EXHIBIT 10.1
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THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN
RESTRICTIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
COMPANY SHARE OPTION AGREEMENT
THIS AGREEMENT, dated as of March 1, 2001 (this "Agreement"), by
and between FIRST NATIONAL BANCORP, INC., an Illinois corporation
("Company"), and BANK OF MONTREAL, a chartered bank of Canada
("Grantee").
WHEREAS, Grantee and Company are concurrently herewith entering
into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement") pursuant to which Grantee shall form a wholly
owned subsidiary which shall be merged with and into Company, with the
Company being the surviving corporation (the "Merger"); and
WHEREAS, as a condition and inducement to Grantee's execution of
the Merger Agreement, Grantee has required that Company agree, and
Company has agreed, to grant Grantee the Option (as defined in Section
2).
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set
forth herein and in the Merger Agreement, and intending to be legally
bound hereby, Company and Grantee agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms which are used
but not defined herein shall have the meanings ascribed to such terms
in the Merger Agreement.
SECTION 2. GRANT OF OPTION. Subject to the terms and
conditions set forth herein, Company hereby grants to Grantee an
irrevocable option (the "Option") to purchase up to 604,553 shares (as
adjusted as set forth herein, the "Option Shares") of Company Common
Shares at a purchase price per Option Share (as adjusted as set forth
herein, the "Purchase Price") of US $72.50; PROVIDED, that in no event
shall the number of Option Shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Company Common
Shares on the date hereof. Company shall make proper provision so
that each Option Share issued upon exercise of the Option shall be
accompanied by the applicable number of rights or other benefits as
may be provided in any Company rights agreement or similar agreement
that may be adopted after the date hereof.
SECTION 3. EXERCISE OF OPTION. (a) Grantee may exercise the
Option, in whole or in part, at any time and from time to time
following the occurrence of an Acquisition Event (as defined in the
Merger Agreement); PROVIDED, that the Option shall terminate and be of
no further force or effect upon the earliest to occur of (A) the
Effective Time, (B) the date which is forty-five (45) days after the
termination of the Merger Agreement in accordance with the terms
thereof, (C) the date which is forty-five (45) days after the
occurrence of an Acquisition Event; and PROVIDED, FURTHER, that any
purchase of shares upon exercise of the Option shall be subject to
compliance with applicable law; and PROVIDED, FURTHER, that Grantee
shall have sent the written notice of such exercise (as provided in
Section 3(c)) within 45 days following the earlier of the termination
of the Merger Agreement or the occurrence of such Acquisition Event.
Notwithstanding the termination of the Option, Grantee shall be
entitled to purchase those Option Shares with respect to which it has
exercised the Option in accordance herewith prior to the termination
of the Option. The termination of the Option shall not affect any
rights hereunder which by their terms extend beyond the date of such
termination.
(b) Company shall notify Grantee promptly in writing of the
occurrence of any Acquisition Event, it being understood that the
giving of such notice by Company shall not be a condition to the right
of Grantee to exercise the option.
(c) In the event Grantee wishes to exercise the Option, it shall
send to Company a written notice (the date of which is herein referred
to as the "Notice Date") specifying (i) the total number of Option
Shares it intends to purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60
business days from the Notice Date for the closing (the "Closing") of
such purchase (the "Closing Date"); PROVIDED, that if the Closing
cannot be consummated by reason of any applicable law, rule,
regulation or order or the need to obtain any necessary approvals or
consents of applicable Governmental Entities (as hereinafter defined),
the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which such restriction on
consummation has expired or been terminated; and PROVIDED, FURTHER,
without limiting the foregoing, that if prior notification or
application to, approval of or authorization by any governmental
entity is required in connection with such purchase, Company shall use
its reasonable best efforts to cooperate with Grantee in the prompt
filing of the required notice or application for approval or
authorization, and the Closing shall occur immediately following the
date on which such approvals have been obtained and any required
notification or waiting periods have expired. As used herein,
"Governmental Entity" includes any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, or industry self-regulatory organization.
(d) Notwithstanding Section 3(c), in no event shall any Closing
Date be more than six months after the related Notice Date, and if the
Closing Date shall not have occurred within six months after the
related Notice Date due to the failure to obtain any such required
approval or consent, the exercise of the Option effected on the Notice
Date shall be deemed to have expired. In the event (i) Grantee
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receives official notice that an approval or consent of any
governmental entity required for the purchase of Option Shares will
not be issued or granted or (ii) a Closing Date shall not have
occurred within six months after the related Notice Date due to the
failure to obtain any such required approval or consent, Grantee shall
be entitled to exercise the Option (whether or not the Option would
have otherwise terminated) in connection with the resale of Company
Common Shares or other securities pursuant to a registration statement
as provided in Section 10. The provisions of this Section 3 and
Section 4 shall apply with appropriate adjustments to any such
exercise.
SECTION 4. PAYMENT AND DELIVERY OF CERTIFICATES. (a) On each
Closing Date, Grantee shall (i) pay to Company, in immediately
available funds by wire transfer to a bank account designated by
Company (provided that the failure or refusal of Company to designate
a bank account shall not preclude Grantee from exercising the Option),
an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date, and (ii) present
and surrender this Agreement to Company at the address of Company
specified in Section 14(f).
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as
provided in Section 4(a), (i) Company shall deliver to Grantee (A) a
certificate or certificates representing the Option Shares to be
purchased at such Closing, which Option Shares shall be fully paid,
validly issued and non-assessable, free and clear of all liens,
claims, charges, security interests or other encumbrances ("Liens")
other than those created by the express terms of this Agreement, and
subject to no preemptive or other similar rights, and (B) if the
Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase the
balance of the shares of Company Common Shares purchasable hereunder,
and (ii) Grantee shall deliver to Company a letter agreeing that
Grantee shall not offer to sell or otherwise dispose of such Option
Shares in violation of applicable federal and state securities laws or
of the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO CERTAIN
PROVISIONS OF AN AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF AND THE ISSUER AND
TO RESALE RESTRICTIONS ARISING UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, A COPY OF WHICH IS MAINTAINED
AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
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RECEIPT OF ISSUER OF A WRITTEN REQUEST THEREFOR
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without such legend
if such Option Shares have been registered pursuant to the Securities
Act, such Option Shares have been sold in reliance on and in
accordance with Rule 144 under the Securities Act or Grantee shall
have delivered to Company a copy of a letter from the staff of the
SEC, or an opinion of counsel in form and substance reasonably
satisfactory to Company and its counsel, to the effect that such
legend is not required for purposes of the Securities Act. In
addition, such certificates shall bear any other legend as may be
required by law.
(d) Upon the giving by Grantee to Company of the written notice
of exercise of the Option provided for under Section 3(c), the tender
of the applicable Purchase Price in immediately available funds and
the tender of this Agreement to Company, Grantee shall be deemed to be
the holder of record of the shares of Company Common Shares issuable
upon such exercise, regardless of whether the stock transfer books of
Company are then closed or certificates representing such shares of
Company Common Shares are then actually delivered to Grantee. Company
shall pay all expenses, and any and all federal, foreign, state, and
local taxes and other charges, that may be payable in connection with
the preparation, issuance and delivery of stock certificates under
this Section 4(d) in the name of Grantee or its assignee, transferee,
or designee.
(e) Company agrees (i) that it shall at all times maintain, free
from Liens and preemptive or similar rights, sufficient authorized but
unissued or treasury shares of Company Common Shares so that the
Option may be exercised without additional authorization of Company
Common Shares after giving effect to all other options, warrants,
convertible securities and other rights to purchase Company Common
Shares then outstanding, (ii) that it will not, by charter amendment
or through reorganization, recapitalization, consolidation, merger,
dissolution, liquidation, spin-off, sale of assets or similar
transaction, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, agreements,
stipulations or conditions to be observed or performed hereunder by
Company and (iii) that it will promptly take all action as may from
time to time be required (including (A) complying with all premerger
notification, reporting and waiting period requirements and (B) in the
event prior approval or authorization of or notice or application to
any governmental entity is necessary before the Option may be
exercised, cooperating fully with Grantee in preparing such
applications or notices and providing such information to such
Governmental Entities as may be required) in order to permit Grantee
to exercise the Option and Company to duly and effectively issue
shares of Company Common Shares pursuant hereto on a timely basis.
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF COMPANY.
Company hereby represents and warrants to Grantee as follows:
(A) CORPORATE AUTHORITY. Company 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, subject to receiving any necessary approvals or
consents, the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of
Company, and no other corporate proceedings on the part of Company are
necessary to authorize this Agreement or to consummate the
transactions so contemplated; this Agreement has been duly and validly
executed and delivered by Company and (assuming due authorization,
execution and delivery by Grantee) constitutes a valid and binding
obligation of Company, enforceable against Company in accordance with
its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, fraudulent conveyance, moratorium
or other similar laws, now or hereinafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(B) SHARES RESERVED FOR ISSUANCE. Company has taken all
necessary corporate action to authorize and reserve and 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
Company Common Shares equal to the maximum number of shares of Company
Common Shares and other shares and securities which are at any time
and from time to time purchasable upon exercise of the Option, and all
such shares and other securities, upon issuance pursuant to the
Option, will be duly authorized, validly issued, fully paid and
non-assessable, and will be delivered free and clear of all Liens
(other than those created by the express terms of this Agreement) and
not subject to any preemptive or other similar rights.
(C) PURCHASE RIGHTS. The Company has taken all action
(including, if required, amending or terminating the Rights Agreement
dated as of November 14, 1996, between Company and Harris Trust and
Savings Bank, as rights agent, or redeeming all of the rights
("Rights") under such Rights Agreement) so that entering into this
Agreement, the acquisition of Company Shares hereunder and the other
transactions contemplated hereby do not and will not result in the
grant of any rights to any person under the Rights Agreement or enable
or require the Rights to be exercised, distributed or triggered.
(D) BOARD ACTION. The Board of Directors of Company has
approved this Agreement and, to its knowledge, no state takeover laws
do or will apply to this Agreement or any of the transactions
contemplated hereby (including the purchase of shares of Company
Common Shares pursuant to the Option).
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(E) NO RESTRICTIONS. No Illinois law applicable generally to
corporations or, to Company's knowledge, other takeover statute
applicable generally to corporations or similar corporate law and no
provision of the certificate of incorporation or by-laws of Company or
any agreement to which Company is a party (i) would or would purport
to impose restrictions which might adversely affect or delay the
consummation of the transactions contemplated by this Agreement, or
(ii) as a result of the consummation of the transactions contemplated
by this Agreement, (A) would or would purport to restrict or impair
the ability of Grantee to vote or otherwise exercise the rights of a
shareholder with respect to securities of Company or any Company
Subsidiary that may be acquired or controlled by Grantee or (B) would
or would purport to entitle any person to acquire securities of
Company.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF GRANTEE.
Grantee hereby represents and warrants to Company as follows:
(A) CORPORATE AUTHORITY. Grantee has full corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement; the execution and
delivery of this Agreement and, subject to obtaining any necessary
approvals or consents from Governmental Entities, the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee; and this Agreement
has been duly executed and delivered by Grantee and (assuming due
authorization, execution and delivery by Company) constitutes a valid
and binding obligation of Grantee, enforceable against Grantee in
accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium or other similar laws, now or hereinafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(B) PURCHASE NOT FOR DISTRIBUTION. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be
acquired with a view to the public distribution thereof in violation
of any federal or state securities laws and will not be transferred or
otherwise disposed of except in a transaction registered or exempt
from registration under the Securities Act and any applicable state
securities laws.
SECTION 7. ADJUSTMENT UPON CHANGES IN COMPANY CAPITALIZATION.
(a) In the event of any change from time to time in Company Common
Shares or any other shares or securities subject to the Option by
reason of a dividend or distribution of shares, subdivision, spinoff,
share split, split-up, merger, consolidation, recapitalization,
combination, exchange of shares, or dividend or distribution, other
than regular cash dividends, on or in respect of the Company Common
Shares, the type and number of shares or securities subject to the
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Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Grantee shall receive, upon
exercise of the Option, the number and class of shares or other
securities or property that Grantee would have received in respect of
Company Common Shares if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable. If
any additional shares of Company Common Shares are issued or otherwise
become outstanding after the date of this Agreement (other than
pursuant to an event described in the first sentence of this
Section 7(a) or upon exercise of the Option), the number of shares of
Company Common Shares subject to the Option shall be increased so
that, after such issuance, it, together with any shares of Company
Common Shares previously issued pursuant hereto, equals 19.9% of the
number of shares of Company Common Shares then issued and outstanding,
without giving effect to any shares subject to or issued pursuant to
the Option. No provision of this Section 7 shall be deemed to affect
or change, or constitute authorization for any violation of, any of
the covenants, agreements, representations or warranties in the Merger
Agreement.
(b) Without limiting the parties' relative rights, remedies,
liabilities and obligations under the Merger Agreement or this
Agreement, in the event that, prior to the termination of the Option,
Company shall enter into an agreement (other than the Merger
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 Company and Company shall be the
continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Company Common Shares shall be
changed into or exchanged for another class or series of shares or
other securities of Company or any other person or cash or any other
property or the outstanding shares of Company Common Shares
immediately prior to such merger shall, after such merger, represent
less than 50% of the outstanding shares and share equivalents having
general voting power of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets (the Company
Subsidiaries taken as a whole) in one transaction or a series of
related transactions, 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 provisions 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 Grantee, of
either (x) the Acquiring Corporation (as hereinafter defined), (y) any
person that controls the Acquiring Corporation, or (z) in the case of
a merger described in clause (ii), Company (such person being referred
to as the "Substitute Option Issuer".
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(c) The Substitute Option shall have the same terms as the
Option; provided, that the exercise price therefor and number of
shares subject thereto shall be as set forth in this Section 7 and the
repurchase rights relating thereto shall be as set forth in Section 9;
PROVIDED, FURTHER, that if an Acquisition Event shall have occurred
prior to or in connection with the issuance of such Substitute Option,
the Substitute Option shall be exercisable immediately upon issuance
without the occurrence of a further Acquisition Event; and PROVIDED,
FURTHER, 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 Grantee. Substitute
Option Issuer shall also enter into an agreement with Grantee in
substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock (as hereinafter defined) as is
equal to the Market/Offer Price (as hereinafter defined) multiplied by
the number of shares of Company Common Shares for which the Option was
theretofore exercisable, divided by the Average Price (as hereinafter
defined). The exercise price of the Substitute Option per share of
Substitute Common Stock (the "Substitute Option Price") shall then be
equal to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of Company Common Shares for which
the Option was theretofore exercisable and the denominator is the
number of shares of Substitute Common Stock for which the Substitute
Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing
or surviving corporation of a consolidation or merger with
Company (if other than Company), or at Grantee's election, any
person that controls such surviving corporation, (y) Company in a
merger in which Company is the continuing or surviving person, or
(z) the transferee of all or substantially all of Company's
assets (or of the assets of Company Subsidiaries taken as a
whole).
(ii) "Market/Offer Price" shall mean the highest of (v) the
highest price per share of Company Common Shares at which a
Tender Offer or an Exchange Offer therefor has been made, (w) the
highest price per share of Company Common Shares to be paid by
any third party pursuant to an agreement with Company, (x) the
price per share of Company Common Shares received by holders of
Company Common Shares in connection with any merger or other
business combination transaction described in Section 7(b)(i),
7(b)(ii) or 7(b)(iii), (y) the highest closing price for shares
of Company Common Shares within the 12-month period immediately
preceding the date on which the merger, consolidation, asset sale
or other transaction in question is consummated, and (z) in the
event of a sale of all or substantially all of Company's assets
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(or those of Company Subsidiaries taken as a whole) an amount
equal to (I) the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of
Company, as determined by a nationally recognized independent
investment banking firm selected by Grantee, divided by (II) the
number of shares of Company Common Shares outstanding at such
time. In calculating the Market/Offer Price, in the event that a
Tender Offer or an Exchange Offer is made for Company Common
Shares or an agreement is entered into involving consideration
other than cash, the value of the securities or other property
issuable or deliverable in exchange for Company Common Shares
shall be determined by a nationally-recognized independent
investment banking firm selected by Grantee.
(iii) "Average Price" shall mean the average closing sales
price per share of a share of Substitute Common Stock quoted on
the NYSE (or if Substitute Common Stock is not quoted on the
NYSE, the average closing sales price per share as quoted on the
Nasdaq National Market System or, if the shares of Substitute
Common Stock are not quoted thereon, the highest bid price per
share as quoted on the principal trading market on which such
shares are traded as reported by a recognized source) for the
12-month period immediately preceding the date of consummation of
the consolidation, merger or sale in question; PROVIDED, that if
Company is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock issued
by Company, by the person merging into Company or by any company
which controls such person, as Grantee may elect.
(iv) "Substitute Common Stock" shall mean the shares of
capital stock (or similar equity interest) with the greatest
voting power in respect of the election of directors (or persons
similarly responsible for the direction of the business and
affairs) of the Substitute Option Issuer.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the shares of Substitute Common
Stock but for the limitation in the first sentence of this
Section 7(f), Substitute Option Issuer shall make a cash payment to
Grantee equal to the excess of (i) the value of the Substitute Option
without giving effect to the limitation in the first sentence of this
Section 7(f) over (ii) the value of the Substitute Option after giving
effect to the limitation in the first sentence of this Section 7(f).
This difference in value shall be determined by a nationally
recognized independent investment banking firm selected by Grantee and
reasonably acceptable to the Acquiring Corporation.
(g) Company shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that
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controls the Acquiring Corporation assume in writing all the
obligations of Company hereunder.
SECTION 8. REPURCHASE AT THE OPTION OF GRANTEE. (a) At the
request of Grantee at any time commencing upon the first occurrence of
a Repurchase Event (as defined in Section 8(c)) and prior to the
termination of the Option pursuant to Section 3(a), Company (or any
successor) shall repurchase from Grantee (x) the Option and (y) all
shares of Company Common Shares purchased by Grantee pursuant hereto
with respect to which Grantee then has beneficial ownership. The date
on which Grantee exercises its rights under this Section 8 is referred
to as the "Request Date". Such repurchase shall be at an aggregate
price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Grantee for any
shares of Company Common Shares acquired pursuant to the Option
with respect to which Grantee then has beneficial ownership;
(ii) the excess, if any, of (x) the Market/Offer Price for
each share of Company Common Shares over (y) the Purchase Price
(as adjusted pursuant to Section 7), multiplied by the number of
shares of Company Common Shares with respect to which the Option
has not been exercised; and
(iii) the excess, if any, of the Market/Offer Price over the
Purchase Price paid (or, in the case of Option Shares with
respect to which the option has been exercised but the Closing
Date has not occurred, payable, as adjusted pursuant to
Section 7) by Grantee for each share of Company Common Shares
with respect to which the Option has been exercised and with
respect to which Grantee then has beneficial ownership,
multiplied by the number of such shares.
(b) If Grantee exercises its rights under this Section 8,
Company shall, within 5 business days after the Request Date, pay the
Section 8 Repurchase Consideration to Grantee in immediately available
funds, and contemporaneously with such payment, Grantee shall
surrender to Company the Option and the certificates evidencing the
shares of Company Common Shares purchased thereunder with respect to
which Grantee then has beneficial ownership, and Grantee shall warrant
that it has sole record and beneficial ownership of such shares and
that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of
any governmental entity is required in connection with the payment of
all or any portion of the Section 8 Repurchase Consideration, Grantee
shall have the ongoing option to revoke its request for repurchase
pursuant to Section 8, in whole or in part, or to require that Company
deliver from time to time that portion of the Section 8 Repurchase
Consideration that it is not then so prohibited from paying and
promptly file the required notice or application for approval and
expeditiously process the same (and each party shall cooperate with
the other in the filing of any such notice or application and the
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obtaining of any such approval) and the period of time that would
otherwise run pursuant to the preceding sentence for the payment of
the portion of the Section 8 Repurchase Consideration shall run
instead from the date on which, as the case may be, (i) any required
notification period has expired or been terminated or (ii) such
approval has been obtained and, in either event, any requisite waiting
period shall have passed. If any governmental entity disapproves of
any part of Company's proposed repurchase pursuant to this Section 8,
Company shall promptly give notice of such fact to Grantee. If any
governmental entity prohibits the repurchase (and Company hereby
undertakes to use its reasonable best efforts to obtain all required
approvals from Governmental Entities to accomplish such repurchase) in
part but not in whole, then Grantee shall have the right (i) to revoke
the repurchase request or (ii) to the extent permitted by such
governmental entity, determine whether the repurchase should apply to
the Option and/or Option Shares and to what extent to each, and
Grantee shall thereupon have the right to exercise the Option as to
the number of Option Shares for which the Option was exercisable at
the Request Date less the sum of the number of shares covered by the
Option in respect of which payment has been made pursuant to
Section 8(a)(ii) and the number of shares covered by the portion of
the Option (if any) that has been repurchased; whereupon, in the case
of clause (ii), Company shall promptly (x) deliver to Grantee that
portion of the Section 8 Repurchase Consideration that Company is not
prohibited from delivering and (y) deliver to Grantee, as appropriate,
either (A) a new Stock Option Agreement evidencing the right of
Grantee to purchase that number of shares of Company Common Shares
obtained by multiplying the number of shares of Company Common Shares
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 Section 8 Repurchase Consideration less the
portion thereof theretofore delivered to Grantee and the denominator
of which is the Section 8 Repurchase Consideration, or (B) a
certificate for the Option Shares it is then so prohibited from
repurchasing; PROVIDED, that if the Option shall have terminated prior
to the date of such notice or shall be scheduled to terminate at any
time before the expiration of a period ending on the thirtieth
business day after such date, Grantee shall nonetheless have the right
so to exercise the Option or exercise its rights under this Section 8
until the expiration of such period of 30 business days. Grantee
shall notify Company of its determination under the preceding sentence
within 10 business days of receipt of notice of disapproval of the
repurchase.
(c) As used herein, a "Repurchase Event" shall occur if (A)
(i) any person (other than Grantee or any subsidiary of Grantee) shall
have acquired beneficial ownership of (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act), or the right to
acquire beneficial ownership of, or any group shall have been formed
which beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of Company
Common Shares or (ii) any of the transactions described in
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Section 7(b)(i), 7(b)(ii) or 7(b)(iii) has been consummated and (B) an
Acquisition Event shall have occurred prior to the termination of the
Option.
SECTION 9. REPURCHASE OF SUBSTITUTE OPTION. (a) At the
request of Grantee at any time, Substitute Option Issuer (or any
successor) shall repurchase from Grantee (x) the Substitute Option and
(y) all shares of Substitute Common Stock purchased by Grantee
pursuant hereto with respect to which Grantee then has beneficial
ownership. The date on which Grantee exercises its rights under this
Section 9 is referred to as the "Section 9 Request Date". Such
repurchase shall be at an aggregate price (the "Section 9 Repurchase
Consideration") equal to the sum of:
(i) the aggregate purchase price paid by Grantee for any
shares of Substitute Common Stock acquired pursuant to the Option
or Substitute Option with respect to which Grantee then has
beneficial ownership;
(ii) the excess, if any, of (x) the Substitute Applicable
Price (as hereinafter defined) for each share of Substitute
Common Stock over (y) the Substitute Option Price (as adjusted
pursuant to Section 7) multiplied by the number of shares of
Substitute Common Stock with respect to which the Substitute
Option has not been exercised; and
(iii) the excess, if any, of the Substitute Applicable Price
over the purchase price paid (or in the case of shares with
respect to which the Option or Substitute Option has been
exercised but the Closing Date has not occurred, payable) by
Grantee for each share of Substitute Common Stock with respect to
which the Option or Substitute Option has been exercised and with
respect to which Grantee then has beneficial ownership,
multiplied by the number of such shares.
(b) If Grantee exercises its rights under this Section 9,
Substitute Option Issuer shall, within 5 business days after the
Section 9 Request Date, pay the Section 9 Repurchase Consideration to
Grantee in immediately available funds, and contemporaneously with
such payment, Grantee shall surrender to Substitute Option Issuer the
Substitute Option and the certificates evidencing the shares of
Substitute Common Stock purchased thereunder with respect to which
Grantee then has beneficial ownership, and Grantee shall warrant that
it has sole record and beneficial ownership of such shares and that
the same are then free and clear of all Liens. Notwithstanding the
foregoing, to the extent that prior notification to or approval of any
governmental entity is required in connection with the payment of all
or any portion of the Section 9 Repurchase Consideration, Grantee may
revoke its request for repurchase pursuant to Section 9, in whole or
in part, or may require that Substitute Option Issuer deliver from
time to time that portion of the Section 9 Repurchase Consideration
that it is not then so prohibited from paying and promptly file the
12
required notice or application for approval and expeditiously process
the same (and each party shall cooperate with the other in the filing
of any such notice or application and the obtaining of any such
approval) and the period of time that would otherwise run pursuant to
the preceding sentence for the payment of the portion of the Section 9
Repurchase Consideration shall run instead from the date on which, as
the case may be, (i) any required notification period has expired or
been terminated or (ii) such approval has been obtained and, in either
event, any requisite waiting period shall have passed. If any
governmental entity disapproves of any part of Substitute Option
Issuer's proposed repurchase pursuant to this Section 9, Substitute
Option Issuer shall promptly give notice of such fact to Grantee. If
any governmental entity prohibits the repurchase (and Substitute
Option Issuer hereby undertakes to use its reasonable best efforts to
obtain all required approvals from Governmental Entities to accomplish
such repurchase) in part but not in whole, then Grantee shall have the
right (i) to revoke the repurchase request or (ii) to the extent
permitted by such governmental entity, determine whether the
repurchase should apply to the Substitute Option and/or Option Shares
and to what extent to each, and Grantee shall thereupon have the right
to exercise the Substitute Option as to the number of Option Shares
for which the Substitute Option was exercisable at the Section 9
Request Date less the sum of the number of shares covered by the
Substitute Option in respect of which payment has been made pursuant
to Section 9(a)(ii) and the number of shares covered by the portion of
the Substitute Option (if any) that has been repurchased; whereupon,
in the case of clause (ii), Substitute Option Issuer shall promptly
(x) deliver to Grantee that portion of the Section 9 Repurchase
Consideration that Substitute Option Issuer is not prohibited from
delivering and (y) deliver to Grantee, as appropriate, either (A) a
new Stock Option Agreement evidencing the right of Grantee to purchase
that number of shares of Substitute Common Stock obtained by
multiplying the number of shares of Substitute 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 Section 9 Repurchase Consideration less the portion
thereof theretofore delivered to Grantee and the denominator of which
is the Section 9 Repurchase Consideration or (B) a certificate for the
Option Shares it is then so prohibited from repurchasing; PROVIDED,
that if the Substitute Option shall have terminated prior to the date
of such notice or shall be scheduled to terminate at any time before
the expiration of a period ending on the thirtieth business day after
such date, Grantee shall nonetheless have the right so to exercise the
Substitute Option or exercise its rights under Section 9 until the
expiration of such period of 30 business days. Grantee shall notify
Substitute Option Issuer of its determination under the preceding
sentence within ten (10) business days of receipt of notice of
disapproval of the repurchase.
(c) For purposes of this Agreement, the "Substitute Applicable
Price" means the highest closing sales price per share of Substitute
13
Common Stock during the six months preceding the Section 9 Request
Date.
(d) Following the conversion of the Option into a Substitute
Option, all references to "Company," "Issuer Common Shares" and
"Section 8," contained herein shall also be deemed to be references to
"Substitute Option Issuer," "Substitute Common Stock" and "Section 9,"
respectively.
SECTION 10. REGISTRATION RIGHTS.
(A) DEMAND REGISTRATION RIGHTS. Company shall, subject to the
conditions of Section 10(c) below, if requested by any Grantee
following an Acquisition Event that occurs prior to the termination of
the Option, including Grantee and any permitted transferee ("Selling
Stockholder"), as expeditiously as possible prepare, file and keep
current a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other
disposition of any or all shares of Company Common Shares or other
securities that have been acquired by or are issuable to the Selling
Stockholder upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by the Selling
Stockholder in such request, including, without limitation, a "shelf"
registration statement under Rule 415 under the Securities Act or any
successor provision, and Company shall use its best efforts to qualify
such shares or other securities for sale under any applicable state
securities laws. Grantee shall have the right to demand one such
registration.
(B) ADDITIONAL REGISTRATION RIGHTS. If Company at any time
after the exercise of the Option proposes to register any shares of
Company Common Shares under the Securities Act in connection with an
underwritten public offering of such Company Common Shares, Company
will promptly give written notice to Grantee of its intention to do so
and, upon the written request of any Selling Stockholder given within
30 days after receipt of any such notice (which request shall specify
the number of shares of Company Common Shares intended to be included
in such underwritten public offering by the Selling Stockholder),
Company will cause all such shares for which a Selling Stockholder
requests participation in such registration to be so registered and
included in such underwritten public offering; PROVIDED, HOWEVER, that
Company may elect to not cause any such shares to be so registered
(i) if in the reasonable good faith opinion of the underwriters for
such offering, the inclusion of all such shares by the Selling
Stockholder would materially interfere with the marketing of such
offering (in which case Company shall register as many shares as
possible without materially interfering with the marketing of the
offering), or (ii) in the case of a registration solely to implement
an employee benefit plan or a registration filed on Form S-4 of the
Securities Act or any successor Form. If some but not all the shares
of Company Common Shares with respect to which Company shall have
received requests for registration pursuant to this Section 10(b)
14
shall be excluded from such registration, Company shall make
appropriate allocation of shares to be registered among the Selling
Stockholders desiring to register their shares pro rata in the
proportion that the number of shares requested to be registered by
each such Selling Stockholder bears to the total number of shares
requested to be registered by all such Selling Stockholders then
desiring to have Company Common Shares registered for sale.
(C) CONDITIONS TO REQUIRED REGISTRATION. Company shall use its
reasonable best efforts to cause each registration statement referred
to in Section 10(a) above to become effective and to obtain all
consents or waivers of other parties which are required therefor and
to keep such registration statement effective as may be reasonably
necessary to effect such sale or other disposition; PROVIDED, HOWEVER,
that Company may delay any registration of Option Shares required
pursuant to Section 10(a) above for a period not exceeding 90 days
provided Company shall in good faith determine that any such
registration would adversely affect an offering or contemplated
offering of other securities by Company or would require disclosure of
nonpublic information that would materially and adversely affect
Company, and Company shall not be required to register Option Shares
under the Securities Act pursuant to Section 10(a) above:
(i) prior to an Acquisition Event;
(ii) on more than three occasions;
(iii) within 90 days after the effective date of a
registration referred to in Section 10(b) above pursuant to which
the Selling Stockholder or Selling Stockholders concerned were
afforded the opportunity to register all such shares under the
Securities Act and shares were registered to the extent
requested; and
(iv) unless a request therefor is made to register at least
25% or more of the aggregate number of Option Shares (including
shares of Company Common Shares and other securities issuable
upon exercise of the Option) then outstanding.
In addition to the foregoing, Company shall not be required to
maintain the effectiveness of any registration statement after the
expiration of three months from the effective date of such
registration statement. Company shall use its reasonable best efforts
to make any filings, and take all steps, under all applicable state
securities laws to the extent necessary to permit the sale or other
disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares; PROVIDED, HOWEVER,
that Company shall not be required to consent to general jurisdiction
or qualify to do business in any state where it is not otherwise
required to so consent to such jurisdiction or to so qualify to do
business. If requested by any such Grantee in connection with such
registration, Company shall become a party to any underwriting
15
agreement relating to the sale of such shares, but only to the extent
of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in secondary
offering underwriting agreements. Upon receiving any request under
this Section 10 from any Grantee, Company agrees to send a copy
thereof to any other person known to Company to be entitled to
registration rights under this Section 10, 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 else in this Section 10, in lieu of
complying with its obligations pursuant to a request made by any
Grantee under this Section 10, Company may, at its election,
repurchase the Option Shares requested to be registered by such
Grantee at a purchase price per share equal to the average closing
price of such Option Shares during the ten business days preceding the
date on which Company gives notice to Grantee of its intention to
repurchase such Option Shares (which notice shall be given no later
than fifteen days after Grantee has given notice to Company of its
election to exercise its registration rights under Section 10(a) or
10(b)).
(D) EXPENSES. Except where applicable state law prohibits such
payments and except for underwriting discounts or commissions and
brokers' fees, Company will pay all expenses (including, without
limitation, registration fees, qualification fees, blue sky fees and
expenses (including the fees and expenses of counsel), legal fees and
expenses, including the reasonable fees and expenses of one counsel to
the holders whose Option Shares are being registered, printing
expenses and the costs of special audits or "cold comfort" letters,
expenses of underwriters, excluding discounts and commissions but
including liability insurance if Company so desires or the
underwriters so require, and the reasonable fees and expenses of any
necessary special experts) in connection with each registration
pursuant to Section 10(a) or 10(b) above (including the related
offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to Section 10(a)
or 10(b) above.
(E) INDEMNIFICATION. In connection with any registration under
Section 10(a) or 10(b) above, Company hereby indemnifies the Selling
Stockholders, and each underwriter thereof, including each person, if
any, who controls such Selling Stockholders or underwriter within the
meaning of Section 15 of the Securities Act, and including each
director, officer, stockholder, partner, member, employee,
representative and agent of any thereof, against all expenses, losses,
claims, damages and liabilities caused by any untrue, or alleged
untrue, statement of a material fact contained in any registration
statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission, or alleged omission, to state
therein a material fact required to be stated therein or necessary to
16
make the statements therein not misleading, except insofar as such
expenses, losses, claims, damages or liabilities of such indemnified
party are caused by any untrue statement or alleged untrue statement
that was included by Company in any such registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon and in conformity
with, information furnished in writing to Company by such indemnified
party expressly for use therein, and Company and each person, if any,
who controls Company within the meaning of Section 15 of the
Securities Act, and each director, officer, stockholder, partner,
member, employee, representative and agent of Company shall be
indemnified by such Selling Stockholders, or by such underwriter, as
the case may be, for all such expenses, losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement, that
was included by Company in any such registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity
with, information furnished in writing to Company by such Selling
Stockholders or such underwriter, as the case may be, expressly for
such use.
Promptly upon receipt by a party indemnified under this
Section 10(e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may
be sought against any indemnifying party under this Section 10(e),
such indemnified party shall notify the indemnifying party in writing
of the commencement of such action, but the failure so to notify the
indemnifying party shall not relieve it of any liability which it may
otherwise have to any indemnified party under this Section 10(e)
unless the failure so to notify the indemnified party results in
substantial prejudice thereto. In case notice of commencement of any
such action shall be given to the indemnifying party as above
provided, the indemnifying party shall be entitled to participate in
and, to the extent it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense of such action at its
own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified
party unless (i) the indemnifying party agrees to pay the same,
(ii) the indemnifying party fails to assume the defense of such action
with counsel satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal
defenses may be available to the indemnifying party that may be
contrary to the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of such
action notwithstanding its obligation to bear fees and expenses of
such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
17
If the indemnification provided for in this Section 10(e) is
unavailable to a party otherwise entitled to be indemnified in respect
of any expenses, losses, claims, damages or liabilities referred to
herein, then the indemnifying party, in lieu of indemnifying such
party otherwise entitled to be indemnified, shall contribute to the
amount paid or payable by such party to be indemnified as a result of
such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative benefits received
by Company, the Selling Stockholders and the underwriters from the
offering of the securities and also the relative fault of Company, the
Selling Stockholders and the underwriters in connection with the
statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations. The amount paid or payable by a party as a
result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; PROVIDED, HOWEVER,
that in no case shall any Selling Stockholder be responsible, in the
aggregate, for any amount in excess of the net offering proceeds
attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any Selling Stockholder to
indemnify shall be several and not joint with other Selling
Stockholders. In connection with any registration pursuant to
Section 10(a) or 10(b) above, Company and each Selling Stockholder
(other than Grantee) shall enter into an agreement containing the
indemnification provisions of this Section 10(e).
(F) MISCELLANEOUS REPORTING. Company shall comply with all
reporting requirements and will do all such other things as may be
necessary to permit the expeditious sale at any time of any Option
Shares by the Selling Stockholders thereof in accordance with and to
the extent permitted by any rule or regulation promulgated by the SEC
from time to time, including, without limitation, Rule 144. Company
shall at its expense provide the Selling Stockholders with any
information necessary in connection with the completion and filing of
any reports or forms required to be filed by them under the Securities
Act or the Exchange Act, or required pursuant to any state securities
laws or the rules of the National Association of Securities Dealers or
any stock exchange.
(G) ISSUE TAXES. Company will pay all stamp taxes in connection
with the issuance and the sale of the Option Shares and in connection
with the exercise of the Option, and will save the Selling
Stockholders harmless, without limitation as to time, against any and
all liabilities with respect to all such taxes.
SECTION 11. QUOTATION OR LISTING. If Company Common Shares
or any other securities to be acquired in connection with the exercise
18
of the Option are then authorized for quotation or trading or listing
on the NYSE, the Nasdaq National Market System or any other securities
exchange or securities quotation system, Company, upon the request of
Grantee, will promptly file an application, if required, to authorize
for quotation or trading or listing the shares of Company Common
Shares or any other securities to be acquired upon exercise of the
Option on such securities exchange or securities quotation system and
will use its reasonable best efforts to obtain approval, if required,
of such quotation or listing as soon as practicable.
SECTION 12. DIVISION OF OPTION. This Agreement (and the
Option granted hereby) are exchangeable, without expense, at the
option of Grantee, upon presentation and surrender of this Agreement
at the principal office of Company for other Agreements providing for
Options of different denominations entitling the holder thereof to
purchase in the aggregate the same number of shares of Company Common
Shares purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any other Stock Option Agreement and related
Options for which this Agreement (and the Option granted hereby) may
be exchanged. Upon receipt by Company 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 to protect Company from any
loss which it may suffer if this Agreement is replaced, and upon
surrender and cancellation of this Agreement, if mutilated, Company
will execute and deliver a new Agreement of like tenor and date.
SECTION 13. LIMITATION OF GRANTEE PROFIT. (a) Notwithstanding
any other provision herein or in the Merger Agreement, in no event
shall Grantee's Total Profit (as defined below) exceed an amount equal
to five percent (5%) of the product of the number of Company Shares
issued and outstanding as of the date of the Merger Agreement
multiplied by $72.50 (the "Maximum Profit"), and, if it otherwise
would exceed such amount, Grantee, at its sole discretion, shall
either (i) reduce the number of shares subject to the Option (and any
Substitute Option), (ii) deliver to Company, or the Substitute
Company, as the case may be, for cancellation shares of Company Common
Shares or Substitute Common Stock, as the case may be (or other
securities into which such Option Shares are converted or exchanged),
(iii) pay cash to Company, or the Substitute Company, as the case may
be, (iv) reduce the amount of the Section 8 Repurchase Consideration
or Section 9 Repurchase Consideration or (v) any combination of the
foregoing, so that Grantee's actually realized Total Profit shall not
exceed the Maximum Profit after taking into account the foregoing
actions. Notwithstanding any other provision of this Agreement, the
Option may not be exercised for a number of shares as would, as of the
date of exercise, result in a Notional Total Profit (as defined below)
of more than the Maximum Profit and, if exercise of the Option would
otherwise result in the Notional Total Profit exceeding such amount,
Grantee, in its discretion, may take any of the actions specified in
this Section 13(a) so that the Notional Total Profit shall not exceed
the Maximum Profit; provided, that nothing in this sentence shall
19
restrict any subsequent exercise of the Option which at such time
complies with this sentence.
(b) For purposes of this Agreement, "Total Profit" shall mean:
(i) the aggregate amount (before taxes) of (A) the excess of (x) the
net cash amounts or fair market value of any property received by
Grantee pursuant to a sale of Option Shares (or securities into which
such shares are converted or exchanged), other than to a wholly-owned
subsidiary of Grantee, or a repurchase of Option Shares by Company
pursuant to Section 8 hereof, after payment of applicable brokerage or
sales commissions and discounts, over (y) Grantee's aggregate purchase
price for such Option Shares (or other securities), plus (B) all
amounts received by Grantee upon the repurchase of the Option by
Company pursuant to Section 8 hereof, plus (C) all equivalent net
amounts with respect to the Substitute Option and any amounts paid
pursuant to Section 7(f) hereof, plus (D) all amounts theretofore
received by Grantee pursuant to Section 4.8 of the Merger Agreement,
minus (ii) all amounts of cash previously paid to Company pursuant to
Section 13(a) plus the value of the Option Shares (or other
securities) previously delivered to Company for cancellation pursuant
to Section 13(a), which value shall be deemed to be the aggregate
Purchase Price paid for such Option Shares (or other securities). For
purposes of this Agreement, "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise the
Option shall be the Total Profit, determined as of the date of such
proposed exercise assuming that the Option were exercised on such date
for such number of shares, and assuming that such shares, together
with all other Option Shares held by Grantee and its affiliates as of
such date, were sold for cash at the closing market price for the
Company Common Shares as of the close of business on the preceding
trading day (less customary brokerage commissions). For purposes of
this Section 13, transactions by a wholly-owned subsidiary transferee
of Grantee in respect of the Option or Option Shares transferred to it
shall be treated as if made by Grantee.
(c) Notwithstanding any other provision of this Agreement,
nothing in this Agreement shall affect the ability of Grantee to
receive, nor relieve Company's obligation to pay, any payment provided
for in Section 4.8 of the Merger Agreement; PROVIDED, that if and to
the extent the Total Profit received by Grantee would exceed the
Maximum Profit following receipt of such payment, Grantee shall be
obligated to comply with the terms of Section 13(a) within three (3)
days of the date on which Grantee has realized cash and/or property
representing Total Profit in excess of Maximum Profit.
SECTION 14. MISCELLANEOUS.
(A) EXPENSES. Except as otherwise provided herein or in the
Merger Agreement, 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, without
20
limitation, fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(B) WAIVER AND AMENDMENT. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits
of such provision. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto. The failure of any
party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
No single or partial exercise of any right, remedy, power or privilege
hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. Any waiver
shall be effective only in the specific instance and for the specific
purpose for which given and shall not constitute a waiver to any
subsequent or other exercise of any right, remedy, power or privilege
hereunder.
(C) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES;
SEVERABILITY. This Agreement, together with the Merger Agreement and
the other documents and instruments referred to herein and therein,
between Grantee and Company constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
This Agreement is not intended to confer upon any person other than
the parties hereto (or their respective successors and assigns) (other
than any transferees of the Option Shares or any permitted transferee
of this Agreement pursuant to Section 14(h)) any rights, remedies,
obligations or liabilities hereunder. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or Governmental Entity to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect
and shall in no way be affected impaired or invalidated. If for any
reason such court or governmental entity determines that the Option
does not permit Grantee to acquire, or does not require Company to
repurchase, the full number of shares of Company Common Shares as
provided in Section 2 (as may be adjusted herein), it is the express
intention of Company to allow Grantee to acquire or to require Company
to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(D) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Illinois
(without giving effect to choice of law principles thereof).
(E) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
(F) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
21
telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to the parties at the addresses set
forth in the Merger Agreement (or at such other address for a party as
shall be specified by like notice).
(G) COUNTERPARTS. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one
and the same agreement and shall become effective when both
counterparts have been signed, it being understood that both parties
need not sign the same counterpart.
(H) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party,
except that Grantee may assign this Agreement to a wholly-owned
subsidiary of Grantee (in which event the term "Grantee" as used
herein shall be deemed to refer to such subsidiary). Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective
successors and permitted assigns. For the avoidance of doubt, nothing
in this paragraph (h) shall prohibit Company from engaging in a
transaction contemplated by Section 7(b) in accordance with the
provisions of Section 7(b), provided that the terms of this Agreement
and the Merger Agreement shall remain applicable with respect to any
such transaction.
(I) FURTHER ASSURANCES. In the event of any exercise of the
Option by Grantee, Company and Grantee shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided
for by such exercise.
(J) ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of
this Agreement in any federal court or Illinois court sitting in the
City of Chicago, this being in addition to any other remedy to which
they are entitled at law or in equity.
[SIGNATURE PAGE FOLLOWS]
22
IN WITNESS WHEREOF, Company and Grantee have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
BANK OF MONTREAL
By: /s/ Paul V. Reagan
--------------------------------
Name: Paul V. Reagan
Title: Senior Vice President and
U.S. General Counsel
FIRST NATIONAL BANCORP, INC.
By: /s/ Albert G. D'Ottavio
--------------------------------
Name: Albert G. D'Ottavio
Title: President and Chief
Operating Officer
23