STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of May 29, 1998 (the
"Agreement"), by and between Xxxxx Bancorp, Inc. ("Grantee") ,
and Columbian Bank, A Federal Savings Bank ("Issuer").
WITNESSETH:
WHEREAS, Issuer and Grantee have entered into a
Reorganization and Merger Agreement dated as of May 29, 1998
(the "Merger Agreement"), providing for, among other things, the
merger of Issuer with a to-be-formed subsidiary of Grantee (the
"Merger"); and
WHEREAS, as a condition and inducement to Grantee's
execution of the Merger Agreement, Grantee has required that
Issuer agree, and Issuer has agreed, to grant to Grantee the
Option (as hereinafter defined); and
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth herein and in the Merger Agreement, and intending to
be legally bound hereby, Issuer and Grantee agree as follows:
1. DEFINED TERMS. Capitalized terms which are used but
not defined herein shall have the meanings ascribed to such
terms in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions
set forth herein, Issuer hereby grants to Grantee an irrevocable
option (the "Option") to purchase up to 14,993 shares (as
adjusted as set forth herein) (the "Option Shares," which shall
include the Option Shares before and after any transfer of such
Option Shares) of Common Stock, par value $1.00 per share
("Issuer Common Stock"), of Issuer at a purchase price per
Option Share (the "Purchase Price") of $29.50 provided, however,
that in no event shall the number of Option Shares for which the
Option is exercisable exceed 19.9% of the issued and outstanding
shares of Issuer Common Stock without giving effect to any
shares subject to or issued pursuant to the Option.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the
agreements or covenants contained in this Agreement or the
Merger Agreement, and (ii) no preliminary or permanent
injunction or other order against the delivery of shares covered
by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, Holder may exercise the
Option, in whole or in part, but only if both a Preliminary
Purchase Event (as hereinafter defined) and a Purchase Event (as
hereinafter defined) shall have
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occurred; provided, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of:
(A) the Effective Date of the Merger;
(B) termination of the Merger Agreement in accordance
with the terms thereof prior to the occurrence of
a Purchase Event or a Preliminary Purchase Event
(as hereinafter defined), other than a
termination of the Merger Agreement by Grantee
based upon a willful breach by Issuer of any of
its representations, warranties, covenants or
agreements set forth in the Merger Agreement (a
"Default Termination"),
(C) 12 months after the termination of the Merger
Agreement by Grantee pursuant to a Default
Termination; and
(D) 12 months after termination of the Merger
Agreement (other than pursuant to a Default
Termination) following the occurrence of a
Purchase Event or a Preliminary Purchase Event;
provided further, that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this
Section 3) within six (6) months following such Purchase Event;
and provided, further, that any purchase of shares upon exercise
of the Option shall be subject to compliance with applicable
laws, including without limitation the Home Owners Loan Act, as
amended ("HOLA"), and the Bank Merger Act, as amended ("Bank
Merger Act"). The term "Holder" shall mean the holder or
holders of the Option from time to time. The Grantee is the
initial Holder. The rights set forth in Section 8 hereof shall
terminate when the right to exercise the Option terminates
(other than as a result of a complete exercise of the Option) as
set forth above.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any subsidiary
of Grantee) shall have acquired beneficial ownership (as
such term is defined in Rule 13d-3 promulgated under the
Exchange Act) of or the right to acquire beneficial
ownership of, any "group" (as such term is defined in
Section 13(d) (3) of the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire
beneficial ownership of, 25% or more of the then
outstanding shares of Issuer Common Stock.
(ii) the occurrence of the Preliminary Purchase Event
described in clause (i) of subsection (c) of this Section
2, except that the percentage referred to in clause (C)
thereof shall be 15%.
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(c) As used herein, a "Preliminary Purchase Event" means
any of the following events:
(i) without Grantee's prior written consent, Issuer
shall have authorized, recommended or publicly proposed,
or publicly announced an intention to authorize, recommend
or propose, or entered into an agreement with any person
(other than Grantee or any subsidiary of Grantee) to
effect (A) a merger, consolidation or similar transaction
involving Issuer or any of its subsidiaries, (B) the
disposition, by sale, lease, exchange or otherwise, of
assets of Issuer or any of its subsidiaries representing
in either case 10% or more of the consolidated assets of
Issuer and its subsidiaries, or (C) the issuance, sale or
other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of
Issuer or any of its subsidiaries (any of the foregoing an
"Acquisition Transaction"); or
(ii) any person (other than the Grantee or a Grantee
Subsidiary) shall have acquired beneficial ownership (as
such term is defined in Rule 13d-3 promulgated under the
Exchange Act) of, or the right to acquire beneficial
ownership of, any "group" (as such term is defined in
Section 13(d)(3) of the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire
beneficial ownership of 10% or more of the then-
outstanding shares of Issuer Common Stock.
(iii) any person (other than Grantee or any subsidiary
of Grantee) shall have commenced (as such term is defined
in Rule 14d-2 under the Exchange Act), or shall have filed
a registration statement under the Securities Act with
respect to, a tender offer or exchange offer to purchase
any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or
control 10% or more of the then outstanding shares of
Issuer Common Stock (such an offer being referred to
herein as a "Tender Offer" and an "Exchange Offer,"
respectively); or
(iv) (A) the holders of Issuer Common Stock shall not
have approved the Merger Agreement at the meeting of such
stockholders held for the purpose of voting on the Merger
Agreement, (B) such meeting shall not have been held or
shall have been canceled prior to termination of the
Merger Agreement or (C) Issuer's Board of Directors shall
have withdrawn or modified in a manner adverse to Grantee
the recommendation of Issuer's Board of Directors with
respect to the Merger Agreement, in each case after it
shall have been publicly announced that any person (other
than Grantee or any subsidiary of Grantee) shall have (x)
made, or disclosed an intention to make, a proposal to
engage in an Acquisition Transaction, (y) commenced a
Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer, or (z)
filed an application (or given notice), whether in draft
or final form, under the HOLA, the Bank Merger Act or the
Change in Bank Control Act of 1978, as amended, for
approval to engage in an Acquisition Transaction; or
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(v) Issuer shall have intentionally and knowingly
breached any representation, warranty, covenant or
agreement contained in the Merger Agreement and such
breach would entitle Grantee to terminate the Merger
Agreement pursuant to Subsection5.4(b) of the Merger
Agreement after (x) a bona fide proposal is made by any
person (other than Grantee or any subsidiary of Grantee) to
Issuer or its stockholders to engage in an Acquisition
Transaction, (y) any person (other than Grantee or any
Subsidiary of Grantee) states its intention to Issuer or
its stockholders to make a proposal to engage in an
Acquisition Transaction if the Merger Agreement terminates
or (z) any person (other than Grantee or any subsidiary of
Grantee) shall have filed an application or notice with
any governmental entity to engage in an Acquisition
Transaction.
As used in this Agreement, "person" shall have the meaning
specified in Section 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Preliminary Purchase Event or Purchase
Event, it being understood that the giving of such notice by
Issuer shall not be a condition to the right of Holder to
exercise the Option.
(e) In the event Holder wishes to exercise the Option,
it shall send to Issuer a written notice (the date of which
being herein referred to as the "Notice Date") specifying (i)
the total number of Option Shares it intends to purchase
pursuant to such exercise, and (ii) a place and date not earlier
than three business days nor later than 15 business days from
the Notice Date for the closing (the "Closing") of such purchase
(the "Closing Date"). If prior notification to or approval of
the Office of Thrift Supervision ("OTS"), the Federal Deposit
Insurance Corporation, or any other governmental entity is
required in connection with such purchase, Issuer shall
cooperate with Grantee in the filing of the required notice of
application for approval and the obtaining of such approval and
the Closing shall occur immediately following such regulatory
approvals (and any mandatory waiting periods).
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to
Issuer, in immediately available funds by wire transfer to a
bank account designated by Issuer, an amount equal to the
Purchase Price multiplied by the number of Option Shares to be
purchased on such Closing Date, and (ii) present and surrender
this Agreement to Issuer at the address of Issuer specified in
Section 12(f) hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as
provided in Section 4(a), (i) Issuer shall deliver to Holder (A)
a certificate or certificates representing the Option Shares to
be purchased at such Closing, which Option Shares shall be free
and clear of all liens, claims, charges and encumbrances of any
kind whatsoever and subject to no preemptive rights, and (B) if
the Option is exercised in part only, an executed new agreement
with the same terms as this Agreement evidencing the right to
purchase the balance of shares of Issuer Common Stock
purchasable hereunder, and (ii) Holder shall deliver to
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Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of
applicable federal and state law or of the provisions of this
Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at
each Closing shall be endorsed with a restrictive legend which
shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED MAY
29, 1998. A COPY OF SUCH AGREEMENT WILL BE PROVIDED
TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY
ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without such
legend if Holder shall have delivered to Issuer a copy of a
letter from the staff of the Commission, or an opinion of
counsel in form and substance reasonably satisfactory to Issuer
and its counsel, to the effect that such legend is not required
for purposes of the Securities Act.
(d) Upon the giving by Holder to Issuer of the written
notice of exercise of the Option provided for under Section
3(e), the tender of the applicable purchase price in immediately
available funds and the tender of this Agreement to Issuer,
Holder shall be deemed to be the holder of record of the shares
of Issuer 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
Issuer Common Stock shall not then be actually delivered to
Holder.
(e) Issuer agrees (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Issuer Common Stock so that the
Option may be exercised without additional authorization of
Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase
Issuer 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 (A) complying with all premerger
notification, reporting and waiting period requirements and (B)
in the event prior approval of or notice to any governmental
entity is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or
notices and providing such information to such governmental
entity as it may require) in order to permit Holder to exercise
the Option and Issuer duly and effectively to issue shares of
Issuer Common Stock pursuant hereto, and (iv) promptly to take
all action provided herein to protect the rights of Holder
against dilution.
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5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer
hereby represents and warrants to Grantee (and Holder, if
different that Grantee) as follows:
(a) DUE AUTHORIZATION. Issuer has a requisite corporate
power and authority to enter into this Agreement, and subject to
any approvals referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate
action on the part of Issuer, and this Agreement has been duly
executed and delivered by Issuer.
(b) NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated
hereby and compliance by Issuer with any of the provisions
hereof will not (i) conflict with or result in a breach of any
provision of its Charter or Bylaws or a default (or give rise to
any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, bond,
debenture, mortgage, indenture, license, material agreement or
other material instrument or obligations to which Issuer is a
party, or by which it or any of its properties or assets may be
bound, or (ii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Issuer or any of its
properties or assets.
(c) AUTHORIZED STOCK. Issuer has taken all necessary
corporate and other action to authorize and reserve and to
permit it to issue, and at all times from the date hereof until
the obligation to deliver Issuer Common Stock upon the exercise
of the Option terminates, will have reserved for issuance upon
exercise of the Option that number of shares of Issuer Common
Stock equal to the maximum number of shares of Issuer Common
Stock at any time and from time to time purchasable upon
exercise of the Option, and all such shares, upon issuance
pursuant to the Option, will be duly and validly issued, fully
paid and nonassessable, and will delivered free and clear of all
liens, claims, charges and encumbrances of any kind or nature
whatsoever and not subject to any preemptive rights.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee
hereby represents and warrants to Issuer that 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, and
this Agreement has been duly executed and delivered by Grantee.
7. ADJUSTMENT UPON CHANGES IN ISSUER CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by
reason of a stock dividend, stock split, split-up,
recapitalization, combination, exchange of shares or similar
transaction, the type and number of shares or securities subject
to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in
the agreements governing such transactions so that Holder shall
receive, upon exercise of the Option, the number and class of
shares or other securities or property that Holder would have
received in respect of Issuer Common Stock
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if the Option has been exercised immediately prior to such
event, or the record date therefor, as applicable. If any
additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a)), the
number of shares of Issuer Common Stock subject to the Option
shall be adjusted so that, after such issuance, it, together
with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer
Common Stock then issued and outstanding, without giving effect
to any shares subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter into an
agreement: (i) to consolidate with or merge into any person,
other than Grantee or one of its subsidiaries, and shall not be
the continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Issuer Common Stock
shall be changed into or exchanged for stock or other securities
of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior
to such merger shall after such merger represent less than 50%
of the outstanding shares and share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than
Grantee or one of its subsidiaries, then, and in each such case,
the agreement governing such transactions shall make proper
provisions so that the Option shall, upon the consummation of
any such transaction and upon the terms and condition set forth
herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Holder, of any of (x)
the Acquiring Corporation (as hereinafter defined), (y) any
person that controls the Acquiring Corporation or (z) in the
case of a merger described in clause (ii), Issuer (such person
being referred to as "Substitute Option Issuer").
(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 Holder. Substitute Option Issuer also shall
enter into an agreement with Holder 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 hereinafter
defined) as is equal to the Assigned Value (as hereinafter
defined) multiplied by the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable, divided
by the Average Price (as hereinafter defined). The exercise
price of Substitute Option per share of Substitute Common Stock
(the "Substitute Option Price") shall then be equal to the
Purchase Price multiplied by a fraction in which the numerator
is the number of shares of Issuer Common Stock for which the
Option was theretofore exercisable and the denominator is the
number of shares of the Substitute Common Stock for which the
Substitute Option is exercisable.
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(e) 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, or (iii) the transferee of all or substantially
all of Issuer's assets (or a substantial part of the
assets of its subsidiaries taken as a whole).
(2) "Substitute Common Stock" shall mean the shares of
capital stock (or similar equity interest) with the
greatest voting power in respect of the election of
directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute
Option Issuer.
(3) "Assigned Value" shall mean the highest of (w) the
price per share of Issuer Common Stock at which a Tender
Offer or an Exchange Offer therefor has been made, (x) the
price per share of Issuer Common Stock to be paid by any
third party pursuant to an agreement with Issuer, (y) the
highest closing price for shares of Issuer Common Stock
within the six-month period immediately preceding the
consolidation, merger or sale in question and (z) in the
event of a sale of all or substantially all of Issuer's
assets or deposits, an amount equal to (i) the sum of the
price paid in such sale for such assets (and/or deposits)
and the current market value of the remaining assets of
Issuer, as determined by a nationally-recognized
investment banking firm selected by Holder, divided by
(ii) the number of shares of Issuer Common Stock
outstanding at such time. In the event that a Tender
Offer or an Exchange Offer is made for Issuer Common Stock
or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the
value of securities or other property issuable or
deliverable in exchange for Issuer Common Stock shall be
determined by a nationally-recognized investment banking
firm selected by Holder.
(4) "Average Price" shall mean the average closing
price of a share of 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 Issuer, the person merging into
Issuer or by any company which controls such person, as
Holder may elect.
(f) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the aggregate of the shares of Substitute Common
Stock outstanding prior to exercise of the Substitute Option.
(g) Issuer shall not enter into any transaction
described in Section 7(b) unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder and take all
other actions that may be necessary so that the provisions of
this Section 7 are given full force and effect (including,
without limitations, any action that may
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be necessary so that the holders of the other shares of common
stock issued by Substitute Option Issuer are not entitled to
exercise any rights by reason of the issuance or exercise of the
Substitute Option and the shares of Substitute Common Stock are
otherwise in no way distinguishable from or have lesser economic
value (other than any diminution in value resulting from the
fact that the shares of Substitute Common Stock are restricted
securities, as defined in Rule 144 under the Securities Act or
any successor provision) than other shares of common stock
issued by Substitute Option Issuer).
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to the last sentence of Section 3(a), at the
request of Holder at any time commencing upon the first
occurrence of a Repurchase Event (as defined in Section 8(d))
and ending 12 months immediately thereafter, Issuer shall
repurchase from Holder (i) the Option and (ii) all shares of
Issuer Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date
on which Holder exercises its rights under this Section 8 is
referred to as the "Request Date." Such repurchase shall be at
an aggregate price (the "Section 8 Repurchase Consideration")
equal to the sum of:
(i) the aggregate Purchase Price paid by Holder
for any shares of Issuer Common Stock acquired
pursuant to the Option with respect to which Holder
then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable
Price (as defined below) for each share of Issuer
Common Stock over (y) the Purchase Price (subject to
adjustment pursuant to Section 7), multiplied by the
number of shares of Issuer Common Stock with respect
to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price
over the Purchase Price (subject to adjustment
pursuant to Section 7) paid (or, in the case of
Option Shares with respect to which the Option has
been exercised but the Closing Date has not
occurred, payable) by Holder for each share of
Issuer Common Stock with respect to which the Option
has been exercised and with respect to which Holder
then has beneficial ownership, multiplied by the
number of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within 10 business days after the Request Date,
pay the Section 8 Repurchase Consideration to Holder in
immediately available funds, and contemporaneously with such
payment Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has
beneficial ownership, and shall warrant that it has sole record
and beneficial ownership of such shares and that the same are
then free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever. Notwithstanding the
foregoing, to the extent that prior notification to or approval
of the OTS, the Federal Deposit Insurance Corporation or any
other governmental entity is required in connection with the
payment of all or any portion of the Section
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8 Repurchase Consideration, Holder shall have the ongoing option
to revoke its request for repurchase pursuant to Section 8, in
whole or in part, or to require that Issuer deliver from time to
time that portion of the Section 8 Repurchase Consideration that
it is not then so prohibited from paying and promptly file the
required notice or application for approval and expeditiously
process the same (and each party shall cooperate with the other
in the filing of any such notice or application and the
obtaining of any such approval). If the OTS, the Federal
Deposit Insurance Corporation or any other governmental entity
disapproves of any part of Issuer's proposed repurchase pursuant
to this Section 8, Issuer shall promptly give notice of such
fact to Holder. If the OTS, the Federal Deposit Insurance
Corporation or any other governmental entity prohibits the
repurchase in part but not in whole, then Holder shall have the
right (i) to revoke the repurchase request or (ii) to the extent
permitted by the OTS, the Federal Deposit Insurance Corporation
or other governmental entity, determine whether the repurchase
should apply to the Option and/or Option Shares and to what
extent to each, and Holder shall thereupon have the right to
exercise the Option as to the number of Option Shares for which
the Option was exercisable at the Request Date less the sum of
the number of shares covered by the Option in respect of which
payment has been made pursuant to Section 8(a)(ii) and the
number of shares covered by the portion of the Option (if any)
that has been repurchased. Holder shall notify Issuer of its
determination under the preceding sentence within five business
days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of
Grantee's rights under this Section 8 shall terminate on the
date of termination of the Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest price per share of
Issuer Common Stock paid for any such share by the person or
groups described in Section 8(d)(i), (ii) the price per share of
Issuer Common Stock received by holders of Issuer Common Stock
in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii),
or (iii) the highest sales price per share of Issuer Common
Stock during the year preceding the Request Date; provided,
however, that in the event of a sale of less than all of
Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market
value of the remaining assets of Issuer as determined by a
nationally-recognized investment banking firm selected by
Holder, divided by the number of shares of Issuer Common Stock
outstanding at the time of such sale. If the consideration to
be offered, paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an
independent nationally-recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this
Agreement.
(d) As used herein, a "Repurchase Event" shall occur if
(i) any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership of (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act), or
the right to acquire beneficial ownership of, or any "group" (as
such term is defined in Section 13(d)(3) of the Exchange Act)
shall have been formed which beneficially owns or has the right
to acquire beneficial ownership of, 50% or more of
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the then outstanding shares of Issuer Common Stock, or (ii) any
of the transactions described in Section 7(b)(i), Section
7(b)(ii) or Section 7(b)(iii) shall be consummated.
9. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. Issuer shall, subject
to conditions of Section 9(c), if requested by any Holder, as
expeditiously as possible prepare and file a registration
statement under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities
that have been acquired by or are issuable to Holder upon
exercise of the Option in accordance with the intended method of
sale or other disposition stated by Holder in such request,
including without limitation a "shelf" registration statement
under Rule 415 under the Securities Act or any successor
provision, and Issuer shall use its best efforts to qualify such
shares or other securities for sale under any applicable state
securities laws.
(b) ADDITIONAL REGISTRATION RIGHTS. If Issuer at any
time after the exercise of the Option proposes to register any
shares of Issuer Common Stock under the Securities Act in
connection with an underwritten public offering of such Issuer
Common Stock, Issuer will promptly give written notice to Holder
of its intention to do so and, upon the written request of
Holder given within 30 days after receipt of any such notice
(which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public
offering by Holder), Issuer will cause all such shares for which
a Holder shall have requested participation in such registration
to be so registered and included in such underwritten public
offering; provided, however, that Issuer may elect to not cause
any such shares to be so registered (i) if the underwriters in
good faith object for valid business reasons, or (ii) in the
case of a registration solely to implement an employee benefit
plan or a registration filed on Form S-4 under the Securities
Act or any successor form; provided, further, however, that such
election pursuant to clause (i) may only be made on time. If
some but not all the shares of Issuer Common Stock with respect
to which Issuer shall have received requests for registration
pursuant to this Section 9(b) shall be excluded from such
registration, Issuer shall make appropriate allocation of shares
to be registered among Holders permitted to register their
shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of
shares requested to be registered by each such Holder bears to
the total number of shares requested to be registered by all
such Holders then desiring to have Issuer Common Stock
registered for sale.
(c) CONDITIONS TO REQUIRED REGISTRATION. Issuer shall
use all reasonable efforts to cause each registration statement
referred to in Section 9(a) to become effective and to obtain
all consents or waivers of other parties which are required
therefor and to keep such registration statement effective;
provided, however, that Issuer may delay any registration or
Option Shares required pursuant to Section 9(a) for a period not
exceeding 90 days if Issuer shall in good faith determine that
any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the
Securities Act pursuant to Section 9(a):
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(i) prior to the earliest of (A) termination of
the Merger Agreement pursuant to the terms thereof,
and (B) a Purchase Event or a Preliminary Purchase
Event;
(ii) on more than one occasion during any
calendar year and on more than two occasions in
total;
(iii) within 90 days after the effective date of
a registration referred to in Section 9(b) pursuant
to which the Holder or Holders concerned were
afforded the opportunity to register such shares
under the Securities Act and such shares were
registered as requested; and
(iv) unless a request therefor is made to Issuer
by the Holder or Holders of at least 25% or more of
the aggregate number of Option Shares (including
shares of Issuer Common Stock issuable upon exercise
of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required
to maintain the effectiveness of any registration statement
after the expiration of nine months from the effective date of
such registration statement. Issuer shall use all reasonable
efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so
registered in accordance with the intended method of
distribution for such shares, provided, however, that Issuer
shall not be required to consent to general jurisdiction or to
qualify to do business in any state where it is not otherwise
required to so consent to such jurisdiction or to so qualify to
do business.
(d) EXPENSES. Issuer will pay all expenses (including
without limitation registration fees, qualification fees, blue
sky fees and expenses, accounting expenses, legal expenses and
printing expenses incurred by it) in connection with each
registration pursuant to Section 9(a) or (b) and all other
qualifications, notification or exemptions pursuant to Section
9(a) or (b). Underwriting discounts and commissions relating to
Option Shares, fees and disbursements of counsel to the
Holder(s) of Option Shares being registered and any other
expenses incurred by such Holder(s) in connection with any such
registration shall be borne by such Holder(s).
(e) INDEMNIFICATION. In connection with any registration
under Section 9(a) or (b), Issuer hereby indemnifies each
Holder, and each underwriter thereof, including each person, if
any, who controls such Holder or underwriter within the meaning
of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement of a material fact contained in any
registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) or
any preliminary prospectus, or caused by any omission, or
alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading, except insofar as such expenses, losses, claims,
damages or liabilities of such indemnified party are caused by
any untrue statement or alleged untrue statement that was
included by Issuer in any such registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto)
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in reliance upon, and in conformity with, information furnished
in writing to Issuer by such indemnified party expressly for use
therein, and Issuer and each officer, director and controlling
person of Issuer shall be indemnified by such Holder, or by such
underwriter, as the case may be, for all such expenses, losses,
claims, damages and liabilities caused by any untrue, or alleged
untrue, statement that was included by Issuer in any such
registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in
reliance upon, and in conformity with, information furnished in
writing to Issuer by such Holder or such underwriter, as the
case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
Section 9(e) of notice of the commencement of any action against
such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under
this Section 9(e), such indemnified party shall notify the
indemnifying party in writing of the commencement of such
action, but, except to the extent of any actual prejudice to the
indemnifying party, the failure to so notify the indemnifying
party shall not relieve it of any liability which it may
otherwise have to any indemnified party under this Section 9(e).
In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying
party shall be entitled to participate in and, to the extent it
may wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own
expense, with counsel chosen by it and reasonably satisfactory
to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of
such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the
indemnifying party agrees to pay the same, (ii) the indemnifying
party fails to assume the defense of such action with counsel
reasonably satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more
legal defenses may be available to the indemnifying party that
may be contrary to the interest of the indemnified party, in
wich case the indemnifying party shall be entitled to assume the
defense of such action notwithstanding its obligations to bear
fees and expenses of such counsel. No indemnifying party shall
be liable for any settlement entered into without its consent,
which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 9(e)
is unavailable to a party otherwise entitled to be indemnified
in respect of any expenses, losses, claims, damages or
liabilities referred to herein, then the indemnifying party, in
lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by
such party to be indemnified as a result of such expenses,
losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative benefits received by Issuer,
the selling Holders and the underwriters from the offering of
the securities and also the relative fault of Issuer, the
selling Holders and the underwriters in connection with the
statement or omissions which results in such expenses, losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations. The amount paid or payable by a party
as a result of the expenses, losses, claims, damages and
liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action
or claim; provided, however, that in
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no case shall the selling Holders be responsible, in the
aggregate, for any amount in excess of the net offering proceeds
attributable to its Option Shares included in the offering. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(g) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Any obligation by any Holder
to indemnify shall be several and not joint with other Holders.
In connection with any registration pursuant to Section
9(a) or (b) above, Issuer and each selling Holder (other than
Grantee) shall enter into an agreement containing the
indemnification provisions of this Section 9(e).
(f) MISCELLANEOUS REPORTING. Issuer shall comply with
all reporting requirements and will do all such other things as
may be necessary to permit the expeditious sale at any time of
any Option Shares by the Holder(s) in accordance with and to the
extent permitted by any rule or regulation permitting
nonregistered sales of securities promulgated by the Commission
from time to time, including, without limitation, Rule 144A.
Issuer shall at its expense provide the Holder with any
information necessary in connection with the completion and
filing of any reports or forms required to be filed by them
under the Securities Act or the Exchange Act, or required
pursuant to any state securities laws or the rules of any stock
exchange.
(g) ISSUER TAXES. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares
and in connection with the exercise of the Option, and will save
any Holder harmless, without limitation as to time, against any
and all liabilities, with respect to all such taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any
other securities to be acquired upon exercise of the Option are
then authorized for quotation or trading or listing on
NASDAQ/NMS or any securities exchange, Issuer, upon the request
of Holder, will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of
Issuer Common Stock or other securities to be acquired upon
exercise of the Option on NASDAQ/NMS or such other securities
exchange and will use its best efforts to obtain approval, if
required, of such quotation or listing as soon as practicable.
11. DIVISION OF OPTION. Upon the occurrence of a
Purchase Event or a Preliminary Purchase Event, 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 the
Issuer for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase in the
aggregate the same number of shares of Issuer Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any other Agreements and related Options for
which this Agreement (and the Option granted hereby) maybe
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
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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.
12. MISCELLANEOUS
(a) EXPENSES. Except as otherwise provided in Section
9, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses
of its own financial consultants, investment bankers,
accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this
Agreement may be waived at any time by the party that is
entitled to the benefits of such provision. This Agreement may
not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by
the parties hereto.
(c) ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES;
SEVERABILITY. This Agreement, together with the Merger
Agreement and the other documents and instruments referred to
herein and therein, between Grantee and Issuer (i) constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof, and (ii) is not intended
to confer upon any person other than the parties hereto (other
than the indemnified parties under Section 9(e) and any
transferee of the Option Shares or any permitted transferee of
this Agreement pursuant to Section 12(h)) any rights or remedies
hereunder. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or a
federal or state regulatory agency to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or
invalidated. If for any reason such court or regulatory agency
determines that the Option does not permit Holder to acquire, or
does not require Issuer to repurchase, the full number of shares
of Issuer Common Stock as provided in Sections 3 and 8 (as
adjusted pursuant to Section 7), it is the express intention of
Issuer to allow Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Maryland
without regard to any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings
contained herein are for convenience of reference only and shall
not affect in any way the meaning or interpretation of this
Agreement.
(f) NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (with confirmation) or sent by
overnight mail service or mailed by registered or certified mail
(return receipt requested) postage prepaid, to the parties at
the following address (or at such other address for a party as
shall be specified by like notice):
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If to Grantee: Xxxxx Bancorp, Inc.
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, President
With a required copy to: Housley Kantarian & Xxxxxxxxx, P.C.
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxx, Esquire
If to Issuer: Columbian Bank, A Federal Savings Bank
000-000 Xx. Xxxx Xxxxxx
Xxxxx xx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, President
With a required copy to: Xxxxx Xxxx
0000 Xxxxxxxxxxx Xxxxxx, X.X.,
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxx, Esquire
(g) COUNTERPARTS. This Agreement and any amendments
hereto may be executed in two counterparts, each of which shall
be considered one and the same agreement and shall become
effective when both counterparts have been signed, it being
understood that both parties need not sign the same counterpart.
(h) ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option
shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent
of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its
rights hereunder in whole or in part after the occurrence of a
Purchase Event. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successor and
assigns.
(i) FURTHER ASSURANCES. In the event of any exercise
of the Option by Holder, Issuer and Holder shall execute and
deliver all other documents and instruments and take all other
action that may be reasonably necessary in order to consummate
the transactions provided for by such exercise.
(j) SPECIFIC PERFORMANCE. The parties hereto agree that
this Agreement may be enforced by either party through specific
performance, injunctive relief and other equitable relief. Both
parties further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have
for any failure to perform this Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this
Stock Option Agreement to be signed by their respective officers
thereunto duly authorized, all as of the day and year first
written above.
XXXXX BANCORP, INC.
By: /s/ Xxxx Xxxxx Xxxxxx
_________________________
Xxxx Xxxxx Xxxxxx
President
COLUMBIAN BANK, A FEDERAL
SAVINGS BANK
By: /s/ Xxxxxx X. Xxxxxx
_________________________
Xxxxxx X. Xxxxxx
President
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