THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN PROVISIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED
Exhibit 10.2
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated May 5, 2011, between Green Bankshares, Inc., a corporation
organized under the laws of the State of Tennessee (“Issuer”), and North American Financial
Holdings, Inc., a Delaware corporation (“Grantee”).
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Investment Agreement of even date herewith
(the “Investment Agreement”), which agreement has been executed by the parties hereto in
connection with this Stock Option Agreement (the “Agreement”)
WHEREAS, as a condition to Grantee’s entering into the Investment 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 Investment 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 2,628,183 fully paid and
nonassessable shares of Issuer’s Common Stock, par value $2.00 per share (“Common Stock”),
at a price per share equal to the closing price on the Nasdaq Global Select Market for shares of
Common Stock on the first trading day following the date of the Investment Agreement (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 (ii)
redeemed, repurchased, retired or otherwise cease to be outstanding after the date of this
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 Investment
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 (g) of this Section 2) within 180 days following such Subsequent Triggering Event.
(b) Each of the following shall be an “Exercise Termination Event”: (i) the
occurrence of the Closing (as defined in the Investment Agreement); (ii) termination of the
Investment Agreement in accordance with the provisions thereof (other than a termination by Grantee
pursuant to Section 5.1(f) or 5.1(g) of the Investment Agreement) (unless the breach by Issuer
giving rise to such right of termination pursuant to Section 5.1(f) is non-volitional)) if such
termination occurs prior to the occurrence of an Initial Triggering Event; and (iii) the passage of
18 months after termination of the Investment Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by Grantee pursuant to Section 5.1(f) or 5.1(g)
of the Investment Agreement (unless the breach by Issuer giving rise to such right of termination
pursuant to Section 5.1(f) is non-volitional).
(c) The term “Holder” shall mean the holder or holders of the Option.
(d) The term “Initial Triggering Event” shall mean any of the following events or
transactions occurring on or 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 with any person other than Grantee or a subsidiary of Grantee. For purposes of
this Agreement, “Acquisition Transaction” shall mean (w) a merger, consolidation or
share exchange, 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 of 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 that is not entered into in violation of the terms of the
Investment Agreement and that involves only (i) the Issuer and one or more of its wholly
owned subsidiaries, (ii) any two or more of such wholly owned subsidiaries, or (iii) any
Subsidiary of the Issuer and the Grantee or a Grantee Subsidiary be deemed to be an
Acquisition Transaction;
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(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
intention to withdraw or modify, in any manner adverse to Grantee, its recommendation that
the stockholders of Issuer approve the transactions contemplated by the Investment
Agreement;
(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 that is public or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(v) After the receipt by Issuer or its stockholders of any bona fide inquiry or
proposal (or the bona fide indication of any intention to propose) from any person other
than Grantee or any Grantee Subsidiary to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Investment Agreement and such
breach (x) would entitle Grantee to terminate the Investment 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, 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.
(e) The term “Subsequent Triggering Event” shall mean either of the following events
or transactions occurring on or after the date hereof:
(i) The acquisition by any person of beneficial ownership of 20% or more of the then
outstanding shares of Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in paragraph (i) of
subsection (d) of this Section 2, except that the percentage referred to in clause (y) shall
be 20%.
(f) Issuer shall notify Grantee promptly in writing of the occurrence of any Initial
Triggering Event or Subsequent Triggering Event of which it has knowledge, 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.
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(g) 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 or any other
regulatory agency is required in connection with such purchase, the Holder shall as soon as
reasonably practicable 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.
(h) At the closing referred to in subsection (g) 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.
(i) At such closing, simultaneously with the delivery by the Holder of immediately available
funds as provided in subsection (h) 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 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.
(j) 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 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 certificate(s) shall bear any other legend as may be required by law.
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(k) Upon the giving by the Holder to Issuer of the written notice of exercise of the Option
provided for under subsection (g) of this Section 2 and the tender by the Holder 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, issuance 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 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)
that it will promptly 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. §
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 or to any state or other
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 or such other 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 and the
term “Grantee”, with respect to any such Stock Option Agreement and related Option, shall
include the Holder of such Option resulting from such exchange. 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.
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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 Investment
Agreement, or the like, the type and number of shares of Common Stock purchasable upon exercise
hereof and the Option Price shall be equitably and proportionally 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 180 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 of 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; 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 practicable 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.
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7. (a) In the event 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 immediately prior to the Repurchase Event (or, as requested
by the Holder, after the Repurchase Event) at a price (the “Option Repurchase Price”) equal
to the product of the number of shares for which this Option may then be exercised multiplied by
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the Option Price, and
(ii) at the request of the owner of Option Shares from time to time (the “Owner”),
delivered prior to an Exercise Termination Event and within 90 days after the occurrence of a
Repurchase Event, Issuer (or any successor thereto) shall repurchase immediately after such request
from the Owner 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 (1) the price per share of Common Stock at which a tender offer or exchange offer
therefor has been made, (2) the price per share of Common Stock to be paid by any third party
pursuant to an agreement with Issuer, (3) 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, and (4) in the event of a sale of all or a substantial portion of Issuer’s assets
(other than to Grantee or a Grantee Subsidiary), the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to the Issuer, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized investment banking
firm selected by the Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.
(b) The Holder or 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, 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 later to occur of (i) 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 (ii) 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, if any, that Issuer is not then prohibited under applicable law, regulation or
formal or informal regulatory agreement or enforcement action from so delivering.
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(c) To the extent that Issuer is prohibited under applicable law, regulation or formal or
informal regulatory agreement or enforcement action from repurchasing the Option and/or the Option
Shares to the full extent requested by the Holder or Owner, as the case may be, Issuer shall,
following its receipt of a written notice required by Section 7(b) of this Agreement, 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,
regulation or formal or informal regulatory agreement or enforcement action from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, to said full extent (and Issuer hereby undertakes to use its best
efforts to obtain all required regulatory and legal approvals and to file any required notices, in
each case 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 an Acquisition Transaction with respect to Issuer (and not
solely involving Issuer and/or one or more subsidiaries of Issuer) (except that the percentage
referred to in clause (y) of the definition thereof shall be 50%) or (ii) upon the acquisition by
any person of beneficial ownership of 50% or more of the then outstanding shares of Common Stock.
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 a Grantee
Subsidiary or controlled Affiliate of Grantee, and 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 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 a Grantee Subsidiary or controlled Affiliate of Grantee, 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.
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(b) The following terms have the meanings indicated:
(A) “Acquiring Corporation” shall mean (i) the continuing or surviving
person 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.
(B) “Assigned Value” shall mean the Market/Offer Price, as defined in
Section 7.
(C) “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.
(D) “Substitute Common Stock” shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(c) The Substitute Option shall have the same terms as the Option, provided, that (1)
the exercise price therefor and number of shares subject thereto shall be as set forth in this
Section 8 and the repurchase rights relating thereto shall be as set forth in Section 9; (2) if a
Subsequent Triggering Event shall have occurred prior to or in connection with the issuance of such
Substitute Option, the Substitute Option shall be exercisable immediately upon issuance without the
occurrence of a further Subsequent Triggering Event; and (3) 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.
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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 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 and reasonably
acceptable to the Issuer.
(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”) delivered prior to any Exercise Termination Event with respect to the Substitute
Option, the Substitute Option Issuer shall repurchase the Substitute Option from the Substitute
Option Holder at a price (the “Substitute Option Repurchase Price”) equal to the amount by
which (i) the Highest Closing Price (as 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, 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 immediately after such request from the Substitute Share Owner such
number of the Substitute Shares from the Substitute Share Owner as the Substitute Share Owner shall
designate at a price (the “Substitute Share Repurchase Price”) equal to the Highest Closing
Price multiplied by the number of Substitute Shares so designated. The term “Highest Closing
Price” shall mean the highest closing price for shares of Substitute Common Stock within the
six-month period immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives notice of the
required repurchase of the Substitute 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, regulation or formal or informal regulatory agreement or enforcement action
from so delivering.
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(c) To the extent that the Substitute Option Issuer is prohibited under applicable law,
regulation or formal or informal regulatory agreement or enforcement action from repurchasing the
Substitute Option and/or the Substitute Shares in part or to the full extent requested by the
Substitute Option Holder or Substitute Share Owner, as the case may be, 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, regulation or formal or informal regulatory
agreement or enforcement action 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 said full extent (and the Substitute Option Issuer shall
use its best efforts to obtain all required regulatory and legal approvals, in each case 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 or 180-day periods for exercise of certain rights under Sections 2, 6, and 7
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; (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason of such exercise; and
(iii) during the pendency of any temporary restraining order, injunction or other legal bar to
exercise of such rights.
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.
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(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) The Board of Directors of Issuer has unanimously approved this Agreement and the
transactions contemplated hereby (including by reserving shares for issuance of shares of
Common Stock on exercise of the Option) and subject to the approval of the Shareholder
Proposal (as defined in the “Investment Agreement” but other than the proposal set forth in
clause (1)(iii) of such definition) taken any other action as required to render
inapplicable to such agreement and transactions any anti-takeover or similar provisions of
the Charter, and its bylaws and the requirements of any “moratorium,” “control share,” “fair
price,” “affiliate transaction,” “business combination” or other antitakeover laws and
regulations of any state, including the Tennessee Business Corporation Act.
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 1933 Act.
13. Neither of the parties hereto may assign any of its rights or obligations under this
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; provided, however,
that until the date 15 days following the date on which the Federal Reserve approves an application
by Grantee under the BHCA to acquire the shares of Common Stock subject to the
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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.
Upon any such assignment, the transferee shall be deemed to be the “Grantee” for purposes of the
Option so transferred and any partial transfer shall be effected by an exchange of the Option in
accordance with Section 4 hereof.
14. Each of Grantee and Issuer will use its reasonable 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 NASDAQ upon
official notice of issuance and applying to the Federal Reserve 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. (a) Grantee may, at any time during which Issuer would be required to repurchase the
Option or any Option Shares pursuant to Section 7 upon proper request or notice, surrender the
Option (together with any Option Shares issued to and then owned by Grantee) to Issuer in exchange
for a cash fee equal to the Surrender Price (as defined below); provided, however,
that Grantee may not exercise its rights pursuant to this Section 15 if Issuer has repurchased the
Option (or any portion thereof) or any Option Shares pursuant to Section 7. The “Surrender
Price” shall be equal to (i) $2,500,000, plus (ii) if applicable, the aggregate purchase price
previously paid pursuant hereto by Grantee with respect to any Option Shares, minus (iii) if
applicable, the sum of (A) the excess of (1) the net cash amounts, if any, received by Grantee
pursuant to the arms’ length sale of Option Shares (or any other securities into which such Option
Shares were converted or exchanged) to any party not affiliated with Grantee, over (2) the
aggregate purchase price previously paid pursuant hereto by Grantee with respect to such Option
Shares and (B) the net cash amounts, if any, received by Grantee pursuant to an arms’ length sale
of a portion of the Option to any party not affiliated with Grantee.
(b) Grantee may exercise its right to surrender the Option and any Option Shares pursuant to
this Section 15 by surrendering to Issuer, at its principal office, this Agreement together with
certificates for Option Shares, if any, accompanied by a written notice stating (i) that Grantee
elects to surrender the Option and Option Shares, if any, in accordance with the provisions of this
Section 15 and (ii) the Surrender Price. The Surrender Price shall be payable in immediately
available funds on or before the second business day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law, regulation or formal or
informal regulatory agreement or enforcement action from paying the Surrender Price to Grantee in
full, Issuer shall immediately so notify Grantee and thereafter deliver or cause to be delivered,
from time to time, to Grantee, the portion of the Surrender Price that Issuer is no longer
prohibited from paying, 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
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surrender pursuant to paragraph (b) of this Section 15 is prohibited under applicable law,
regulation or formal or informal regulatory agreement or enforcement action from paying to Grantee
the Surrender Price in full (i) Issuer shall (A) use its reasonable best efforts to obtain all
required regulatory and legal approvals and to file any required notices as promptly as practicable
in order to make such payments, (B) within five days of the submission or receipt of any documents
relating to any such regulatory and legal approvals, provide Grantee with copies of the same, and
(C) keep Grantee advised of both the status of any such request for regulatory and legal approvals,
as well as any discussions with any relevant regulatory or other third party reasonably related to
the same and (ii) Grantee may revoke such notice of surrender by delivery of a notice of revocation
to Issuer and, upon delivery of such notice of revocation, the Exercise Termination Date shall be
extended to a date six months from the date on which the Exercise Termination Date would have
occurred if not for the provisions of this Section 15(c) (during which period Grantee may exercise
any of its rights hereunder, including any and all rights pursuant to this Section 15).
(d) Grantee shall have rights substantially identical to those set forth in paragraphs (a),
(b) and (c) of this Section 15 with respect to the Substitute Option and the Substitute Option
Issuer during any period in which the Substitute Option Issuer would be required to repurchase the
Substitute Option pursuant to Section 9.
16. (a) Notwithstanding any other provision of this Agreement, in no event shall the Grantee’s
Total Profit (as hereinafter defined) exceed $8,000,000 and, if it otherwise would exceed such
amount, the Grantee, at its sole election, shall either (i) reduce the number of shares of Common
Stock subject to this Option, (ii) deliver to Issuer for cancellation Option Shares previously
purchased by Grantee, (iii) pay cash to Issuer, or (iv) any combination thereof, so that Grantee’s
actually realized Total Profit shall not exceed $8,000,000 after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Agreement, this Option may not be exercised
for a number of shares as would, as of the date of exercise, result in a Notional Total Profit (as
defined below) of more than $8,000,000; provided that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term “Total Profit” shall mean the aggregate amount (before
taxes) of the following: (i) the amount received by Grantee pursuant to Issuer’s repurchase of the
Option (or any portion thereof) pursuant to Section 7, (ii) (x) the amount received by Grantee
pursuant to Issuer’s repurchase of Option Shares pursuant to Section 7, less (y) the Grantee’s
purchase price for such Option Shares, (iii) (x) the net cash amounts received by Grantee pursuant
to the sale of Option Shares (or any other securities into which such Option Shares are converted
or exchanged) to any unaffiliated party, less (y) the Grantee’s purchase price of such Option
Shares, (iv) any amounts received by Grantee on the transfer of the Option (or any portion thereof)
to any unaffiliated party, and (v) any amount equivalent to the foregoing with respect to the
Substitute Option.
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(d) As used herein, the term “Notional Total Profit” with respect to any number of
shares as to which Grantee may propose to exercise the Option shall be the Total Profit, determined
as of the date of such proposed exercise assuming (1) that the Option were
exercised on such date for such number of shares and (2) that such shares, together with all
other Option Shares held by Grantee and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the preceding trading day
(less customary brokerage commissions).
17. 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.
18. 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 (or the
Substitute Issuer to repurchase pursuant to Section 9), the full number of shares of Common Stock
(or Substitute 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.
19. All notices, requests, claims, demands and other communications hereunder shall be deemed
to have been duly given when delivered in person, by facsimile, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of the parties set forth in
the Investment Agreement.
20. This Agreement shall be governed by and construed in accordance with the laws of the State
of Delaware, without regard to any applicable conflicts of law principles (except to the extent
that mandatory provisions of federal or state law apply).
21. This Agreement may be executed in counterparts (including by facsimile and email), each of
which shall be deemed to be an original, but all of which shall constitute one and the same
agreement.
22. 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.
23. Except as otherwise expressly provided herein or in the Investment 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 and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this Agreement, except
as expressly provided herein.
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24. Capitalized terms used in this Agreement and not defined herein shall have the meanings
assigned thereto in the Investment Agreement.
[Signature page follows]
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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.
| GREEN BANKSHARES, INC. (Issuer) |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| Name: Xxxxxxx X. Xxxxx | ||||
| Title: Chairman and CEO | ||||
| NORTH AMERICAN FINANCIAL HOLDINGS, INC. (Grantee) |
||||
| By: | /s/ Xxxxxxxxxxx X. Xxxxxxxx | |||
| Name: Xxxxxxxxxxx X. Xxxxxxxx | ||||
| Title: EVP, CFO | ||||
[Signature Page to Stock Option Agreement]