EXHIBIT 99.2
OPTION AGREEMENT
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OPTION AGREEMENT ("Option Agreement") dated May 8, 1997, among BAY VIEW
CAPITAL CORPORATION ("Buyer"), a Delaware corporation registered as a savings
and loan holding company under the Home Owners' Loan Act, as amended ("HOLA"),
and AMERICA FIRST EUREKA HOLDINGS, INC., a Delaware corporation ("Seller").
W I T N E S S E T H:
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WHEREAS, the Board of Directors of Buyer and the Board of Directors of
Seller have approved an Agreement and Plan of Merger dated as of even date
herewith (the "Agreement") providing for, among other things, the merger of
Seller with and into Buyer;
WHEREAS, as a condition to Seller entering into the Merger Agreement,
Seller has required that Buyer agree, and Buyer has agreed, to grant to Seller
the option set forth herein to purchase authorized but unissued shares of Buyer
Common Stock.
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. Definitions.
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Capitalized terms used but not defined herein shall have the same meanings
as in the Agreement.
2. Grant of Option.
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Subject to the terms and conditions set forth herein, Buyer hereby grants
to Seller an option (the "Option") to purchase from Buyer up to 1,290,530
authorized and unissued shares of Buyer Common Stock at a price of $51 3/4 per
share (the "Purchase Price") payable in cash as provided in Section 4 hereof.
3. Exercise of Option.
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(a) Seller may exercise the Option, in whole or in part, at any time or
from time to time if a Purchase Event (as defined below) shall have occurred;
provided, however, that (i) to the extent the Option shall not have been
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exercised, it shall terminate and be of no further force and effect upon the
earliest to occur of (A) the Effective Time of the Merger, (B) the termination
of the Agreement in accordance with Sections 7.01(a) through 7.01(d) or
Section 7.01(f) thereof, and (C) three years following the termination of the
Agreement in accordance with Section 7.01(e) thereof, provided that if such
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termination follows an Extension Event (as defined below), the Option shall not
terminate until the date that is 12 months following such termination; (ii) if
the Option cannot be exercised on such day because of any injunction, order or
similar restraint issued by a court of competent jurisdiction, the Option shall
expire on the 30th business day after such injunction, order or restraint shall
have been dissolved or when such injunction, order or restraint shall have
become permanent and no longer subject to appeal, as the case may be; and
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(iii) that any such exercise shall be subject to compliance with applicable law,
including the HOLA.
(b) As used herein, a "Purchase Event" shall mean any of the following
events:
(i) Buyer or any of its Subsidiaries, without having received prior
written consent from Seller, shall have entered into, authorized,
recommended, proposed or publicly announced its intention to enter into,
authorize, recommend, or propose, an agreement, arrangement or
understanding with any person (other than Seller or any of its
Subsidiaries, Selling Stockholder or General Partner) to (A) effect a
merger or consolidation or similar transaction involving Buyer or any of
its Subsidiaries (other than internal mergers, reorganizing actions,
consolidations or dissolutions involving only existing Subsidiaries of
Buyer), (B) purchase, lease or otherwise acquire 15% or more of the assets
of Buyer or any of its Subsidiaries, or (C) purchase or otherwise acquire
(including by way of merger, consolidation, share exchange or similar
transaction) Beneficial Ownership (as defined below) of Common Stock
representing more than 15% of the voting power of Buyer or any of its
Subsidiaries;
(ii) any person (other than Seller or any of its Subsidiaries, Selling
Stockholder or General Partner or any person acting in concert with any
such parties, or Buyer or any Subsidiary of Buyer in a fiduciary capacity)
shall have acquired Beneficial Ownership or the right to acquire Beneficial
Ownership of more than 15% of the voting power of Buyer; or
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(iii) Buyer's Board of Directors shall have withdrawn or modified in a
manner adverse to Seller the recommendation of the Board of Directors with
respect to the Agreement, in each case after an Extension Event; or
(iv) the holders of Buyer Common Stock shall not have approved the
Agreement at the Buyer Meeting, or such Meeting shall not have been held or
shall have been canceled prior to termination of the Agreement in
accordance with its terms, in each case after an Extension Event.
(c) As used herein, the term "Extension Event" shall mean any of the
following events:
(i) a Purchase Event of the type specified in clauses (b) (i) and
(b) (ii) above;
(ii) any person (other than Seller or any of its Subsidiaries, Selling
Stockholder or General Partner) shall have "commenced" (as such term is
defined in Rule 14d-2 under the Exchange Act), or shall have filed a
registration statement under the Securities Act with respect to, a tender
offer or exchange offer to purchase shares of Buyer Common Stock such that,
upon consummation of such offer, such person would have Beneficial
Ownership or the right to acquire Beneficial Ownership of more than 15% of
the voting power of Buyer; or,
(iii) any person (other than Seller or any Subsidiary of Seller,
Selling Stockholder or General Partner, or Buyer or any Subsidiary of Buyer
in a fiduciary capacity) shall have publicly announced its willingness, or
shall have publicly announced a proposal, or publicly disclosed an
intention to
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make a proposal, (x) to make an offer described in clause (ii) above or (y)
to engage in a transaction described in clause (i) above.
(d) As used herein, the terms "Beneficial Ownership" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange Act.
(e) In the event Seller wishes to exercise the Option, it shall deliver to
Buyer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of shares of Buyer Common Stock
it intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 calendar days from the Notice
Date for the closing of such purchase (the "Closing Date").
4. Payment and Delivery of Certificates.
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(a) At the closing referred to in Section 3 hereof, Seller shall pay to
Buyer the aggregate purchase price for the shares of Buyer Common Stock
purchased pursuant to the exercise of the Option in immediately available funds
by wire transfer to a bank account designated by Buyer.
(b) At such closing, simultaneously with the delivery of cash as provided
in Section 4(a), Buyer shall deliver to Seller a certificate or certificates
representing the number of shares of Buyer Common Stock purchased by Seller,
registered in the name of Seller or a nominee designated in writing by Seller,
and Seller shall deliver to Buyer a letter agreeing that Seller shall not offer
to sell, pledge or otherwise dispose of such shares in violation of applicable
law or the provisions of this Option Agreement.
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(c) If at the time of issuance of any Buyer Common Stock pursuant to any
exercise of the Option, Buyer shall have issued any share purchase rights or
similar securities to holders of Buyer Common Stock, then each such share of
Buyer Common Stock shall also represent rights with terms substantially the same
as and at least as favorable to Seller as those issued to other holders of Buyer
Common Stock.
(d) Certificates for Buyer Common Stock delivered at any closing hereunder
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
___________________, a copy of which is on file at the principal office of
_____________, and to resale restrictions arising under the Securities Act
of 1933 and any applicable state securities laws. A copy of such agreement
will be provided to the holder hereof without charge upon receipt by
___________________ 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 Seller shall have delivered
to Buyer an opinion of counsel, in form and substance reasonably satisfactory to
Buyer and its counsel, to the effect that such legend is not required for
purposes of the Securities Act and any applicable state securities laws.
5. Authorization, etc.
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(a) Buyer hereby represents and warrants to Seller that:
(i) Buyer has full corporate authority to execute and deliver this
Option Agreement and, subject to Section 11(i), to consummate the
transactions contemplated hereby;
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(ii) such execution, delivery and consummation have been authorized by
the Board of Directors, and no other corporate actions are necessary
therefor;
(iii) this Option Agreement has been duly and validly executed and
delivered and represents a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms; and
(iv) Buyer has taken all necessary corporate action to authorize and
reserve and, subject to Section 11(i), permit it to issue and, at all times
from the date hereof through the date of the exercise in full or the
expiration or termination of the Option, shall have reserved for issuance
upon exercise of the Option, 1,290,530 shares of Buyer Common Stock, all of
which, upon issuance pursuant hereto, shall be duly authorized, validly
issued, fully paid and nonassessable, and shall be delivered free and clear
of all claims, liens, encumbrances, restrictions (other than federal and
state securities restrictions) and security interests and not subject to
any preemptive rights.
(b) Seller hereby represents and warrants to Buyer that:
(i) Seller has full corporate authority to execute and deliver this
Option Agreement and, subject to Section 11(i), to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have been authorized by
all requisite corporate action by Seller, and no other corporate
proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly executed and
delivered and represents a valid and legally
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binding obligation of Seller, enforceable against Seller in accordance with
its terms; and
(iv) any Buyer Common Stock or other securities acquired by Seller
upon exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed of
except in compliance with the Securities Act.
6. Adjustment upon Changes in Capitalization.
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In the event of any change in Buyer Common Stock by reason of dividends,
split-ups, recapitalizations or the like, the type and number of shares subject
to the Option, and the purchase price per share, as the case may be, shall be
adjusted appropriately. In the event that any additional shares of Buyer Common
Stock are issued after the date of this Option Agreement (other than pursuant to
an event described in the preceding sentence or pursuant to this Option
Agreement), the number of Shares of Buyer Common Stock subject to the Option
shall be adjusted so that, after such issuance, it equals at least 19.9% of the
number of shares of Buyer Common Stock then issued and outstanding (without
considering any shares subject to or issued pursuant to the Option).
7. Repurchase.
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(a) Subject to Section 11(i), at the request of Seller at any time
commencing upon the occurrence of a Purchase Event and ending 13 months
immediately thereafter (the "Repurchase Period"), Buyer (or any successor entity
thereof) shall repurchase the Option from Seller together with all (but not less
than all, subject to Section 10) shares of Buyer Common Stock purchased by
Seller pursuant thereto with respect to which Seller then has Beneficial
Ownership,
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at a price (per share, the "Per share Repurchase Price") equal to the sum of:
(i) The exercise price paid by Seller for any shares of Buyer Common
Stock acquired pursuant to the Option;
(ii) The difference between (A) the "Market/Tender Offer Price" for
share of Buyer Common Stock (defined as the higher of (x) the highest price
per share at which a tender or exchange offer has been made for shares of
Buyer Common Stock or (y) the highest closing mean of the "bid" and the
"ask" price per share of Buyer Common Stock reported by the Nasdaq, the
automated quotation system of the National Association of Securities
Dealers, Inc., for any day within that portion of the Repurchase Period
which precedes the date Seller gives notice of the required repurchase
under this Section 7) and (B) the exercise price as determined pursuant to
Section 2 hereof (subject to adjustment as provided in Section 6),
multiplied by the number of shares of Buyer Common Stock with respect to
which the Option has not been exercised, but only if the Market/Tender
Offer Price is greater than such exercise price;
(iii) The difference between the Market/Tender Offer Price and the
exercise price paid by Seller for any shares of Buyer Common Stock
purchased pursuant to the exercise of the Option, multiplied by the number
of shares so purchased, but only if the Market/Tender Offer Price is
greater than such exercise price; and
(iv) Seller's reasonable out-of-pocket expenses incurred in connection
with the transactions contemplated by the Merger
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Agreement, including, without limitation, legal, accounting and investment
banking fees.
(b) In the event Seller exercises its rights under this Section 7, Buyer
shall, within ten business days thereafter, pay the required amount to Seller by
wire transfer of immediately available funds to an account designated by Seller
and Seller shall surrender to Buyer the Option and the certificates evidencing
the shares of Buyer Common Stock purchased thereunder with respect to which
Seller then has Beneficial Ownership, and Seller shall warrant that it has sole
record and Beneficial Ownership of such certificates and that the same are free
and clear of all liens, claims, charges, restrictions and encumbrances of any
kind whatsoever.
(c) In determining the Market/Tender Offer Price, the value of any
consideration other than cash shall be determined by an independent nationally
recognized investment banking firm selected by Seller and reasonably acceptable
to Buyer.
8. Repurchase at Option of Buyer and First Refusal.
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(a) Except to the extent that Seller shall have previously exercised its
rights under Section 7, at the request of Buyer during the six-month period
commencing 13 months following the first occurrence of a Purchase Event, Buyer
may repurchase from Seller, and Seller shall sell to Buyer, all (but not less
than all, subject to Section 10) of the Buyer Common Stock acquired by Seller
pursuant hereto and with respect to which Seller has Beneficial Ownership at the
time of such repurchase at a price per share equal to the greater of (i) 110% of
the Market/Tender Offer Price per share, (ii) the Per Share Repurchase Price or
(iii) the sum of (A)
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the aggregate Purchase Price of the shares so repurchased plus (B) interest on
the aggregate Purchase Price paid for the shares so repurchased from the date of
purchase to the date of repurchase at the highest rate of interest announced by
Seller Bank as its prime or base lending or reference rate during such period,
less any dividends received on the shares so repurchased, plus (C) Seller's
reasonable out-of-pocket expenses incurred in connection with the transactions
contemplated by the Agreement, including, without limitation, legal, accounting
and investment banking fees. Any repurchase under this Section 8(a) shall be
consummated in accordance with Section 7(b).
(b) If, at any time after the occurrence of a Purchase Event and prior to
the earlier of (i) the expiration of 18 months immediately following such
Purchase Event or (ii) the expiration or termination of the Option, Seller shall
desire to sell, assign, transfer or otherwise dispose of the Option or all or
any of the share of Buyer Common Stock acquired by it pursuant to the Option, it
shall give Buyer written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, and setting forth the terms of
the proposed transaction. An Offeror's Notice shall be deemed an offer by
Seller to Buyer, which may be accepted within ten business days of the receipt
of such Offeror's Notice, on the same terms and conditions and at the same price
at which Seller is proposing to transfer the Option or such shares to a third
party. The purchase of the Option or any such shares by Buyer shall be closed
within ten business days of the date of the acceptance of the offer and the
purchase price shall be paid to Seller by wire transfer of immediately available
funds to an
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account designated by Seller. In the event of the failure or refusal of Buyer
to purchase the Option or all the shares covered by the Offeror's Notice or if
any Regulatory Authority disapproves Buyer's proposed purchase of the Option or
such shares, Seller may, within 60 days from the date of the Offeror's Notice,
sell all, but not less than all, of the Option or such shares to such third
party at no less than the price specified and on terms no more favorable to the
purchaser than those set forth in the Offeror's Notice. The requirements of
this Section 8(b) shall not apply to (i) any disposition as a result of which
the proposed transferee would Beneficially Own not more than 2% of the voting
power of Buyer or (ii) any disposition of Buyer Common Stock by a person to whom
Seller has sold Buyer Common Stock issued upon exercise of the Option.
9. Registration Rights.
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At any time after a Purchase Event, Buyer shall, if requested by any holder
or beneficial owner of shares of Buyer Common Stock issued upon exercise of the
Option (except any beneficial holder who acquired all of such holder's shares in
a transaction exempt from the requirements of Section 8(b) by reason of clause
(i) thereof) (each a "Holder"), as expeditiously as possible file a registration
statement on a form for general use under the Securities Act if necessary in
order to permit the sale or other disposition of the shares of Buyer Common
Stock that have been acquired upon exercise of the Option in accordance with the
intended method of sale or other disposition requested by any such Holder (it
being understood and agreed that any such sale or other disposition shall be
effected on a widely distributed basis so
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that, upon consummation thereof, no purchaser or transferee shall Beneficially
Own more than 2% of the shares of Buyer Common Stock then outstanding). Each
such Holder shall provide all information reasonably requested by Buyer for
inclusion in any registration statement to be filed hereunder. Buyer shall use
its 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
day such registration statement first becomes effective as may be reasonably
necessary to effect such sales or other dispositions. The registration effected
under this Section 9 shall be at Buyer's expense except for underwriting
commissions and the fees and disbursements of such Holders' counsel attributable
to the registration of such Buyer Common Stock. In no event shall Buyer be
required to effect more than one registration hereunder. The filing of the
registration statement hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public distribution by Buyer of Buyer
Common Stock or if a special audit of Buyer would otherwise be required in
connection therewith. If requested by any such Holder in connection with such
registration, Buyer shall become a party to any underwriting agreement relating
to the sale of such certificates, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for parties similarly
situated. Upon receiving any request for registration under this Section 9 from
any Holder, Buyer agrees to send a copy thereof to any other person known to
Buyer to be entitled to registration rights under this Section 9, in each case
by promptly mailing the same, postage
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prepaid, to the address of record of the persons entitled to receive such
copies.
10. Severability.
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Any term, provision, covenant or restriction contained in this Option
Agreement held by a court or a Regulatory Authority of competent jurisdiction to
be invalid, void or unenforceable, shall be ineffective to the extent of such
invalidity, voidness or unenforceability, but neither the remaining terms,
provisions, covenants or restrictions contained in this Option Agreement nor the
validity or enforceability thereof in any other jurisdiction shall be affected
or impaired thereby. Any term, provision, covenant or restriction contained in
this Option Agreement that is so found to be so broad as to be unenforceable
shall be interpreted to be as broad as is enforceable. If for any reason such
court or Regulatory Authority determines that applicable law will not permit
Seller or any other person to acquire, or Buyer to repurchase or purchase, the
full number of shares of Buyer Common Stock provided in Section 2 hereof (as
adjusted pursuant to Section 6 hereof), it is the express intention of the
parties hereto to allow Seller or such other person to acquire, or Buyer to
repurchase or purchase, such lesser number of shares as may be permissible,
without any amendment or modification hereof.
11. Miscellaneous.
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(a) Expenses. Each of the parties hereto shall pay all costs and expenses
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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, except as otherwise provided
herein.
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(b) Entire Agreement. Except as otherwise expressly provided herein, this
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Option Agreement and the Agreement contain the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral.
(c) Successors; No Third Party Beneficiaries. The terms and conditions of
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this Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing
in this Option Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this Option Agreement, except as expressly provided herein.
(d) Assignment. Other than as provided in Sections 8 and 9 hereof, neither
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of the parties hereto may sell, transfer, assign or otherwise dispose of any of
its rights or obligations under this Option Agreement or the Option created
hereunder to any other person (whether by operation of law or otherwise),
without the express written consent of the other party.
(e) Notices. All notices or other communications which are required or
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permitted hereunder shall be in writing and sufficient if delivered in
accordance with Section 8.02 of the Agreement (which is incorporated herein by
reference).
(f) Counterparts. This Option Agreement may be executed in counterparts,
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and each such counterpart shall be deemed to be an original instrument, but both
such counterparts together shall constitute but one agreement.
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(g) Specific Performance. The parties hereto agree that if for any reason
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Seller or Buyer shall have failed to perform its obligations under this Option
Agreement, then either party hereto seeking to enforce this Option Agreement
against such non-performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. This provision
is without prejudice to any other rights that either party hereto may have
against the other party hereto for any failure to perform its obligations under
this Option Agreement.
(h) Governing Law. This Option Agreement shall be governed by and
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construed in accordance with the laws of the State of Delaware applicable to
agreements made and entirely to be performed within such state. Nothing in this
Option Agreement shall be construed to require any party (or any subsidiary or
affiliate of any party) to take any action or fail to take any action in
violation of applicable law, rule or regulation.
(i) Regulatory Approvals; Section 16(b). If, in connection with (A) the
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exercise of the Option under Section 3 or a sale by Seller to a third party
under Section 8, (B) a repurchase by Buyer under Section 7 or a repurchase or
purchase by Buyer under Section 8, prior notification to or approval of the OTS
or any other Regulatory Authority is required, then the required notice or
application for approval shall be promptly filed and expeditiously processed and
periods of time that otherwise would run pursuant to such Sections shall run
instead from the date on which any such
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required notification period has expired or been terminated or such approval has
been obtained, and in either event, any requisite waiting period shall have
passed. In the case of clause (A) of this subsection (i), such filing shall be
made by Seller, and in the case of clause (B) of this subsection (i), such
filing shall be made by Buyer, provided that each of Seller and Buyer shall use
its best efforts to make all filings with, and to obtain consents of, all third
parties and Regulatory Authorities necessary to the consummation of the
transactions contemplated hereby. Periods of time that otherwise would run
pursuant to Sections 3, 7 or 8 shall also be extended to the extent necessary to
avoid liability under Section 16(b) of the Exchange Act.
(j) No Breach of Agreement Authorized. Nothing contained in this Option
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Agreement shall be deemed to authorize Buyer to issue any shares of Buyer Common
Stock in breach of, or otherwise breach any of, the provisions of the Agreement.
(k) Waiver and Amendment. Any provision of this Agreement may be waived at
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any time by the party that is entitled to the benefits of such provision. This
Option Agreement may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by the parties
hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the date first written above.
BAY VIEW CAPITAL CORPORATION
By: /s/ Edward H. Sondker
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Name: Edward H. Sondker
Title: President and Chief
Executive Officer
AMERICA FIRST EUREKA HOLDINGS, INC.
By: /s/ Stephen T. McLin
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Name: Stephen T. McLin
Title: Chief Executive Officer
and President
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