THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated January 19, 1997,
between First USA, Inc., a Delaware corporation ("Issuer"),
and Banc One Corporation, an Ohio corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an
Agreement and Plan of Merger of even date herewith (the
"Merger Agreement"), which agreement has been executed by the
parties hereto immediately prior to this Stock Option
Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into
the Merger Agreement and in consideration therefor, Issuer
has agreed to grant Grantee the Option (as hereinafter
defined);
NOW, THEREFORE, in consideration of the foregoing
and the mutual covenants and agreements set forth herein and
in the Merger Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase,
subject to the terms hereof, up to 24,480,231 fully paid and
nonassessable shares of Issuer's Common Stock, par value $.01
per share ("Common Stock"), at a price of $46.50 per share
(the "Option Price"); provided, however, that in no event
shall the number of shares of Common Stock for which this
Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to
any shares subject to or issued pursuant to the Option. The
number of shares of Common Stock that may be received upon
the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of
Common Stock are either (i) issued or otherwise become
outstanding after the date of this Agreement (other than
pursuant to this Agreement or as permitted under the terms of
the Merger Agreement) or (ii) redeemed, repurchased, retired
or otherwise cease to be outstanding after the date of the
Agreement, the number of shares of Common Stock subject to
the Option shall be increased or decreased, as appropriate,
so that, after such issuance, such number equals 19.9% of the
number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section
1(b) or elsewhere in this Agreement shall be deemed to
authorize Issuer or Grantee to breach any provision of the
Merger Agreement.
2. (a) The Holder (as hereinafter defined) may
exercise the Option, in whole or part, and from time to time,
if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the
occurrence of an Exercise Termination Event (as hereinafter
defined), provided that the Holder shall have sent the
written notice of such exercise (as provided in subsection
(e) of this Section 2) within 90 days following such
Subsequent Triggering Event. Each of the following shall be
an "Exercise Termination Event": (i) the Effective Time (as
defined in the Merger Agreement) of the Merger; (ii)
termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.1(d) of the
Merger Agreement (unless the breach by Issuer giving rise to
such right of termination is non-volitional); or (iii) the
passage of 12 months after termination of the Merger
Agreement if such termination follows the occurrence of an
Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless
the breach by Issuer giving rise to such right of termination
is non-volitional) (provided that if an Initial Triggering
Event continues or occurs beyond such termination and prior
to the passage of such 12-month period, the Exercise
Termination Event shall be 12 months from the expiration of
the Last Triggering Event but in no event more than 18 months
after such termination). The "Last Triggering Event" shall
mean the last Initial Triggering Event to expire. The term
"Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean
any of the following events or transactions occurring after
the date hereof:
(i) Issuer or any of its Subsidiaries (each
an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning
assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve
or accept any Acquisition Transaction. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w)
a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as
defined in Rule 1-02 of Regulation S-X promulgated by
the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets
or deposits of Issuer or any Significant Subsidiary of
Issuer, (y) a purchase or other acquisition (including
by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the
voting power of Issuer, or (z) any substantially similar
transaction; provided, however, that in no event shall
any merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more of
its Subsidiaries or involving only any two or more of
such Subsidiaries, be deemed to be an Acquisition
Transaction, provided that any such transaction is not
entered into in violation of the terms of the Merger
Agreement;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall
have authorized, recommended, proposed or publicly
announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with
any person other than Grantee or a Grantee Subsidiary,
or the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its
interest to withdraw or modify, in any manner adverse to
Grantee, its recommendation that the stockholders of
Issuer approve the transactions contemplated by the
Merger Agreement in anticipation of engaging in an
Acquisition Transaction;
(iii) Any person other than Grantee, any
Grantee Subsidiary or any Issuer Subsidiary acting in a
fiduciary capacity in the ordinary course of its
business shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of
the outstanding shares of Common Stock (the term
"beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of
the 1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any
Grantee Subsidiary shall have made a bona fide proposal
to Issuer or its stockholders by public announcement or
written communication that is or becomes the subject of
public disclosure to engage in an Acquisition
Transaction; provided that for the purposes of this
paragraph (iv), a proposal relating solely to an
acquisition of the assets or stock of First USA
Paymentech, Inc. shall not be deemed to be an Initial
Triggering Event;
(v) After an overture is made by a third
party to Issuer or its stockholders to engage in an
Acquisition Transaction, Issuer shall have breached any
covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate
the Merger Agreement and (y) shall not have been cured
prior to the Notice Date (as defined below); or
(vi) Any person other than Grantee or any
Grantee Subsidiary, other than in connection with a
transaction to which Grantee has given its prior written
consent, shall have filed an application or notice with
the Federal Reserve Board, or other federal or state
bank regulatory authority, which application or notice
has been accepted for processing, for approval to engage
in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall
mean either of the following events or transactions occurring
after the date hereof:
(i) The acquisition by any person of
beneficial ownership of 20% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of
this Section 2, except that the percentage referred to
in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in
writing of the occurrence of any Initial Triggering Event or
Subsequent Triggering Event of which it has notice (together,
a "Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right
of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and
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 shares
it will purchase pursuant to such exercise and (ii) a place
and date not earlier than three business days nor later than
60 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or
any other regulatory agency is required in connection with
such purchase, the Holder shall promptly file the required
notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date
on which any required notification periods have expired or
been terminated or such approvals have been obtained and any
requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) At the closing referred to in subsection (e)
of this Section 2, the Holder shall pay to Issuer the
aggregate purchase price for the shares of Common Stock
purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank
account designated by Issuer, provided that failure or
refusal of Issuer to designate such a bank account shall not
preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the
delivery of immediately available funds as provided in
subsection (f) of this Section 2, Issuer shall deliver to the
Holder a certificate or certificates representing the number
of shares of Common Stock purchased by the Holder and, if the
Option should be exercised in part only, a new Option
evidencing the rights of the Holder thereof to purchase the
balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise
dispose of such shares in violation of applicable law or the
provisions of this Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend
that shall read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of
Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended
(the "1933 Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a
letter from the staff of the SEC, or an opinion of counsel,
in form and substance reasonably satisfactory to Issuer, to
the effect that such legend is not required for purposes of
the 1933 Act; (ii) the reference to the provisions to 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 the Holder to Issuer of the
written notice of exercise of the Option provided for under
subsection (e) of this Section 2 and the tender of the
applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares
of Common Stock shall not then be actually delivered to the
Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other
charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized
but unissued or treasury shares of Common Stock so that the
Option may be exercised without additional authorization of
Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase
Common Stock; (ii) that it will not, by charter amendment or
through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek
to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or
performed hereunder by Issuer; (iii) promptly to take all
action as may from time to time be required (including (x)
complying with all premerger notification, reporting and
waiting period requirements specified in 15 U.S.C. SECTION 18a
and regulations promulgated thereunder and (y) in the event,
under the Bank Holding Company Act of 1956, as amended (the
"BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or
notice to the Federal Reserve Board or to any state
regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing
such applications or notices and providing such information
to the Federal Reserve Board or such state regulatory
authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the
rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of the
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, on the same terms and subject
to the same conditions as are set forth herein, in the
aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Stock Option Agreements and related
Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not
the Agreement so lost, stolen, destroyed or mutilated shall
at any time be enforceable by anyone.
5. In addition to the adjustment in the number of
shares of Common Stock that are purchasable upon exercise of
the Option pursuant to Section 1 of this Agreement, the
number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject
to adjustment from time to time as provided in this Section
5. In the event of any change in, or distributions in
respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions
on or in respect of the Common Stock that would be prohibited
under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon
exercise hereof and the Option Price shall be appropriately
adjusted in such manner as shall fully preserve the economic
benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to
provide for such proper adjustment and the full satisfaction
of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event,
Issuer shall, at the request of Grantee delivered within 90
days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option
(or part thereof) or any of the shares of Common Stock issued
pursuant hereto), promptly prepare, file and keep current a
shelf registration statement under the 1933 Act covering this
Option and any shares issued and issuable pursuant to this
Option and shall use its reasonable best efforts to cause
such registration statement to become effective and remain
current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total
or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee.
Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to
remain effective for such period not in excess of 180 days
from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary
to effect such sales or other dispositions. Grantee shall
have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as
provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and
if in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful
marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced;
and provided, however, that after any such required reduction
the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25%
of the total number of shares to be sold by the Holder and
Issuer in the aggregate; and provided further, however, that
if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as
practical and no reduction shall thereafter occur. Each such
Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in
connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of
such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other
agreements customarily included in secondary offering
underwriting agreements for the Issuer. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees
to send a copy thereof to any other person known to Issuer to
be entitled to registration rights under this Section 6, in
each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained
herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6 by reason
of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request
of the Holder, delivered prior to an Exercise Termination
Event, Issuer (or any successor thereto) shall repurchase the
Option from the Holder 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 this Option may
then be exercised and (ii) at the request of the owner of
Option Shares from time to time (the "Owner"), delivered
within 90 days of such occurrence (or such later period as
provided in Section 10), 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. The term "Market/Offer Price"
shall mean the highest of (i) the price per share of Common
Stock at which a tender offer or exchange offer therefor has
been made, (ii) the price per share of Common Stock to be
paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock
within the six-month period immediately preceding the date
the Holder gives notice of the required repurchase of this
Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of
a sale of all or a substantial portion 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 a nationally recognized investment banking firm mutually
selected by the Holder or the Owner, as the case may be, on
the one hand, and the Issuer, on the other, divided by the
number of shares of Common Stock of Issuer outstanding at the
time of such sale. In determining the Market/Offer Price,
the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm
mutually selected by the Holder or Owner, as the case may be,
on the one hand, and the Issuer, on the other.
(b) The Holder and the Owner, as the case may be,
may exercise its right to require Issuer to repurchase the
Option and any Option Shares pursuant to this Section 7 by
surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or
notices stating that the Holder or the Owner, as the case may
be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business
days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately
prior to the occurrence of a Repurchase Event, Issuer shall
deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer
is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option
and/or the Option Shares in full, Issuer shall immediately so
notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder
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 paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the
Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use
its best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may
revoke its notice of repurchase of the Option or the Option
Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from
delivering; and (ii) deliver, as appropriate, either (A) to
the Holder, a new Stock Option Agreement evidencing the right
of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common
Stock for which the surrendered Stock Option Agreement was
exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the
Option Repurchase Price less the portion thereof theretofore
delivered to the Holder and the denominator of which is the
Option Repurchase Price, or (B) to the Owner, a certificate
for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase
Event shall be deemed to have occurred (i) upon the
consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of
Issuer, other than any such transaction which would not
constitute an Acquisition Transaction pursuant to the
provisos to Section 2(b)(i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50% or
more of the then outstanding shares of Common Stock, provided
that no such event shall constitute a Repurchase Event unless
a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option
Shares under this Section 7 shall not terminate upon the
occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the
occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i)
to consolidate with or merge into any person, other than
Grantee or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one
of its Subsidiaries, to merge into Issuer and Issuer shall be
the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Common Stock
shall be changed into or exchanged for stock or other
securities of any other person or cash or any other property
or the then outstanding shares of Common Stock shall after
such merger represent less than 50% of the outstanding voting
shares and voting 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 provision so
that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of the Holder, of
either (x) the Acquiring Corporation (as hereinafter defined)
or (y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings
indicated:
(1) "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 person, and (iii) the transferee
of all or substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the
common stock issued by the issuer of the Substitute
Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/
Offer Price, as defined in Section 7.
(4) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock
for the one year immediately preceding the
consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer
is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of
common stock issued by the person merging into Issuer or
by any company which controls or is controlled by such
person, as the Holder may elect.
(c) The Substitute Option shall have the same
terms as the Option, provided, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as
the Option, such terms shall be as similar as possible and in
no event less advantageous to the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the
then Holder or Holders of the Substitute Option in
substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock as is equal
to the Assigned Value multiplied by the number of shares of
Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall
then be equal to the Option Price multiplied by a fraction,
the numerator of which shall be the number of shares of
Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is
exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for
more than 19.9% of the shares of Substitute Common Stock
outstanding prior to exercise of the Substitute Option. In
the event that the Substitute Option would be exercisable for
more than 19.9% of the shares of Substitute Common Stock
outstanding prior to exercise but for this clause (e), the
issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the
excess of (i) the value of the Substitute Option without
giving effect to the limitation in this 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 the Holder or the Owner,
as the case may be, and reasonably acceptable to the
Acquiring Corporation.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the
Acquiring Corporation and any person that controls the
Acquiring Corporation assume in writing all the obligations
of Issuer hereunder.
9. (a) At the request of the holder of the
Substitute Option (the "Substitute Option Holder"), the
Substitute Option Issuer shall repurchase the Substitute
Option from the Substitute Option Holder at a price (the
"Substitute Option Repurchase Price") equal to (x) the amount
by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be
exercised plus (y) Grantee's reasonable out-of-pocket expenses
(to the extent not previously reimbursed), and at the request of
the owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option
Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to (x) the Highest
Closing Price multiplied by the number of Substitute Shares
so designated plus (y) Grantee's reasonable Out-of-Pocket
Expenses (to the extent not previously reimbursed). The term
"Highest Closing Price" shall mean the highest closing price
for shares of Substitute Common Stock within the six-month
period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice
of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder and the
Substitute Share Owner, as the case may be, may exercise its
respective right to require the Substitute Option Issuer to
repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose
to the Substitute Option Issuer, at its principal office, the
agreement for such Substitute Option (or, in the absence of
such an agreement, a copy of this Agreement) and certificates
for Substitute Shares accompanied by a written notice or
notices stating that the Substitute Option Holder or the
Substitute Share Owner, as the case may be, elects to require
the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the
surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice
or notices relating thereto, the Substitute Option Issuer
shall deliver or cause to be delivered to the Substitute
Option Holder the Substitute Option Repurchase Price and/or
to the Substitute Share Owner the Substitute Share Repurchase
Price therefor or, in either case, the portion thereof which
the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option
Issuer is prohibited under applicable law or regulation from
repurchasing the Substitute Option and/or the Substitute
Shares in part or in full, the Substitute Option Issuer
following a request for repurchase pursuant to this Section 9
shall immediately so notify the Substitute Option Holder and/
or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from
delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at
any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable
law or regulation from delivering to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the
Substitute Option Repurchase Price and the Substitute Share
Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as
practicable in order to accomplish such repurchase), the
Substitute Option Holder or Substitute Share Owner may revoke
its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that
portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option
Issuer is not prohibited from delivering; and (ii) deliver,
as appropriate, either (A) to the Substitute Option Holder, a
new Substitute Option evidencing the right of the Substitute
Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of
delivery of the notice of repurchase by a fraction, the
numerator of which is the Substitute Option Repurchase Price
less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the
Substitute Option Repurchase Price, or (B) to the Substitute
Share Owner, a certificate for the Substitute Common Shares
it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain
rights under Sections 2, 6, 7 and 13 shall be extended: (i)
to the extent necessary to obtain all regulatory approvals
for the exercise of such rights, and for the expiration of
all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934
Act by reason of such exercise.
11. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has full 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 and validly authorized 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 and validly
executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate
action to authorize and reserve and to permit it to issue,
and at all times from the date hereof through the termination
of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number
of shares of Common Stock at any time and from time to time
issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued,
fully paid, nonassessable, and will be delivered free and
clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if
required redeeming all of the Rights or amending or
terminating the Rights Agreement) so that the entering into
of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated
hereby do not and will not result in the grant of any rights
to any person under the Rights Agreement or enable or require
the Rights to be exercised, distributed or triggered.
12. 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) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon
exercise of the Option will not be, acquired with a view to
the public distribution thereof and will not be transferred
or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
13. Neither of the parties hereto may assign any
of its rights or obligations under this Option Agreement or
the Option created hereunder to any other person, without the
express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred
prior to an Exercise Termination Event, Grantee, subject to
the express provisions hereof, may assign in whole or in part
its rights and obligations hereunder within 90 days following
such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the
date 15 days following the date on which the Federal Reserve
Board approves an application by Grantee under the BHCA to
acquire the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option except in
(i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to
purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a widely
dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best
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 making application to
list the shares of Common Stock issuable hereunder on the New
York Stock Exchange upon official notice of issuance and
applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common
Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. 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.
16. 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 the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided
in Section 1(a) hereof (as adjusted pursuant to Section 1(b)
or 5 hereof), it is the express intention of Issuer to allow
the Holder to acquire or to require Issuer to repurchase such
lesser number of shares as may be permissible, without any
amendment or modification hereof.
17. All notices, requests, claims, demands and
other communications hereunder shall be deemed to have been
duly given when delivered in person, by cable, telegram,
telecopy or telex, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective
addresses of the parties set forth in the Merger Agreement.
18. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
19. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same
agreement.
20. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with
the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment
bankers, accountants and counsel.
21. Except as otherwise expressly provided herein
or in the Merger Agreement, 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.
22. Capitalized terms used in this Agreement and
not defined herein shall have the meanings assigned thereto
in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the date first above
written.
FIRST USA, INC.
By: /s/ XXXX X. XXXXXXXX
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Chief
Executive Officer
BANC ONE CORPORATION
By: /s/ XXXX X. XxXXX
Name: Xxxx X. XxXxx
Title: Chairman and Chief
Executive Officer
