Exhibit 10.1
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made and entered into
as of this 24th day of February 2001, by and between FNH CORPORATION, a
Pennsylvania corporation ("Issuer"),
and
PROMISTAR FINANCIAL CORPORATION, a Pennsylvania corporation
("Grantee"), and is the Option Agreement referred to in the Merger Agreement
referred to herein.
WHEREAS, Grantee and Issuer contemplate entering into an Agreement and
Plan of Reorganization of even date herewith (the "Merger Agreement") providing
for the Merger of Issuer into Grantee, with Grantee as the surviving corporation
(the "Merger"); and
WHEREAS, in order to induce Grantee to enter into the Merger Agreement
and to provide reasonable assurances that the transactions contemplated by the
Merger Agreement will be consummated, Issuer desires to grant Grantee an option
to purchase up to 38,749 authorized but unissued shares of Issuer Common Stock,
$1.00 par value ("Issuer Common Stock"), upon the terms and subject to the
conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound, Issuer and Grantee agree as follows:
1. Grant. Subject to the terms and conditions set forth herein,
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Issuer hereby grants to Grantee an exclusive and irrevocable option (the
"Option") to purchase from Issuer up to 38,749 authorized but unissued shares of
Issuer Common Stock (the "Option Shares") at a price of $210.00 per Option Share
(the "Exercise Price"); provided that in no event shall the number of shares for
which this Option is exercisable exceed the lesser of (i) 19.99% of the issued
and outstanding shares of Common Stock and (ii) such number of shares of Common
Stock that will avoid application of the provisions of Subchapter E of Chapter
25 of the BCL. 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. Grantee and any person to whom it may assign its rights
hereunder is referred to as a "Holder."
2. Exercise.
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(a) The Option may be exercised by any Holder, in whole or in
part, at any time or from time to time, on or after the date hereof and within
six months following the occurrence of any of the Exercise Events described in
Subsection 2 (b). The Option will terminate and be of no further force or effect
(i) at the Effective Time or (ii) upon termination of the Merger Agreement in
accordance with the provisions thereof. Any such exercise will be subject to
compliance with applicable law, including receipt of all required regulatory
approvals. Issuer will not take any action which would have the effect of
preventing or disabling Issuer from delivering the Option Shares or otherwise
performing its obligations under this Agreement.
(b) Any of the following events occurring between the
date hereof and the Effective Time will be an "Exercise Event" for the purposes
of this Agreement:
(i) any corporation (other than Grantee or any
Grantee Subsidiary), partnership, individual, trust, unincorporated association,
other entity or group (as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934 (the "Exchange Act")) (collectively "Persons") shall have (A)
announced the commencement of a tender offer or exchange offer for at least
twenty percent (20%) of the then outstanding shares of Issuer Common Stock or
(B) acquired direct or indirect "beneficial ownership" (as defined under the
Exchange Act) of twenty percent (20%) or more of the then outstanding shares of
Issuer Common Stock;
(ii) Issuer shall have (A) intentionally acted
or failed to act so as to have caused the conditions specified in Section 5.01
of the Merger Agreement to be met, whether or not the Merger Agreement shall
have been terminated, or (B) breached or violated Section 4.04(f) of the Merger
Agreement;
(iii) any Person shall, with respect to Issuer
Common Stock, solicit proxies or written consents or become a "participant" in
any "solicitation" (as such terms are defined in Regulation 14A under the
Exchange Act) in opposition to the Merger;
(iv) Issuer or any of its subsidiaries, without
having received the Grantee's prior written consent, shall have entered into an
agreement with, or the Board of Directors of Issuer shall have recommended that
the shareholders of Issuer approve or accept a transaction with, any Person (x)
to merge or consolidate, or enter into any similar transaction, except as
contemplated by the Merger Agreement, (y) to purchase, lease or otherwise
acquire all or substantially all of the assets of Issuer or any of its
subsidiaries, or (z) to purchase or otherwise acquire including by way of
merger, consolidation, share exchange or any similar transaction, securities
representing twenty percent (20%) or more of the voting power of Issuer or any
of its subsidiaries (other than pursuant to this Agreement); or
(v) the Board of Directors of Issuer shall have
withdrawn or modified (or publicly announced its intention to withdraw or
modify) in any manner adverse in any respect to Grantee, its recommendation that
the shareholders of Issuer approve the transaction contemplated by the Merger
Agreement.
(c) To exercise the Option, the Holder will send a
written notice to Issuer specifying the number of Option Shares Holder will
purchase and the place and date for closing the purchase. The date so specified
is referred to herein as the "Closing Date." The Closing Date shall be not later
than ten business days from the date such notice is mailed, but not earlier than
the expiration or termination of any applicable waiting period under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). If the Closing Date is
to occur sooner than two business days from the date such notice is mailed,
telegraphic or telephonic notice will also be given at the time such written
notice is given.
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(d) Upon any exercise of the Option hereunder, the
Merger Agreement will terminate, as provided in Section 2.07(g) of the Merger
Agreement, without any further action of the parties and the Plan of Merger will
be deemed to be abandoned. Exercise of the Option will not constitute a breach
of the Merger Agreement or a failure by Grantee to perform its obligations under
the Merger Agreement.
3. Payment and Delivery of Certificate(s). At the closing of any
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purchase of any of the Option Shares hereunder, (a) Holder will pay to Issuer
the aggregate price for the Option Shares so purchased by certified or cashier's
check or wire transfer of immediately available funds and (b) Issuer will
deliver to Holder a duly issued certificate (or certificates in the
denominations designated by Holder in its notice of exercise) representing the
number of Option Shares purchased. The obligation of Issuer to deliver the
Option Shares at such closing will be subject only to the condition that no
preliminary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction will be in effect which would prohibit such sale
and delivery.
4. Notification of Record Date. Issuer will give Grantee at least ten
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business days' prior written notice before setting the record date for
determining the holders of record of Issuer Common Stock entitled to notice of,
or to vote on, any matter, to receive any dividend or distribution, or to
participate in any rights offering or other matters, or to receive any other
benefit or right, with respect to Issuer Common Stock.
5. Postponement of Meeting. If the Holder elects to exercise the Option
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granted hereunder after the record date set by Issuer for any shareholders'
meeting called to approve the Merger, or called for any other purpose, then,
subject to applicable law and Issuer's certificate of incorporation and bylaws,
Issuer will, upon request by Holder, promptly postpone the meeting to a later
date and set a later record date for such later meeting; provided, however, that
the record date for such later meeting will be a date that is not less than ten
nor more than thirty business days after the postponement of the originally
scheduled shareholders' meeting.
6. Representations and Warranties of Issuer. Issuer hereby represents
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and warrants to Grantee as follows:
(a) Due Authorization. This Agreement has been duly authorized
by all necessary corporate action on the part of Issuer, has been duly executed
by a duly authorized officer of Issuer and is valid, binding and enforceable
against Issuer in accordance with its terms.
(b) Option Shares. Issuer has taken all necessary corporate
action to authorize and reserve for issuance, upon exercise of the Option, the
Option Shares, and at all times from the date hereof through the date of the
exercise in full or the termination of the Option, Issuer will have reserved for
issuance upon exercise of the 38,749 shares of Issuer Common Stock. The Option
Shares, upon purchase by Holder, will be fully and validly issued, fully paid
and nonassessable, and delivered free and clear of all claims, liens,
encumbrances and security interests, including any preemptive or similar rights.
7. Representations and Warranties of Grantee. Grantee hereby represents
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and warrants to Issuer as follows:
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(a) Due Authorization. This Agreement has been duly
authorized by all necessary corporate action on the part of Grantee and has been
duly executed by a duly authorized officer of Grantee, and is valid, binding and
enforceable against Grantee in accordance with its terms.
(b) Investment Intent. Any Option Shares acquired upon
exercise of the Option will not be taken by Holder with a view to the public
distribution thereof, and will not be transferred, except in a transaction
registered or exempt from registration under the Securities Act of 1933 (the
"Securities Act").
8. Anti-dilution Provisions. In the event of any change in the
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outstanding Issuer Common Stock by reason of stock dividends, stock splits,
split-ups, mergers, recapitalizations, combinations, conversions, exchanges of
shares or otherwise, the number and kinds of shares or securities subject to the
Option and the purchase price per Option Share will be appropriately adjusted so
as to fairly and equitably preserve, as far as practicable, the original Option
rights granted hereby so that Holder will be entitled to purchase the number of
shares of Issuer Common Stock that will be equal to 19.99% of the then
outstanding shares of Issuer Common Stock (after giving effect to such exercise
and assuming all options and rights to purchase or convert into shares of Issuer
Common Stock will have been exercised and taking into account shares of Issuer
Common Stock held by Grantee or its subsidiaries on the date hereof) for an
aggregate purchase price of $8,137,290; provided that in no event shall the
number of shares for which this Option is exercisable exceed the lesser of (i)
19.99% of the issued and outstanding shares of Common Stock and (ii) such number
of shares of Common Stock that will avoid application of the provisions of
Subchapter E of Chapter 25 of the BCL. 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.
9. Transfer of Option to Issuer. If after the date hereof and
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before the Effective Time,
(a) one of the Exercise Events specified in Subsection 2(b)
(ii) will have occurred; or
(b) Issuer's shareholders have failed to approve the Merger
by the earlier of (i) the conclusion of such meeting of Issuer shareholders as
is called for the purpose of approving the Merger and (ii) December 31, 2001 and
there shall have occurred and be continuing any of the Exercise Events specified
in Subsection 2(b)(i), (iii) or (iv);
then Holder will have the right (whether or not the Option will have previously
terminated) to notify Issuer of its election to transfer the Option to Issuer
together with any shares of Issuer Common Stock purchased by Holder pursuant
hereto, and within two business days after the giving by Holder of such notice,
Issuer will pay to Holder the sum of (x) the Exercise Price paid by Holder for
any shares of Issuer Common Stock acquired pursuant to the Option; (y) the
difference between the "Market/Offer Price" for shares of Issuer Common Stock
(defined as the higher of the highest price per share at which a tender or
exchange offer has been made or the highest sale price for shares of Issuer
Common Stock on the principal trading market on which shares are traded, as
reported by a recognized source, or if there is no trading market for Issuer
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Common Stock, the highest sale price for shares of Issuer Common Stock as
determined by an independent valuation, during the 365-day period preceding the
notice of the required purchase under this Section (10) and the Exercise Price
paid by Holder for any shares of Issuer Common Stock purchased pursuant to the
exercise of the Option, multiplied by the number of shares so purchased, but
only if the Market/Offer Price is greater than such Exercise Price; and (z) the
difference between the Market/Offer Price and the Exercise Price of the Option,
multiplied by the number of shares of Issuer Common Stock with respect to which
the Option has not been exercised, but only if the Market/Offer Price is greater
than such exercise price, payable in immediately available funds, at which time
the Option will terminate.
10. Right of First Refusal.
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(a) At least five business days before making any sale or
other disposition of Option Shares, Holder will give Issuer a notice (the
"Disposition Notice") advising Issuer of the number and type of Option Shares
proposed to be disposed of and the proposed purchase price therefor, and, if
Holder then intends to tender such Shares into a tender or exchange offer by a
Person other than Holder or any subsidiary or affiliate of Holder, advising
Issuer of such specific offer to purchase such Shares, the price to be paid
thereunder and the identity of the offeror. For purposes hereof, a tender or
exchange offer to purchase Issuer Common Stock will be deemed to be an offer at
the price specified therein, without regard to any provisions thereof with
respect to proration or conditions to the offeror's obligation to purchase.
Issuer will have the right, exercisable by written notice given by Issuer to
Holder within five business days after receipt of the Disposition Notice, but in
no event later than 24 hours before the earlier of the proration date or the
date on which withdrawal rights expire for any such offer, to purchase (or to
cause its designee or designees to purchase) all, but not less than all, of the
Option Shares specified in such Disposition Notice for cash at the price set
forth therein. If the purchase price specified in the Disposition Notice
includes any property other than cash, such purchase price will be deemed to be
the amount of any cash included in the purchase price plus the value (as
determined by a nationally recognized investment banking firm mutually selected
by the parties whose fees will be borne equally by Issuer and Holder) of such
other property included in such price; provided that the time during which
Issuer must exercise its right of first refusal and consummate the purchase of
the Issuer Common Stock will not be affected by the time required to make such
determination.
(b) If Issuer exercises its right of first refusal hereunder,
the closing of the purchase of the Option Shares with respect to which such
right has been exercised will take place within two business days after Issuer
gives notice of such exercise, but no later than 6 hours before the earlier of
the proration date or the date on which withdrawal rights expire for any such
offer. Delivery of payment and certificates at such closing will be
substantially as set forth in Section 3 above; provided, however, that if the
determination of value of any noncash consideration has not yet been made, as to
that portion of the purchase price Issuer will pay an amount equal to such value
as estimated by the investment banking firm at closing, with an adjusting
payment to be made by the appropriate party when the final determination has
been made. If Issuer does not exercise its right of first refusal hereunder
within the time specified and pay to Holder the amount due for the Option
"shares subject to such right of first refusal, Holder will at all times
thereafter be free to sell the Option Share specified in such Disposition Notice
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to the offeror, if any, identified therein or to any other party, at the price
specified therein or at any price in excess thereof.
11. Specific Performance. Issuer and Grantee acknowledge that the
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Option granted to Grantee herein, the right of first refusal granted to Issuer
in Section 11 hereof and the Option Shares covered hereby, are unique and that
neither party hereto will have an adequate remedy at law if the other breaches
any covenant contained herein or fails to perform any of its obligations
hereunder. Accordingly, each party agrees that the other will have the right, in
addition to any other rights which it may have, to specific performance and
equitable and injunctive relief if the other party will fail or threaten to fail
to perform any of its obligations under this Agreement.
12. Miscellaneous.
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(a) Assignability. Grantee's rights hereunder may be
assigned to any subsidiary or affiliate of Grantee. Issuer may not assign its
rights hereunder without the prior written consent of Grantee, and any purported
assignment without such prior written consent will be null and void.
(b) Third Parties. Nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give to any third
party any rights or remedies by virtue of this Agreement or any exercise or
non-exercise of the Option granted hereby.
(c) Entire Agreement; Amendments. Except as otherwise
expressly provided herein, this Agreement contains the entire agreement of the
parties hereto with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(d) Notices. Except as otherwise expressly provided
herein, all notices, requests, claims, demands and other communications
hereunder will be in writing and will be furnished by hand delivery, by telegram
or telex, or by mail (registered or certified, postage prepaid, return receipt
requested) to the parties at the addresses set forth below. Any such notice
(except a notice pursuant to Section 10 hereof) will be deemed duly given upon
the date it is actually received by the party to whom notice is intended to be
given or is actually delivered at his address as shown below:
If to Issuer:
Xxxxx X. Xxxxxxx
Chairman, President and Chief Executive Officer
FNH Corporation
00 Xxxxxx Xxxx
Xxxxx, XX 00000
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with a copy to:
Xxxxxxx X. Xxxx, Esq.
Xxxxxxxx Xxxxxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
If to Grantee:
Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
Promistar Financial Corporation
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxx Xxxxxx Xxxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx, LLP
Xxxxx X. Xxxxxx Building
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
The addresses set forth above may be changed by any party upon furnishing to the
other party a notice of change of address in accordance with the terms of this
paragraph.
(e) Governing Law. This Agreement will be governed by
and construed in accordance with the substantive law of the Commonwealth of
Pennsylvania applicable to contracts made and to be performed in such state.
(f) Counterparts. This Agreement may be executed in
several counterparts, each of which will be an original, but all of which
together will constitute one and the same agreement.
(g) Effect of Headings. The section and paragraph
headings herein are for convenience only and will not affect the construction
hereof.
(h) Time of the Essence. The parties agree that time
will be of the essence in the performance of obligations hereunder.
(i) Severability. If any term, provision, covenant
or restriction contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions contained herein will remain in full force and effect, and will in
no way be effected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option will not permit Holder to acquire
or Issuer to repurchase pursuant to Section 10 the full number of shares of
Issuer Common Stock provided in Section 8 hereof (as adjusted pursuant to
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Section 8 hereof), it is the express intention of Issuer to allow Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without amendment or modification hereof.
(j) Definitions. Capitalized Terms used but not defined
herein will have the meanings ascribed to them in the Merger Agreement.
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IN WITNESS WHEREOF, Grantee and Issuer have caused this Agreement to be
duly executed on the day and year first above written.
ATTEST FNH Corporation
By /s/ V. Xxxxx Xxxxxxx By /s/ Xxxxx X. Xxxxxxx
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V. Xxxxx XxXxxxx Xxxxx X. Xxxxxxx
Secretary Chairman, President and
Chief Executive Officer
(Corporate Seal)
Promistar Financial Corporation
By /s/ Xxxxxxx X. Xxxx By /s/ Xxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxx Xxxx X. Xxxxxxxx
Secretary Chairman and
Chief Executive Officer
(Corporate Seal)
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