STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated May 6, 1995, between WEST ONE
BANCORP, an Idaho corporation ("Issuer"), and U. S. BANCORP, an
Oregon corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger dated May 5, 1995 (the "Merger Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms
hereof, up to 7,330,184 fully paid and nonassessable shares of
Issuer's Common Stock, $5 par value per share ("Common Stock"), at
a price of $34.00 per share (the "Option Price"); provided further
that in no event shall the number of shares of Common Stock for
which this Option is exercisable exceed 19.9 percent of the
Issuer's issued and outstanding shares of Common Stock. 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 issued or otherwise become outstanding after the date of
this Agreement (other than pursuant to this Agreement), the number
of shares of Common Stock subject to the Option shall be increased
so that, after such issuance, it equals 19.9 percent of the number
of shares of Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the
Option. Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize Issuer or Grantee to
breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or in part, and from time to time, if, but only
if, both an Initial Triggering Event (as hereinafter defined) and a
Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event
(as hereinafter defined), provided that the Holder shall have sent
the written notice of such exercise (as provided in
subsection (e) of this Section 2) within 90 days following such
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Subsequent Triggering Event. Each of the following shall be an
Exercise Termination Event: (i) the Effective Time of the Merger;
(ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event except a termination by
Grantee pursuant to Section 8.1(d) of the Merger Agreement (unless
the breach by Issuer giving rise to such right of termination is
non-volitional); (iii) the passage of 12 months after termination
of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless the
breach by Issuer giving rise to such right of termination is non-
volitional) (provided that if an Initial Triggering Event continues
or occurs beyond such termination and prior to the passage of such
12-month period, the Exercise Termination Event shall be 12 months
from the expiration of the Last Triggering Event but in no event
more than 18 months after such termination) or (iv) the third
anniversary of the date hereof. The "Last Triggering Event" shall
mean the last Initial Triggering Event to expire. The term
"Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person
(the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or
any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer
shall have recommended that the stockholders of
Issuer approve or accept any such Acquisition
Transaction. For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving
Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease, or other acquisition
of all or a substantial portion of the assets of
Issuer or any Significant Subsidiary of Issuer,
(y) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or
otherwise) of securities representing 10 percent or
more of the voting power of Issuer or any
Significant Subsidiary of Issuer, or (z) any
substantially similar transaction; provided,
however, that in no event shall any (i) merger,
consolidation, or similar transaction involving
Issuer or any Significant Subsidiary in which the
voting securities of Issuer outstanding immediately
prior thereto continue to represent (by either
remaining outstanding or being converted into the
voting securities of the surviving entity of any
such transaction) at least 65 percent of the
combined voting power of the voting securities of
the Issuer or the surviving entity outstanding
immediately after the consummation of such merger,
consolidation, or similar transaction, or (ii) any
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merger, consolidation, purchase, or similar
transaction involving only the Issuer and one or more of
its Subsidiaries or involving only any two or more of
such Subsidiaries, be deemed to be an Acquisition
Transaction, provided any such transaction is not
entered into in violation of the terms of the Merger
Agreement;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent,
shall have authorized, recommended, proposed, or
publicly announced its intention to authorize,
recommend, or propose, to engage in an Acquisition
Transaction with any person other than Grantee or a
Grantee Subsidiary, or the Board of Directors of
Issuer shall have publicly withdrawn or modified, or
publicly announced its interest to withdraw or
modify, in any manner adverse to Grantee, its
recommendation that the stockholders of Issuer
approve the transactions contemplated by the Merger
Agreement;
(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 15 percent or more of the outstanding
shares of Common Stock (the term "beneficial
ownership" for purposes of this Option Agreement
having the meaning assigned thereto in Section 13(d)
of the 1934 Act, and the rules and regulations
thereunder);
(iv) Any person other than Grantee or any
Grantee Subsidiary shall have made a bona fide
proposal to Issuer or its stockholders by public
announcement or written communication that is or
becomes the subject of public disclosure to engage
in an Acquisition Transaction;
(v) After an overture is made by a third party
to Issuer or its stockholders to engage in an
Acquisition Transaction, Issuer shall have breached
any covenant or obligation contained in the Merger
Agreement and such breach (x) would entitle Grantee
to terminate the Merger Agreement and (y) shall not
have been cured prior to the Notice Date (as defined
below); or
(vi) Any person other than Grantee or any
Grantee Subsidiary, other than in connection with a
transaction to which Grantee has given its prior
written consent, shall have filed an application or
notice with the Federal Reserve Board, or other
federal or state bank regulatory authority, which
application or notice has been accepted for
processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean
either of the following events or transactions occurring after
the date hereof:
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(i) The acquisition by any person of
beneficial ownership of 25 percent or more of the
then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in clause (i) of subsection (b) of
this Section 2, except that the percentage referred
to in clause (y) shall be 25 percent.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent
Triggering Event (together, a "Triggering Event"), it being
understood that the giving of such notice by Issuer shall not be
a condition to the right of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes
to exercise the Option, it shall send to Issuer a written notice
(the date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it will purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing
Date"); provided that if prior notification to or approval of the
Federal Reserve Board or any other regulatory agency is required
in connection with such purchase, the Holder shall promptly file
the required notice or application for approval and shall
expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead
from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained
and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) At the closing referred to in subsection (e) of
this Section 2, the Holder shall pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant
to the exercise of the Option in immediately available funds by
wire transfer to a bank account designated by Issuer, provided
that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery
of immediately available funds as provided in subsection (f) of
this Section 2, Issuer shall deliver to the Holder a certificate
or certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in
part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this
Agreement and a letter agreeing that the Holder will not offer to
sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend that
shall read substantially as follows:
"The transfer of the shares represented by
this certificate is subject to certain
provisions of an agreement between the
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registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be
provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended
(the "1933 Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if
the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Issuer, to the effect that
such legend is not required for purposes of the 1933 Act;
(ii) the reference to the provisions to this Agreement in the
above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by Holder to Issuer of the written
notice of exercise of the Option provided for under
subsection (e) of this Section 2 and the tender of the applicable
purchase price in immediately available funds, the Holder shall
be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that
certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state, and local
taxes and other charges that may be payable in connection with
the preparation, issue, and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee,
transferee, or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option
may be exercised without additional authorization of Common Stock
after giving effect to all other options, warrants, convertible
securities, and other rights to purchase Common Stock; (ii) that
it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution, or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations, or conditions
to be observed or performed hereunder by Issuer; (iii) promptly
to take all action as may from time to time be required
(including (x) complying with all premerger notification,
reporting, and waiting period requirements specified in 15 USC
Section 18 and regulations promulgated thereunder and (y) in the
event, under the Bank Holding Company Act of 1956, as amended
(the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to
the Federal Reserve Board or to any state regulatory authority is
necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such
state regulatory authority as they may require) in order to
permit the Holder to exercise the Option and Issuer duly and
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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 condition as are set
forth herein, in the aggregate the same number of shares of
Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any Stock Option Agreements and
related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction, or
mutilation of this Agreement, and (in the case of loss, theft, or
destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated,
Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed,
or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares
of Common Stock that are purchasable upon exercise of the Option
pursuant to Section 1 of this Agreement, the number of shares of
Common Stock purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on
or in respect of the Common Stock that would be prohibited under
the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof
and the Option Price shall be appropriately adjusted in such
manner as shall fully preserve the economic benefits provided
hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations
hereunder.
6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall,
at the request of Grantee delivered within 90 days of such
Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof)
or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file, and keep current a shelf registration
statement under the 1933 Act covering this Option and any shares
issued and issuable pursuant to this Option and shall use its
reasonable best efforts to cause such registration statement to
become effective and remain current in order to permit the sale
or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option
("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best
efforts to cause such registration statement first to become
effective and then to remain effective for such period not in
excess of 180 days from the date 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
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foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as
provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters,
of such offering the inclusion of the Holder's Option or Option
Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option
Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; and provided, however, that
after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder shall
constitute at least 25 percent of the total number of shares to
be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer
shall file a registration statement for the balance as promptly
as practical and no reduction shall thereafter occur. Each such
Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be field
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 such underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from any
Holder, Issuer agrees to send a copy thereof to any other person
known to Issuer to be entitled to registration rights under this
Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary
contained herein, in no event shall Issuer be obligated to effect
more than two registrations pursuant to this Section 6 by reason
of the fact that there shall be more than one Grantee as a result
of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request of
the Holder, delivered prior to an Exercise Termination Event,
Issuer (or any successor thereto) shall repurchase the Option
from the Holder at a price (the "Option Repurchase Price") equal
to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of
shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the
"Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase
such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "Option Share Repurchase Price")
equal to the market/offer price multiplied by the number of
Option Shares so designated. The term "market/offer price" shall
mean the highest of the following amounts with respect to 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 (i) the price per share of Common Stock at which a
tender offer or exchange offer therefor has been made, (ii) the
price per share of Common Stock to be paid by any third party
pursuant to an agreement with Issuer, (iii) the highest closing
price for shares of Common Stock, or (iv) in the event of a sale
of all or a substantial portion of Issuer's assets, the sum of
the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such
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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 Issuer.
Notwithstanding the foregoing, if the same person who has
participated in a Triggering Event has entered, or after such
Triggering Event has occurred enters, into any agreement or
understanding with Grantee relating to Grantee's rights under
this Option or with respect to the Option Shares or directly or
indirectly relating to Issuer, Grantee shall, notwithstanding the
terms of such agreement or understanding, at any time upon the
occurrence of a Subsequent Triggering Event of the type set forth
in Section 3(d)(i) without Issuer's approval, recommendation or
consent, promptly request that Issuer repurchase the Option and
any Option Shares held by Grantee as provided in this Section 8
and Issuer shall do so.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and
any Option Shares pursuant to this Section 7 by surrendering for
such purpose to Issuer, at its principal office, a copy of this
Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer
to repurchase this Option and/or the Option Shares in accordance
with the provisions of this Section 7. Within the latter to
occur of (x) five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer
shall deliver or cause to be delivered to Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, within five business days after the
date on which Issuer is no longer so prohibited; provided,
however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 7 is
prohibited under applicable law or regulation from delivering to
the Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal
approvals and file any required notices as promptly as
practicable in order to accomplish such repurchase), the Holder
or Owner may revoke its notice of repurchase of the Option or the
Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new
Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator
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of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event
shall be deemed to have occurred (i) upon the consummation of any
merger, consolidation, or similar transaction involving Issuer or
any purchase, lease, or other acquisition of all or a substantial
portion of the assets of Issuer, other than any such transaction
which would not constitute an Acquisition Transaction pursuant to
the proviso to Section 2(b)(i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50 percent
or more of the then outstanding shares of Common Stock, provided
that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option Shares
under this Section 7 shall not terminate upon the occurrence of
an Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge
into Issuer and Issuer shall be the continuing or surviving
corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of
Common Stock shall after such merger represent less than
50 percent of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person,
other than Grantee or one of its Subsidiaries, then, and in each
such case, the agreement governing such transaction shall make
proper provision so that the Option shall, upon the consummation
of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of the Holder, of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any
person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a
consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is
the continuing or surviving person, and (iii) the
transferee of all or substantially all of Issuer's
assets.
(2) "Substitute Common Stock" shall mean the
common stock issued by the Issuer of the Substitute
Option upon exercise of the Substitute Option.
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(3) "Assigned Value" shall mean the
market/offer price, as defined in Section 7.
(4) "Average Price" shall mean the average
closing price of a share of the Substitute Common
Stock for the one year immediately preceding the
consolidation, merger, or sale in question, but in
no event higher than the closing price of the shares
of Substitute Common Stock on the date preceding
such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a
share of common stock issued by the person merging
into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as
the Option, provided, that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms
shall be as similar as possible and in no event less advantageous
to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock as is equal to
the Assigned Value multiplied by the number of shares of Common
Stock for which the Option is then exercisable, divided by the
Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the
Option Price multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock for which the
Option is then exercisable and the denominator of which shall be
the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9 percent of the shares of Substitute Common Stock
outstanding prior to the exercise of the Substitute Option. In
the event that the Substitute Option would be exercisable for
more than 19.9 percent of the shares of Substitute Common Stock
outstanding prior to exercise but for this clause (e), the issuer
of the Substitute Option (the "Substitute Option Issuer") shall
make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in this
clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably
acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the
Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer
hereunder.
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9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the issuer of 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 the Substitute Shares 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
rights 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 the
portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing
the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner
and thereafter deliver or cause to be delivered, from time to
time, to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the portion of the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited
from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any
time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law
or regulation from delivering to the Substitute Option Holder
and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase
Price, respectively, in full (and the Substitute Option Issuer
shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish
such repurchase), the Substitute Option Holder or Substitute
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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 Option Shares it is
then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under
Sections 2, 6, 7, and 13 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of
such rights and for the expiration of all statutory waiting
periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings
on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by
Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times
from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon
the exercise of the Option, that number of shares of Common Stock
equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and
clear of all claims, liens, encumbrances, and security interests
and not subject to any preemptive rights.
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
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corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise of
the Option will not be, acquired with a view to the public
distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express
written consent of the other party, except that in the event a
Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 90 days following such Subsequent
Triggering Event (or such later period as provided in
Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an
application by Grantee under the BHCA to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its
rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2 percent of the
voting shares of Issuer, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement,
including without limitation making application to list the
shares of Common Stock issuable hereunder on the NASDAQ Stock
Market National Market System upon official notice of issuance
and applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee
shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder
until such time, if ever, as it deems appropriate to do so.
15. Notwithstanding anything to the contrary herein, in the
event that the Holder or Owner or any Related Person (as
hereinafter defined) thereof is a person making an offer or
proposal to engage in an Acquisition Transaction (other than the
transaction contemplated by the Merger Agreement), then (i) in
the case of a Holder or any Related Person thereof, the Option
held by it shall immediately terminate and be of no further force
or effect, and (ii) in the case of an Owner or any Related Person
thereof, the Option Shares held by it shall be immediately
repurchasable by Issuer at the Option Price. A "Related Person"
of a Holder or Owner means any "affiliate" (as defined in
Rule 12b-2 of the rules and regulations under the 1934 Act) of
the Holder or Owner and any person that is the beneficial owner
of 25% or more of the voting power of the Holder or Owner, as the
case may be.
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16. 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.
17. If any term, provision, covenant, or restriction
contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions,
and covenants and restrictions contained in this Agreement shall
remain in full force and effect, and shall in no way be affected,
impaired, or invalidated. If for any reason such court or
regulatory agency determines that the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided in
Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to repurchase such
lesser number of shares as may be permissible, without any
amendment or modification hereof.
18. All notices, requests, claims, demands, and other
communications hereunder shall be deemed to have been duly given
when delivered in person, by cable, telegram, telecopy, or telex,
or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set
forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon, regardless of
the laws hat might otherwise govern under applicable principles
of conflicts of laws thereof.
20. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
21. 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.
22. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided
herein.
23. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the
Merger Agreement.
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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.
U. S. BANCORP
By /S/ GERRY B. CAMERON
Title Chairman of the Board
Chief Executive Officer
WEST ONE BANCORP
By /S/ DANIEL R. NELSON
Title Chairman and Chief Executive
Officer
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