Exhibit A
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED BY
THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
This OPTION AGREEMENT, dated as of January 27, 1997 (this
"Agreement"), is entered into between MIDCONN BANK, a Connecticut-chartered
savings bank ("Issuer"), and EAGLE FINANCIAL CORP., a Delaware corporation
("Grantee").
WITNESSETH:
WHEREAS, Grantee, Eagle Federal Savings Bank, a wholly-owned
subsidiary of Grantee, and Issuer have entered into an Agreement and Plan of
Merger, dated as of January 27, 1997 (the "Plan"), which was executed by the
parties thereto prior to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering
into the Plan and in consideration therefor, Issuer has agreed to grant Grantee
the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Plan, the parties
hereto agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 485,319 fully paid and nonassessable shares of common stock, par value $1.00
per share of Issuer ("Issuer Common Stock") (which number of shares is equal to
19.9% of the total of (i) the number of outstanding shares of Issuer Common
Stock on the date hereof and (ii) the number of shares issuable pursuant to this
Option), at a price per share equal to $21.00 (the "Initial Price"); provided,
however, that in the event Issuer issues or agrees to issue any additional
shares of Issuer Common Stock (other than shares issued upon the exercise of
options outstanding as of the date of the Plan in accordance with their terms
pursuant to existing stock option plans), or grants one or more options to
purchase additional shares of Issuer Common Stock at a price less than the
Initial Price, as adjusted pursuant to Section 5(b) hereof, such price shall be
equal to such lesser price (such price, as adjusted, is hereinafter referred to
as the "Option Price"). The number of shares of Issuer Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or part, at
any time and from time to time following the occurrence of a Purchase Event (as
defined below); provided, however, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase Event;
(iii) 12 months after the termination of the Plan following the
occurrence of a Preliminary Purchase Event (as defined below), unless
clause (vii) is applicable;
(iv) upon the termination of the Plan, prior to the occurrence of
a Purchase Event or Preliminary Purchase Event, by MidConn Bank
pursuant to Section 8.1(h) of the Plan, both parties pursuant to
Section 8.1(a) of the Plan, by either party pursuant to Section 8.1(b)
or (c) of the Plan or Section 8.1(d) of the Plan based on any required
vote of Grantee's shareholders not being received, or by Issuer
pursuant to Section 8.1(e) or (f) of the Plan;
(v) six months after the termination of the Plan, by either party
pursuant to Section 8.1(d) of the Plan based on the required vote of
Issuer's shareholders not being received, if no Purchase Event or
Preliminary Purchase Event has occurred prior to the meeting of
shareholders (or any adjournment or postponement thereof) held to vote
on the Plan;
(vi) 12 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a breach by
Issuer, unless such breach was willful or intentional; or
(vii) 18 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a willful or
intentional breach by Issuer, or by Grantee pursuant to Section 8.1(g)
of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring on or after the date hereof and prior
to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior written
consent, shall have entered into any letter of intent or definitive
agreement to engage in an Acquisition Transaction (as defined below)
with any person (as defined below) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary") or the Board of Directors
of Issuer shall have recommended that the shareholders of Issuer
approve or accept any Acquisition Transaction with any Person (as the
term "person" is defined in Section 3(a)9 and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations thereunder) other than Grantee or any
Grantee Subsidiary. For purposes of this Agreement "Acquisition
Transaction" shall mean (x) a merger, consolidation or other business
combination involving Issuer, (y) a purchase, lease or other
acquisition of all or substantially all of the assets of Issuer, (z) a
purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of Beneficial Ownership
(as the term "beneficial ownership" is defined in Regulation 13d-3(a)
of the Exchange Act) of securities representing 10.0% or more of the
voting power of Issuer; provided, however, that "Acquisition
Transaction" shall not include a transaction entered into after the
termination of the Plan in which the Issuer is the surviving entity,
if in connection with such transaction, no person acquires Beneficial
Ownership of 10.0% or more of the total voting power of the Issuer to
be outstanding after giving effect to such transaction and in which
the aggregate voting power of Issuer acquired by all persons is less
than 15% of the total voting power of Issuer;
(ii) Any Person (other than Grantee, any Grantee Subsidiary or
any current affiliate of Issuer) shall have acquired Beneficial
Ownership of 10.0% or more of the outstanding shares of Issuer Common
Stock;
(iii) (a) Any Person (other than Grantee or any Grantee
Subsidiary) shall have made a bona fide proposal to Issuer or, by a
public announcement or written communication that is or becomes the
subject of public disclosure, to Issuer's shareholders to engage in an
Acquisition Transaction (including, without limitation, any situation
in which any Person other than Grantee or any Grantee Subsidiary shall
have commenced (as such
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term is defined in Rule 14d-2 under the Exchange Act), or shall have
filed a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to a tender offer or
exchange offer to purchase any shares of Issuer Common Stock such
that, upon consummation of such offer, such person would have
Beneficial Ownership of 10.0% 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)), (b) such bona
fide proposal is not withdrawn or such public announcement or written
communication is not publicly withdrawn at least five business days
prior to the MidConn Special Meeting (as defined in the Plan), and (c)
the shareholders of Issuer do not approve the Merger, as defined in
the Plan, at the Special Meeting, as defined in the Plan;
(iv) There shall exist a willful or intentional breach under the
Plan by Issuer and such breach would entitle Grantee to terminate the
Plan;
(v) The special meeting of Issuers' shareholders held for the
purpose of voting on the Plan, shall not have been held pursuant to
the Plan or shall have been canceled prior to termination of the Plan,
or for any reason whatsoever Issuer's Board of Directors shall have
failed to recommend, or shall have withdrawn or modified in a manner
adverse to Grantee the recommendation of Issuer's Board of Directors,
that Issuer's shareholders approve the Plan, or if Issuer or Issuer's
Board of Directors fails to oppose any proposal by any Person (other
than Grantee or any Grantee Subsidiary); or
(vi) Any Person (other than Grantee or any Grantee Subsidiary)
shall have filed an application or notice with the Board of Governors
of the Federal Reserve System (the "FRB"), the Federal Deposit
Insurance Corporation (the "FDIC"), the Connecticut Banking
Commissioner (the "Commissioner"), or other regulatory or
administrative agency or commission (each, a "Governmental Authority")
for approval to engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean any of the following events or
transactions occurring on or after the date hereof and prior to an Exercise
Termination Event:
(i) The acquisition by any Person (other than Grantee or any
Grantee Subsidiary) of Beneficial Ownership (other than on behalf of
the Issuer) of 25% or more of the then outstanding Issuer Common
Stock; or
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) except that the percentage referred to in clause (z)
thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event known to Issuer; provided,
however, that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the "Option Notice," the date
of which being hereinafter referred to as the "Notice Date") specifying (i) the
total number of shares of Issuer Common Stock it will purchase pursuant to such
exercise and (ii) the time (which shall be on a business day that is not less
than three nor more than 10 business days from the Notice Date) on which the
closing of such purchase shall take place (the "Closing Date"); such closing to
take place at the principal office of the Issuer; provided, however, that, if
prior notification to or approval of the FDIC, the FRB, the Commissioner or any
other Governmental Authority is required in connection with such purchase (each,
a "Notification" or an "Approval," as the case may be), (a) Grantee shall
promptly file the required notice or application for approval
("Notice/Application"), (b) Grantee shall expeditiously process the
Notice/Application and (c) for the purpose of determining the Closing Date
pursuant to
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clause (ii) of this sentence, the period of time that otherwise would run from
the Notice Date shall instead run from the later of (x) in connection with any
Notification, the date on which any required notification periods have expired
or been terminated and (y) in connection with any Approval, the date on which
such approval has been obtained and any requisite waiting period or periods
shall have expired. For purposes of Section 2(a) hereof, any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto. On or prior
to the Closing Date, Grantee shall have the right to revoke its exercise of the
Option by written notice to the Issuer given not less than three business days
prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee shall
pay to Issuer the aggregate purchase price for the number of shares of Issuer
Common Stock specified in the Option Notice in immediately available funds by
wire transfer to a bank account designated by Issuer; provided, however, that
failure or refusal of Issuer to designate such a bank account shall not preclude
Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f) hereof, Issuer shall deliver to
Grantee a certificate or certificates representing the number of shares of
Issuer Common Stock specified in the Option Notice and, if the Option should be
exercised in part only, a new Option evidencing the rights of Grantee thereof to
purchase the balance of the shares of Issuer Common Stock purchasable hereunder.
(h) Certificates for Issuer Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities Act of
1933, as amended, and applicable state securities laws and to certain
provisions of an agreement among Eagle Financial Corp., Eagle Federal
Savings Bank and MidConn Bank, dated as of January 27, 1997. A copy of
such agreement is on file at the principal office of Eagle Financial
Corp., and will be provided to the holder hereof without charge upon
receipt by Eagle Financial Corp. of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC"), FDIC or Governmental Authority responsible for
administering any applicable state securities laws or an opinion of counsel, in
form and substance satisfactory to Issuer's counsel, to the effect that such
legend is not required for purposes of the Securities Act or applicable state
securities laws; (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; and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice and the
tender of the applicable purchase price in immediately available funds on the
Closing Date, unless prohibited by applicable law, Grantee shall be deemed to be
the holder of record of the number of shares of Issuer Common Stock specified in
the Option Notice, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Issuer Common
Stock shall not then actually be delivered to Grantee. Issuer shall pay all
expenses 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 Grantee.
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SECTION 3. Issuer agrees: (i) that it shall at all times until the
termination of this Agreement have reserved for issuance upon the exercise of
the Option that number of authorized and reserved shares of Issuer Common Stock
equal to the maximum number of shares of Issuer Common Stock at any time and
from time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid, non-assessable,
and delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all reasonable action as may from time to time be
requested by the Grantee, at Grantee's expense (including (x) complying with all
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. ss. 18a and regulations promulgated thereunder and (y) in the event
prior approval of or notice to the FDIC, the FRB, the Commissioner or any other
Governmental Authority, under the Change in Bank Control Act of 1978, as
amended, the Bank Holding Company Act, as amended, Section 36a-181 or Section
36a- 184, as applicable, of the Connecticut Bank Holding Company Act, or any
other applicable federal or state banking law, is necessary before the Option
may be exercised, cooperating with Grantee in preparing such applications or
notices and providing such information to each such Governmental Authority as it
may require in order to permit Grantee to exercise the Option and Issuer duly
and effectively to issue shares of Issuer Common Stock pursuant hereto; and (iv)
to take all action provided herein to protect the rights of Grantee against
dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any 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.
SECTION 5. The number of shares of Issuer Common Stock purchasable upon
the exercise of the Option shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in the type or number of shares of
Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other issuances of additional shares (other than pursuant to the exercise of
the Option), the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision shall
be made so that, in the event that any additional shares of Issuer 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
Issuer Common Stock that remain subject to the Option shall be increased or
decreased (as applicable) so that, after such issuance and together with the
shares of Issuer Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in the Issuer
Common Stock), the Option shall equal the sum of 19.9% of the total of (i) the
number of shares of Issuer Common Stock then issued and outstanding and (ii) the
number of share issuable pursuant to this Option.
(b) Whenever the number of shares of Issuer Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by
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multiplying the Option Price by a fraction, the numerator of which shall be
equal to the number of shares of Issuer Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
of Issuer Common Stock purchasable after the adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf offering circular or,
if applicable, a registration statement with the SEC, under the Securities Act
covering any shares issued and issuable pursuant to the Option and, if
applicable, shall use its reasonable best efforts to cause such registration
statement to become effective, and to remain current and effective for a period
not in excess of 180 days from the day such registration statement first becomes
effective, in order to permit the sale or other disposition of any shares of
Issuer Common Stock issued upon total or partial exercise of the Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee.
Grantee shall have the right to demand two such registrations which right shall
be transferable. Grantee shall provide all information reasonably requested by
Issuer for inclusion in any offering circular or, if applicable, registration
statement to be filed hereunder. In connection with any such offering circular
or, if applicable, registration statement, Issuer and Grantee shall provide each
other with representations, warranties, indemnities and other agreements
customarily given in connection with such registration. If requested by Grantee
in connection with such registration, Issuer and Grantee shall become a party to
any underwriting agreement relating to the sale of such shares, but only to the
extent of obligating themselves in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements. Notwithstanding the foregoing, if Grantee revokes any exercise
notice or fails to exercise any Option with respect to any exercise notice
pursuant to Section 2(e) hereof, Issuer shall not be obligated to continue any
registration process with respect to the sale of Option Shares issuable upon the
exercise of such Option and Grantee shall not be deemed to have demanded
registration of Option Shares.
(b) In the event that Grantee requests Issuer to prepare an offering
circular or, if applicable, to file a registration statement following the
failure to obtain any approval required to exercise the Option as described in
Section 9 hereof, the closing of the sale or other disposition of the Issuer
Common Stock or other securities pursuant to such offering circular or, if
applicable, registration statement shall occur substantially simultaneously with
the exercise of the Option.
(c) Concurrently with the preparation of an offering circular or, if
applicable, filing of a registration statement under Section 6(a) hereof, Issuer
shall also make all filings required to comply with state securities laws in
such number of states as Grantee may reasonably request.
SECTION 7. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, (i) at the request (the date of such
request being the "Option Repurchase Request Date") of Grantee, Issuer shall
repurchase, subject to compliance with applicable law and out of funds legally
available therefor, the Option from Grantee at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which the Option may then be exercised and (ii) at the request (the date of such
request being the "Option Share Repurchase Request Date") of the owner of Option
Shares from time to time (the "Owner"), Issuer shall repurchase such number of
the Option Shares from the Owner as the 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, provided however, that Issuer shall
not be required to so repurchase to the extent beyond which such repurchase
would cause the Issuer not to be classified as "adequately capitalized" as
defined in the Federal Deposit Insurance Act and the regulations of the FDIC
thereunder. The term "market/offer price" shall mean the highest of (i) the
price per share of Issuer
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Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof and on or prior to the Option Repurchase Request Date or
the Option Share Repurchase Request Date, as the case may be, (ii) the price per
share of Issuer Common Stock paid or to be paid by any third party pursuant to
an agreement with Issuer (whether by way of a merger, consolidation or
otherwise), (iii) the average of the 20 highest last sale prices for shares of
Issuer Common Stock as reported within the 90-day period ending on the Option
Repurchase Request Date or the Option Share Repurchase Request Date, as the case
may be, and (iv) in the event of a sale of all or substantially all of Issuer's
assets, the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by an investment
banking firm selected by Grantee or the Owner, as the case may be, and
reasonably acceptable to Issuer, divided by the number of shares of Issuer
Common Stock outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be the
value determined by an investment banking firm selected by Grantee or the Owner,
as the case may be, and reasonably acceptable to Issuer. The investment banking
firm's determination shall be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or 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 Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within 30 business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price.
(c) Issuer hereby undertakes to use its reasonable best efforts to
obtain all required regulatory, shareholder and legal approvals and to file any
required notices as promptly as practicable in order to accomplish any
repurchase contemplated by this Section 7. Nonetheless, to the extent that
Issuer is prohibited under applicable law or regulation from repurchasing any
Option and/or any Option Shares in full, Issuer shall promptly so notify Grantee
and/or the Owner and thereafter deliver or cause to be delivered, from time to
time, to Grantee and/or the Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively, that it is
no longer prohibited from delivering, within five business days after the date
on which Issuer is no longer so prohibited; provided, however, that if Issuer at
any time after delivery of a notice of repurchase pursuant to Section 7(b)
hereof is prohibited as referred to above, from delivering to Grantee and/or the
Owner, as appropriate, the Option Repurchase Price or the Option Share
Repurchase Price, respectively, in full, Grantee or the Owner, as appropriate,
may revoke its notice of repurchase of the Option or the Option Shares either in
whole or in part whereupon, in the case of a revocation in part, Issuer shall
promptly (i) deliver to Grantee and/or the Owner, as appropriate, that portion
of the Option Purchase Price or the Option Share Repurchase Price that Issuer is
not prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Issuer Common Stock
equal to the number of shares of Issuer Common Stock purchasable immediately
prior to the delivery of the notice of repurchase less the number of shares of
Issuer Common Stock covered by the portion of the Option repurchased or, (B) to
the Owner, a certificate for the number of Option Shares covered by the
revocation.
(d) Issuer shall not enter into any agreement with any Person (other
than Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other Person assumes all the obligations of Issuer pursuant to this Section 7 in
the event that Grantee or the Owner elects, in its sole discretion, to require
such other Person to perform such obligations.
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SECTION 8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into a letter of intent or definitive agreement (i) to
consolidate or merge with any Person (other than Grantee or a Grantee
Subsidiary), and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any Person (other than Grantee or a
Grantee Subsidiary) 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 any other Person or cash or any other property or the then
outstanding shares of Issuer Common Stock shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged company,
or (iii) to sell or otherwise transfer all or substantially all of its assets to
any Person (other than Grantee or a Grantee Subsidiary) then, and in each such
case, such letter of intent or definitive agreement governing such transaction
shall make proper provision so that the Option shall, upon the consummation of
such transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at the
election of Grantee, of either (x) the Acquiring Corporation (as defined below)
or (y) any person that controls the Acquiring Corporation (the Acquiring
Corporation and any such controlling person being hereinafter referred to as the
"Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as is hereinafter defined) as is equal to the
market/offer price (as defined in Section 7 hereof) multiplied by the number of
shares of Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Option Price multiplied by a
fraction in which the numerator is the number of shares of Issuer Common Stock
for which the Option was theretofore exercisable and the denominator is the
number of shares for which the Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, provided, further that the terms
of the Substitute Option shall include (by way of example and not limitation)
provisions for the repurchase of the Substitute Option and Substitute Common
Stock by the Substitute Option Issuer on the same terms and conditions as
provided in Section 7 hereof.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving corporation, and (iii) the transferee of all
or any substantial part of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one-year period 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 share of Issuer
Common Stock issued by Issuer, the corporation merging into Issuer or
by any company which controls or is controlled by such merging
corporation, as Grantee may elect.
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(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of (i) the
shares of Substitute Common Stock outstanding immediately prior to the issuance
of the Substitute Option and (ii) the shares subject to the Substitute Option.
In the event that the Substitute Option would be exercisable for more than such
number of shares of Substitute Common Stock but for this clause (e), the
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute Option after
giving effect to the limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment banking firm selected
by Grantee and the Substitute Option Issuer. In addition, the provisions of
Section 5(a) hereof shall not apply to the issuance of any Substitute Option and
for purposes of applying Section 5(a) hereof thereafter to any Substitute
Option, the percentage referred to in Section 5(a) hereof shall thereafter equal
the percentage that the percentage of the shares of Substitute Common Stock
subject to the Substitute Option bears to the number of shares of Substitute
Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the OTS, the
FDIC, the Commissioner or any other Governmental Authority despite the best
efforts of Issuer or the Substitute Option Issuer, as the case may be, to obtain
such approvals, the exercise of the rights shall be deemed to have been
rescinded as of the related notice date. In the event (a) Grantee receives
official notice that an approval of the OTS, the FDIC, the Commissioner or any
other Governmental Authority required for the purchase and sale of the Option
Shares will not be issued or granted or (b) a closing date has not occurred
within 12 months after the related notice date due to the failure to obtain any
such required approval, Grantee shall be entitled to exercise the Option in
connection with the concurrent resale of the Option Shares pursuant to a
registration statement as provided in Section 6 hereof. Nothing contained in
this Agreement shall restrict Grantee from specifying alternative means of
exercising rights pursuant to Sections 2, 6 or 7 hereof in the event that the
exercising of any such rights shall not have occurred due to the failure to
obtain any required approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Issuer, enforceable against
Issuer in accordance with its terms, subject to any required Governmental
Approval, and except as enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this
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Agreement in accordance with its terms will have reserved for issuance upon the
exercise of the Option, that number of shares of Issuer Common Stock equal to
the maximum number of shares of Issuer Common Stock at any time and from time to
time issuable hereunder, and all such shares, upon issuance pursuant hereto,
will be duly authorized, validly issued, fully paid, non-assessable, and will be
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
SECTION 11. (a) Neither of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express 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 Preliminary Purchase Event. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising
under the Securities Act of 1933, as amended, and applicable state
securities laws and to certain provisions of an agreement among Eagle
Financial Corp., Eagle Federal Savings Bank and MidConn Bank, dated as
of January 27, 1997. A copy of such agreement is on file at the
principal office of Eagle Financial Corp., and will be provided to any
permitted assignee of the Option without charge upon receipt of a
written request therefor.
SECTION 12. Each of Grantee and Issuer will use its reasonable efforts
to make all filings with,and to obtain consents of, all third parties and
Governmental Authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
FDIC, the FRB, the Commissioner and any other Governmental Authority for
approval to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. 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.
SECTION 14. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that Grantee is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7 hereof, the full number of shares of Issuer
Common Stock provided in Section 1 hereof (as adjusted pursuant hereto), it is
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and at the respective addresses of the parties set forth in the
Plan.
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SECTION 16. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 17. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement and shall be effective at the time of execution and
delivery.
SECTION 18. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder.
SECTION 19. Except as otherwise expressly provided herein or in the
Plan, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned thereto in the
Plan.
SECTION 21. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 22. In the event that any selection or determination is to be
made by Grantee or the Owner hereunder and at the time of such selection or
determination there is more than one Grantee or Owner, such selection shall be
made by a majority in interest of such Grantees or Owners.
SECTION 23. In the event of any exercise of the option by Grantee,
Issuer and such Grantee 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.
SECTION 24. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
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IN WITNESS WHEREOF, each of the parties has caused this Option
Agreement to be executed and delivered on its behalf by their respective
officers thereunto duly authorized, all as of the date first above written.
MidConn Bank
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
Eagle Financial Corp.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
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