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 U. S. BANCORP,
an Oregon corporation ("Issuer"), and WEST ONE BANCORP, an Idaho
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 19,542,378 fully paid and nonassessable shares of
Issuer's Common Stock, $5 par value per share ("Common Stock"), at a
price of $28.00 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
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Section 2) within 90 days following such 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 merger,
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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
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duly and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal
office of Issuer, for other Agreements providing for Options of
different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same 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
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outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking
firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to 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 of which is the
Option Repurchase Price less the portion thereof theretofore
delivered to the Holder and the denominator of which is the Option
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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
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Holder of Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon,
in the latter case, the Substitute Option Issuer shall promptly
(i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option
Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered
Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the
Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price,
or (B) to the Substitute Share Owner, a certificate for the
Substitute 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
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necessary corporate action on the part of Grantee. This Agreement
has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except
in a transaction registered or exempt from registration under the
Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express written
consent of the other party, except that in the event a Subsequent
Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions
hereof, may assign in whole or in part its rights and obligations
hereunder within 90 days following such Subsequent Triggering Event
(or such later period as provided in Section 10); provided,
however, that until the date 15 days following the date on which
the Federal Reserve Board approves an application by Grantee under
the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except
in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in
excess of 2 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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