EXHIBIT 10.3
THE TRANSFER OF THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED
HEREIN AND TO RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS
STOCK OPTION AGREEMENT
This Stock Option Agreement, dated as of June 25, 1996 (the
"Agreement"), is made by and between Mid-Peninsula Bancorp, a California
corporation ("Issuer"), and Cupertino National Bancorp, a California
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Reorganization and Merger dated June 5, 1996 (the "Reorganization
Agreement"), providing for, among other things, the merger of Grantee with
and into Issuer (the "Merger"), with Issuer concurrently changing its name to
Greater Bay Bancorp and being the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Reorganization Agreement, and in consideration of the grant of the option
granted pursuant to the Stock Option Agreement, dated the date hereof,
between Issuer as grantee and Grantee as issuer (the "Reciprocal Option"),
Issuer has agreed to grant to Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Reorganization Agreement, and intending to be legally bound hereby,
Issuer and Grantee agree as follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Reorganization
Agreement. As used in this Agreement, the following terms shall have the
meanings indicated:
(a) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
(c) "Holder" means Grantee and, to the extent Grantee has assigned
its rights and obligations under this Agreement as permitted herein, any
subsidiary of Grantee, but only to the extent such entity is the holder of
rights afforded by this Agreement at the time such rights are exercised or
otherwise asserted.
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(d) "Person" shall have the meaning specified in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act and the rules and regulations thereunder.
(e) "Securities Act" means the Securities Act of 1933, as amended.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option")
to purchase up to 307,504 shares (the "Option Shares") of Common Stock, no
par value ("Issuer Common Stock"), of Issuer at a purchase price per Option
Share of Twenty and 45/100ths Dollars ($20.45) (the "Purchase Price"). The
Purchase Price and the number of Option Shares that may be received upon the
exercise of the Option are subject to adjustment as set forth below.
3. EXERCISE OF OPTION.
(a) The Holder may exercise the Option, in whole or in part, at
any time and from time to time following the occurrence of a Purchase Event
(as defined below); PROVIDED THAT the Option shall terminate and be of no
further force and effect upon the earliest to occur of:
(i) the Effective Time of the Merger; or
(ii) 12 months after the first occurrence of a Purchase Event;
or
(iii) 18 months after the termination of the
Reorganization Agreement on or following the occurrence of a Preliminary
Purchase Event (as defined below); or
(iv) termination of the Reorganization Agreement in accordance
with the terms thereof prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event; or
(v) the date on which the Reciprocal Option shall have become
exercisable, in whole or in part, in accordance with its terms.
Notwithstanding anything to the contrary contained herein, (A) the Option may
not be exercised at any time when Grantee shall be in breach of any of its
covenants or agreements contained in the Reorganization Agreement such that
Issuer shall be entitled (without regard to any grace period provided
therein) to terminate the Reorganization Agreement pursuant to Section
12b(vii) thereof, whether or not Issuer shall have so terminated the
Reorganization Agreement; (B) this Agreement and the Option shall terminate
automatically upon the termination of the Reorganization Agreement by Issuer
pursuant to Section 12b(vii) thereof; and (C) any purchase of shares upon
exercise of the Option shall be subject to compliance with applicable law,
including, without limitation, the Bank Holding Company Act of 1956, as
amended.
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(b) As used herein, a "Purchase Event" means any of the following
events:
(i) The Board of Directors of Issuer shall have approved, or
recommended to the Issuer's shareholders that they approve, a proposal
received by Issuer from a person (other than Grantee or any subsidiary of
Grantee) to effect an Acquisition Transaction (as defined below), Tender
Offer (as defined below) or Exchange Offer (as defined below); or
(ii) Issuer, without having received Grantee's prior written
consent, shall have entered into an agreement with any person (other than
Grantee or any subsidiary of Grantee) to effect an Acquisition Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act and the rules and regulations promulgated thereunder) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of fifteen percent (15%) or more of the then outstanding shares of
Issuer Common Stock.
As used herein, the term "Acquisition Transaction" shall mean (A) a merger,
consolidation or similar transaction involving Issuer or any of its
subsidiaries (other than internal mergers, reorganizations, consolidations or
dissolutions involving only Issuer and/or existing subsidiaries and other
than a merger, consolidation or similar transaction in which the common
shareholders of Issuer immediately prior thereto in the aggregate own at
least seventy-five percent (75%) of the common stock of the surviving or
successor corporation immediately after the consummation thereof), (B) the
disposition, by sale, lease, exchange or otherwise, of fifteen (15%) or more
of the consolidated assets or deposit liabilities of Issuer and its
subsidiaries, or (C) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or any similar transaction), other than
by Issuer or its subsidiaries, of securities representing fifteen percent
(15%) or more of the voting power of Issuer or any of its subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership of, or the right to acquire
beneficial ownership of, or any "group" (as defined under the Exchange Act
and the rules and regulations thereunder) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, ten
percent (10%) or more of the then outstanding shares of Issuer Common Stock;
or
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(ii) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2 under
the Exchange Act), or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to purchase
any shares of Issuer Common Stock such that, upon consummation of such offer,
such person would own or control ten percent (10%) or more of the then
outstanding shares of Issuer Common Stock (such an offer being referred to
herein as a "Tender Offer" or an "Exchange Offer", respectively); or
(iii) Issuer, without having received Grantee's prior
written consent, shall have entered into an agreement with any person (other
than Grantee or any subsidiary of Grantee) with respect to, or the Board of
Directors of Issuer shall have recommended that the shareholders of Issuer
approve or accept, a purchase or other acquisition (including by way of
merger, consolidation, share exchange or any similar transaction), other than
by Issuer or its subsidiaries, representing ten percent (10%) or more of the
voting power of Issuer or any of its subsidiaries; or
(iv) any person (other than Grantee or any subsidiary of
Grantee) shall have filed an application or notice with the Federal Reserve
Board or other federal or state regulatory authority, which application or
notice has been accepted for processing, for approval to engage in an
Acquisition Transaction; or
(v) the holders of Issuer Common Stock shall not have
approved the Reorganization Agreement at the meeting of such shareholders
held for the purpose of voting on the Reorganization Agreement, such meeting
shall not have been held or shall have been canceled prior to termination of
the Reorganization Agreement, or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee the recommendation of
Issuer's Board of Directors with respect to the Reorganization Agreement, in
each case after it shall have been publicly announced that any person (other
than Grantee or any subsidiary of Grantee) shall have (A) made or disclosed
an intention to make a proposal to engage in an Acquisition Transaction or
(B) commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Purchase Event or Preliminary Purchase Event; PROVIDED,
HOWEVER, such notice shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall
send to Issuer a written notice (dated the date on which it is sent to
Issuer, which date is 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 date not earlier than three (3) business days nor later
than fifteen (15) business days from the Notice Date for the closing (the
"Closing") of such purchase (the "Closing Date"). The Closing shall be held
at the Issuer's principal office or at such other place as Issuer and Holder
may agree. If prior notification to or approval of the Federal Reserve Board
or any other regulatory authority is required as a condition precedent
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to such purchase, then (A) Holder shall promptly file and process the
required notice or application for approval; (B) Issuer shall cooperate with
Holder in the filing of the required notice or application for approval and
the obtaining of any such approval; and (C) the Closing Date shall be subject
to extension for such period of time, not to exceed six (6) months, as may be
necessary to permit the Holder to submit such filing to, and, if necessary,
to obtain such approval from, the Federal Reserve Board or other applicable
regulatory authority; PROVIDED, HOWEVER, that the notice of Option exercise
and such governmental filing must be made, and the Notice Date must be, no
later than the date on which the Option would otherwise terminate. Any
exercise of the Option shall be deemed to have occurred on the Notice Date.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified
in Section 11(g) hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever, and (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 Issuer Common
Stock purchasable hereunder; and (ii) Holder shall deliver to Issuer a letter
agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of the provisions of this Agreement or applicable
state and federal securities laws.
(c) Certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR QUALIFIED
OR REGISTERED UNDER THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE
SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND UNTIL THEY HAVE BEEN QUALIFIED OR
REGISTERED UNDER APPLICABLE STATE SECURITIES LAWS, UNLESS THE ISSUER
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES,
REASONABLY SATISFACTORY TO THE ISSUER, STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
TRANSFER OF THE
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SECURITIES REPRESENTED BY THIS CERTIFICATE IS ALSO
SUBJECT TO RESALE RESTRICTIONS ARISING UNDER THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF JUNE 5, 1996, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF THE ISSUER.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Holder shall
have delivered to Issuer a copy of a letter from the staff of the SEC, or an
opinion of counsel in form and substance reasonably satisfactory to Issuer
and its counsel, to the effect that such legend is not required for purposes
of the Securities Act or applicable state securities laws.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents
and warrants to Grantee as follows:
(a) DUE AUTHORIZATION. Issuer has all requisite corporate power
and authority to enter into this Agreement and, subject to any approvals
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly
executed and delivered by Issuer.
(b) AUTHORIZED STOCK. Issuer has taken all necessary corporate
action to authorize and reserve and to permit it to issue, and, at all times
from the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common
Stock or other securities which may be issued pursuant to Section 7 upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon
due exercise of the Option, including all additional shares of Issuer Common
Stock or other securities which may be issuable pursuant to Section 7, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any stockholder of Issuer.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) DUE AUTHORIZATION. Grantee has all requisite corporate power
and authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly
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authorized by all necessary corporate action on the part of Grantee. This
Agreement has been duly executed and delivered by Grantee.
(b) PURCHASE NOT FOR DISTRIBUTION. This Option is not being, and
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 and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities Act
and applicable state securities laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of
a stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the
documentation pertaining to such transaction so that Holder shall receive,
upon exercise of the Option, the number and class of shares or other
securities or property that Holder would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior to such
event, or the record date therefor, as applicable. If any additional shares
of Issuer Common Stock are issued after the date of this Agreement (whether
upon exercise of stock options or otherwise but excluding any issuance
pursuant to an event described in the first sentence of this Section 7(a)),
the number of shares of Issuer Common Stock subject to the Option shall be
adjusted so that, after such issuance, such number of shares, together with
any shares of Issuer Common Stock previously issued pursuant hereto, equals
nineteen percent (19%) of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option (with any fractional share being rounded up to
the next full share). Issuer agrees that in no event shall the number of
shares of Issuer Common Stock issued after the date of this Agreement
pursuant to the preceding sentence, together with the number of shares of
Issuer Common Stock subject to the Option, adjusted as aforesaid, exceed the
number of available authorized but unissued and unreserved shares of Issuer
Common Stock.
(b) In the event that Issuer shall, prior to the occurrence of an
event set forth in Section 3(a) terminating the Holder's right to exercise
the Option, enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its subsidiaries, to merge
into Issuer and Issuer shall be the continuing or surviving corporation, but,
in connection with such merger, the then outstanding shares of Issuer Common
Stock shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or the outstanding
shares of Issuer Common Stock immediately prior to such merger shall after
such merger represent less than fifty percent (50%) of the outstanding shares
and share equivalents of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its consolidated assets or deposit
liabilities to any person other than
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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
(A) the Acquiring Corporation (as defined below), or (B) any person that
controls the Acquiring Corporation, (such person being referred to as the
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
PROVIDED THAT if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee. The Substitute Option
Issuer shall also enter into an agreement with the then holder or holders of
the Substitute Option in substantially the same form as this Agreement (after
giving effect for such purposes to the provisions of this Agreement), which
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as is hereinafter defined) as is equal
to the Assigned Value (as is hereinafter defined) multiplied by the number of
shares of the Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as is hereinafter defined). The
exercise price of the Substitute Option per share of the Substitute Common
Stock (the "Substitute Purchase Price") shall then be equal to the Purchase
Price multiplied by a fraction in which the numerator is the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable
and the denominator is the number of shares of the Substitute Common Stock
for which the Substitute Option is exercisable.
(e) As used herein, the following terms have the meanings
indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, and (C) the transferee of all or any substantial part of
the Issuer's assets (or the assets of its subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (A) the price
per share of the Issuer Common Stock at which a Tender Offer or Exchange
Offer therefor has been made by any person (other than Grantee or a
subsidiary of Grantee), (B) the price per share of the Issuer Common Stock to
be paid by any person (other than Grantee or a subsidiary of Grantee)
pursuant to an agreement with Issuer, and (C) the highest bid price per share
of Issuer Common Stock as quoted by the brokerage firms acting as market
makers for Issuer's Common Stock prior to the listing of Issuer's Common
Stock on the NASDAQ National Market System and thereafter, on the NASDAQ
Stock Market or other principal trading market or securities exchange on
which such shares are traded as reported by a
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recognized source within the six-month period immediately preceding the
effective date of the agreement governing the transaction described in
Section 7(b) which gave rise to the Substitute Option; PROVIDED, HOWEVER,
that in the event of a sale of less than all of Issuer's consolidated assets
or deposit liabilities, the Assigned Value shall be the sum of the price paid
in such sale for such assets or deposit liabilities and the current market
value of the remaining consolidated net assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder (or by a
majority in interest of the Holders if there shall be more than one Holder (a
"Holder Majority")) and reasonably acceptable to Issuer, divided by the
number of shares of the Issuer Common Stock outstanding at the time of such
sale. In the event that an exchange offer is made for the Issuer Common
Stock or an agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other property
issuable or deliverable in exchange for the Issuer Common Stock shall be
determined by a nationally recognized investment banking firm by Holder (or a
Holder Majority) and reasonably acceptable to Issuer.
(iv) "Average Price" shall mean the average closing price
determined as described above prior to and following the listing of Issuer's
common stock on the NASDAQ National Market System of a share of the
Substitute Common Stock for the one year immediately preceding the effective
date of the consolidation, merger or sale in question, but in no event higher
than the closing price of the shares of the Substitute Common Stock on the
day preceding such consolidation, merger or sale; PROVIDED THAT if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed with
respect to a share of common stock issued by Issuer, the person merging into
Issuer or by any company which controls or is controlled by such merging
person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than nineteen percent
(19%) of the aggregate of the shares of the Substitute Common Stock
outstanding prior to exercise of the Substitute Option (with any fractional
share being rounded up to the next full share).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder and take all other actions that may be
necessary so that the provisions of this Section 7 are given full force and
effect (including, without limitation, any action that may be necessary so
that the shares of Substitute Common Stock are in no way distinguishable from
or have lesser economic value than other shares of common stock issued by the
Substitute Option Issuer).
(h) At the written request of Holder delivered to the Substitute
Option Issuer prior to the occurrence of an event set forth in Section 3(a)
above terminating the Substitute Option, the Substitute Option Issuer shall
repurchase from Holder (i) the Substitute Option and/or (ii) all Substitute
Common Stock theretofore purchased by Holder pursuant hereto with respect to
which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 7(h) is referred to as the
"Substitute Option Request
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Date." Such repurchase shall be at an aggregate price (the "Substitute
Option Repurchase Consideration") equal to the sum of (A) the excess, if any,
of (1) the Highest Closing Price (as defined below) for each share of
Substitute Common Stock over (2) the Substitute Purchase Price per share of
Substitute Common Stock, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised and as to
which Holder has exercised its repurchase right hereunder, plus (B) the
Highest Closing Price for each share of Substitute Common Stock multiplied by
the number of shares of Substitute Common Stock acquired by Holder upon
exercise of the Option or Substitute Option and as to which Holder has
exercised its repurchase right hereunder. The term "Highest Closing Price"
shall mean the highest bid price per share of Substitute Common Stock as
quoted by the brokerage firms acting as market makers for the Substitute
Common Stock prior to the listing of the Substitute Common Stock on any
national securities exchange and thereafter as reported by the principal
trading market or securities exchange on which such shares are traded, during
the sixty (60) business days preceding the Substitute Option Request Date.
(i) The provisions of Sections 8(b), 8(c), 9 and 10 shall apply,
with appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and as applicable, references in such
sections to "Issuer", "Option", "Purchase Price", "Issuer Common Stock",
"Repurchase Consideration", and "Request Date" shall be deemed to be
references to "Substitute Option Issuer", "Substitute Option", "Substitute
Purchase Price", "Substitute Common Stock", "Substitute Option Repurchase
Consideration", and "Substitute Option Request Date", respectively.
8. REPURCHASE AT THE OPTION OF GRANTEE.
(a) At any time after the first occurrence of a Repurchase Event
(as defined in Section 8(e) below), at the written request of Holder
delivered to Issuer prior to the occurrence of an event set forth in Section
3(a) above terminating the Option, Issuer shall repurchase from Holder (i)
the Option and (ii) all Option Shares theretofore purchased by Holder
pursuant hereto with respect to which Holder then has beneficial ownership.
The date on which Holder exercises its rights under this Section 8 is
referred to as the "Request Date." Such repurchase shall be at an aggregate
price (the "Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any
Option Shares acquired pursuant to the Option with respect to which Holder
then has beneficial ownership;
(ii) the excess, if any, of (A) the Applicable Price (as
defined below) for each Option Share over (B) the Purchase Price per Option
Share (subject to adjustment pursuant to Section 7(a)), multiplied by the
number of Option Shares with respect to which the Option has not been
exercised; and
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10
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7(a)) paid (or, in
the case of Option Shares with respect to which the Option has been exercised
but the Closing Date has not occurred, payable) by Holder for each Option
Share with respect to which the Option has been exercised and with respect to
which Holder then has beneficial ownership, multiplied by the number of such
shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten (10) business days after the Request Date, pay the
Repurchase Consideration to Holder in immediately available funds, and Holder
shall surrender to Issuer the Option and the certificates evidencing the
Option Shares purchased thereunder with respect to which Holder then has
beneficial ownership and has designated to be repurchased, and Holder shall
warrant that it has sole record and beneficial ownership of such shares and
that the same are then free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever.
(c) Notwithstanding the provisions hereof to the contrary, to the
extent that Issuer is prohibited under applicable law, regulation or
administrative policy from repurchasing all or any portion of the Option or
Option Shares, then (i) Issuer shall promptly give notice of such fact to
Holder; (ii) Issuer shall, from time to time subject to the last sentence of
this Section 8(c), deliver to Holder that portion of the Repurchase
Consideration that it is not then so prohibited from paying; (iii) at
Holder's request, Issuer shall promptly file any required notice or
application for approval and expeditiously process the same. After Holder's
receipt of such notice from Issuer, Issuer shall not be in breach of its
repurchase obligation hereunder to the extent it is or remains, despite
reasonable efforts to obtain any required approvals, legally prohibited from
repurchasing the Option or Option Shares. Holder shall have the right (A) to
revoke its request for repurchase with respect to the portion of the Option
or Option Shares that Issuer is prohibited from repurchasing, (B) to require
Issuer to deliver to Holder the Option and/or Option Shares Issuer is
prohibited from repurchasing, and (C) to exercise the Option as to the number
of Option Shares for which the Option was exercisable at the Request Date
less the number of such Option Shares in respect of which the Repurchase
Consideration has been lawfully paid. Notwithstanding anything herein to the
contrary, Issuer shall not be obligated to repurchase all or any part of the
Option or Option Shares pursuant to more than one written request from
Holder, except that Issuer shall be obligated to repurchase, pursuant to more
than one written request, any Option or Option Shares in the event that
Holder (1) has revoked its request for repurchase in accordance with the
provisions of this Section 8 prior to the occurrence of an event set forth in
Section 3(a) terminating the Holder's right to exercise the Option and (2)
has delivered, prior to such event, a new written notice requesting a
repurchase. If an event set forth in Section 3(a) terminating the Holder's
right to exercise the Option occurs prior to, or is scheduled to occur
within, sixty (60) days after the date of the notice by Issuer described in
clause 8(c)(i) above, then, notwithstanding the occurrence of such
terminating event, Holder shall have the right to receive the Repurchase
Consideration to the extent Issuer is or becomes, within a sixty (60) day
period from the date of such notice by Issuer, legally permitted to
repurchase. Except as set forth in the preceding sentence, Holder's
repurchase rights under this Agreement shall
11
Page 40 of 69 Pages
terminate concurrently with the termination of Holder's right to exercise the
Option, pursuant to Section 3(a).
(d) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of Issuer Common Stock paid
for any such share by the person or groups described in Section 8(e)(i), (ii)
the price per share of Issuer Common Stock received by holders of Issuer
Common Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the
highest bid price per share of Issuer Common Stock as quoted by the brokerage
firms acting as market makers for Issuer's Common Stock prior to the listing
of Issuer's Common Stock on the NASDAQ National Market System and thereafter
on the NASDAQ Stock Market or other principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
during the sixty (60) business days preceding the Request Date; PROVIDED,
HOWEVER, that in the event of a sale of less than all of Issuer's assets, the
Applicable Price shall be the sum of the price paid in such sale for such
assets or deposit liabilities and the current market value of the remaining
consolidated net assets of Issuer as determined by a nationally recognized
investment banking firm selected by Holder (or the Holder Majority) and
reasonably acceptable to Issuer, divided by the number of shares of the
Issuer Common Stock outstanding at the time of such sale. If the
consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Holder (or the Holder
Majority) and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(e) As used herein, a "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act and the rules and
regulations promulgated thereunder) shall have been formed which beneficially
owns, or has the right to acquire beneficial ownership of, fifty percent
(50%) or more of the then outstanding shares of Issuer Common Stock or (ii)
any of the transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
shall be consummated.
9. LISTING. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are not then authorized for quotation on
the NASDAQ Stock Market National Market System or any securities exchange,
Issuer, upon the request of Holder, will promptly file an application to
authorize for quotation the shares of Issuer Common Stock or other securities
to be acquired upon exercise of the Option on the NASDAQ Stock Market
National Market System and will use its best efforts to obtain approval of
such listing as soon as practicable.
10. DIVISION OF OPTION. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Holder, upon presentation
and surrender of
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Page 41 of 69 Pages
this Agreement at the principal office of Issuer for other agreements
providing for other options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer
Common Stock purchasable hereunder. The terms "other agreements" and "other
options" as used in the preceding sentence mean any other agreements and
related options for which this Agreement (and the Option granted hereby) may
be exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Agreement, and (in
the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Agreement, if
mutilated, Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
11. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in Section 9, each of
the parties hereto and any Holder shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including, without 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.
(c) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY. This Agreement,
together with the Reorganization Agreement and the other documents and
instruments referred to herein and therein (i) constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof and (ii) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
(d) SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court or a federal or state regulatory
authority of competent jurisdiction to be invalid, void or unenforceable,
such invalid, void or unenforceable term, provision, covenant or restriction
shall, if it is so susceptible, be deemed modified to the minimum extent
necessary to render the same valid and enforceable and, in all events, 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. Without limiting the foregoing, if for any
reason such court or regulatory authority determines that Holder may not
legally acquire, or Issuer may not legally repurchase, the full number of
shares of Issuer Common Stock as provided in Sections 3 and 8 (as adjusted
pursuant to Section 7), it is the express intention of Issuer to allow Holder
to acquire or to require Issuer
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Page 42 of 69 Pages
to repurchase the maximum number of shares as may be legally permissible
without any amendment or modification hereof.
(e) GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of California without regard to any
applicable conflicts of law rules.
(f) 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.
(g) NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be given
(and shall be deemed to have been duly received if so given) by personal
delivery, by telecopy (PROVIDED THAT copy is concurrently sent by first class
U.S. mail, postage prepaid), or by mail (registered or certified mail,
postage prepaid, return receipt requested) to the parties as follows:
If to Issuer: Cupertino National Bancorp
20230 Stevens Creek Boulevard
Cupertino, CA 95014
Attn: C. Donald Allen, President
Fax No.: 408-996-2465
If to Grantee: Mid-Peninsula Bancorp
420 Cowper Street
Palo Alto, CA 94301-1504
Attn: David L. Kalkbrenner, President
Fax No.: 415-323-7421
or to such other address as a party may have furnished to the others in
writing in accordance with this paragraph, except that notices of change of
address shall only be effective upon receipt. Any notice, demand or other
communication given pursuant to the provisions of this Section 11(g) shall be
deemed to have been given on the date actually delivered or on the third day
following the date mailed, whichever first occurs.
(h) 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.
(i) 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 without the prior written consent of the other
party, except that Grantee may assign this Agreement to a wholly-owned
subsidiary of Grantee upon compliance with applicable laws.
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Page 43 of 69 Pages
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.
(j) FURTHER ASSURANCES. In the event of any exercise of the Option
by Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(k) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
CUPERTINO NATIONAL BANCORP MID-PENINSULA BANCORP
By-------------------- By-------------------------------
C. Donald Allen David L. Kalkbrenner
President President
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Page 44 of 69 Pages
THE TRANSFER OF THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED
HEREIN AND TO RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS
STOCK OPTION AGREEMENT
This Stock Option Agreement, dated as of June 25, 1996 (the
"Agreement"), is made by and between Cupertino National Bancorp, a California
corporation ("Issuer"), and Mid-Peninsula Bancorp, a California corporation
("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Reorganization and Merger dated June 5, 1996 (the "Reorganization
Agreement"), providing for, among other things, the merger of Issuer with and
into Grantee (the "Merger"), with Grantee concurrently changing its name to
Greater Bay Bancorp and being the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Reorganization Agreement, and in consideration of the grant of the option
granted pursuant to the Stock Option Agreement, dated the date hereof,
between Issuer as grantee and Grantee as issuer (the "Reciprocal Option"),
Issuer has agreed to grant to Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Reorganization Agreement, and intending to be legally bound hereby,
Issuer and Grantee agree as follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Reorganization
Agreement. As used in this Agreement, the following terms shall have the
meanings indicated:
(a) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
(c) "Holder" means Grantee and, to the extent Grantee has assigned
its rights and obligations under this Agreement as permitted herein, any
subsidiary of Grantee, but only to the extent such entity is the holder of
rights afforded by this Agreement at the time such rights are exercised or
otherwise asserted.
Page 45 of 69 Pages
(d) "Person" shall have the meaning specified in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act and the rules and regulations thereunder.
(e) "Securities Act" means the Securities Act of 1933, as amended.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option")
to purchase up to 361,065 shares (the "Option Shares") of Common Stock, no
par value ("Issuer Common Stock"), of Issuer at a purchase price per Option
Share of Fourteen and 80/100 Dollars ($14.80) (the "Purchase Price"). The
Purchase Price and the number of Option Shares that may be received upon the
exercise of the Option are subject to adjustment as set forth below.
3. EXERCISE OF OPTION.
(a) The Holder may exercise the Option, in whole or in part, at
any time and from time to time following the occurrence of a Purchase Event
(as defined below); PROVIDED THAT the Option shall terminate and be of no
further force and effect upon the earliest to occur of:
(i) the Effective Time of the Merger; or
(ii) 12 months after the first occurrence of a Purchase Event;
or
(iii) 18 months after the termination of the
Reorganization Agreement on or following the occurrence of a Preliminary
Purchase Event (as defined below); or
(iv) termination of the Reorganization Agreement in accordance
with the terms thereof prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event; or
(v) the date on which the Reciprocal Option shall have become
exercisable, in whole or in part, in accordance with its terms.
Notwithstanding anything to the contrary contained herein, (A) the Option may
not be exercised at any time when Grantee shall be in breach of any of its
covenants or agreements contained in the Reorganization Agreement such that
Issuer shall be entitled (without regard to any grace period provided
therein) to terminate the Reorganization Agreement pursuant to Section
12b(xi) thereof, whether or not Issuer shall have so terminated the
Reorganization Agreement; (B) this Agreement and the Option shall terminate
automatically upon the termination of the Reorganization Agreement by Issuer
pursuant to Section 12b(xi) thereof; and (C) any purchase of shares upon
exercise of the Option shall be subject to compliance with applicable law,
including, without limitation, the Bank Holding Company Act of 1956, as
amended.
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Page 46 of 69 Pages
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) The Board of Directors of Issuer shall have approved, or
recommended to the Issuer's shareholders that they approve, a proposal
received by Issuer from a person (other than Grantee or any subsidiary of
Grantee) to effect an Acquisition Transaction (as defined below), Tender
Offer (as defined below) or Exchange Offer (as defined below); or
(ii) Issuer, without having received Grantee's prior written
consent, shall have entered into an agreement with any person (other than
Grantee or any subsidiary of Grantee) to effect an Acquisition Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act and the rules and regulations promulgated thereunder) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of fifteen percent (15%) or more of the then outstanding shares of
Issuer Common Stock.
As used herein, the term "Acquisition Transaction" shall mean (A) a merger,
consolidation or similar transaction involving Issuer or any of its
subsidiaries (other than internal mergers, reorganizations, consolidations or
dissolutions involving only Issuer and/or existing subsidiaries and other
than a merger, consolidation or similar transaction in which the common
shareholders of Issuer immediately prior thereto in the aggregate own at
least seventy-five percent (75%) of the common stock of the surviving or
successor corporation immediately after the consummation thereof), (B) the
disposition, by sale, lease, exchange or otherwise, of fifteen (15%) or more
of the consolidated assets or deposit liabilities of Issuer and its
subsidiaries, or (C) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or any similar transaction), other than
by Issuer or its subsidiaries, of securities representing fifteen percent
(15%) or more of the voting power of Issuer or any of its subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership of, or the right to acquire
beneficial ownership of, or any "group" (as defined under the Exchange Act
and the rules and regulations thereunder) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, ten
percent (10%) or more of the then outstanding shares of Issuer Common Stock;
or
3
Page 47 of 69 Pages
(ii) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2 under
the Exchange Act), or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to purchase
any shares of Issuer Common Stock such that, upon consummation of such offer,
such person would own or control ten percent (10%) or more of the then
outstanding shares of Issuer Common Stock (such an offer being referred to
herein as a "Tender Offer" or an "Exchange Offer", respectively); or
(iii) Issuer, without having received Grantee's prior
written consent, shall have entered into an agreement with any person (other
than Grantee or any subsidiary of Grantee) with respect to, or the Board of
Directors of Issuer shall have recommended that the shareholders of Issuer
approve or accept, a purchase or other acquisition (including by way of
merger, consolidation, share exchange or any similar transaction), other than
by Issuer or its subsidiaries, representing ten percent (10%) or more of the
voting power of Issuer or any of its subsidiaries; or
(iv) any person (other than Grantee or any subsidiary of
Grantee) shall have filed an application or notice with the Federal Reserve
Board or other federal or state regulatory authority, which application or
notice has been accepted for processing, for approval to engage in an
Acquisition Transaction; or
(v) the holders of Issuer Common Stock shall not have
approved the Reorganization Agreement at the meeting of such shareholders
held for the purpose of voting on the Reorganization Agreement, such meeting
shall not have been held or shall have been canceled prior to termination of
the Reorganization Agreement, or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee the recommendation of
Issuer's Board of Directors with respect to the Reorganization Agreement, in
each case after it shall have been publicly announced that any person (other
than Grantee or any subsidiary of Grantee) shall have (A) made or disclosed
an intention to make a proposal to engage in an Acquisition Transaction or
(B) commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Purchase Event or Preliminary Purchase Event; PROVIDED,
HOWEVER, such notice shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall
send to Issuer a written notice (dated the date on which it is sent to
Issuer, which date is 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 date not earlier than three (3) business days nor later
than fifteen (15) business days from the Notice Date for the closing (the
"Closing") of such purchase (the "Closing Date"). The Closing shall be held
at the Issuer's principal office or at such other place as Issuer and Holder
may agree. If prior notification to or approval of the Federal Reserve Board
or any other regulatory authority is required as a condition precedent
4
Page 48 of 69 Pages
to such purchase, then (A) Holder shall promptly file and process the
required notice or application for approval; (B) Issuer shall cooperate with
Holder in the filing of the required notice or application for approval and
the obtaining of any such approval; and (C) the Closing Date shall be subject
to extension for such period of time, not to exceed six (6) months, as may be
necessary to permit the Holder to submit such filing to, and, if necessary,
to obtain such approval from, the Federal Reserve Board or other applicable
regulatory authority; PROVIDED, HOWEVER, that the notice of Option exercise
and such governmental filing must be made, and the Notice Date must be, no
later than the date on which the Option would otherwise terminate. Any
exercise of the Option shall be deemed to have occurred on the Notice Date.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified
in Section 11(g) hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever, and (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 Issuer Common
Stock purchasable hereunder; and (ii) Holder shall deliver to Issuer a letter
agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of the provisions of this Agreement or applicable
state and federal securities laws.
(c) Certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR QUALIFIED
OR REGISTERED UNDER THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE
SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND UNTIL THEY HAVE BEEN QUALIFIED OR
REGISTERED UNDER APPLICABLE STATE SECURITIES LAWS, UNLESS THE ISSUER
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES,
REASONABLY SATISFACTORY TO THE ISSUER, STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
TRANSFER OF THE
5
Page 49 of 69 Pages
SECURITIES REPRESENTED BY THIS CERTIFICATE IS ALSO
SUBJECT TO RESALE RESTRICTIONS ARISING UNDER THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF JUNE 5, 1996, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF THE ISSUER.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Holder shall
have delivered to Issuer a copy of a letter from the staff of the SEC, or an
opinion of counsel in form and substance reasonably satisfactory to Issuer
and its counsel, to the effect that such legend is not required for purposes
of the Securities Act or applicable state securities laws.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents
and warrants to Grantee as follows:
(a) DUE AUTHORIZATION. Issuer has all requisite corporate power
and authority to enter into this Agreement and, subject to any approvals
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly
executed and delivered by Issuer.
(b) AUTHORIZED STOCK. Issuer has taken all necessary corporate
action to authorize and reserve and to permit it to issue, and, at all times
from the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common
Stock or other securities which may be issued pursuant to Section 7 upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon
due exercise of the Option, including all additional shares of Issuer Common
Stock or other securities which may be issuable pursuant to Section 7, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any stockholder of Issuer.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) DUE AUTHORIZATION. Grantee has all requisite corporate power
and authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly
6
Page 50 of 69 Pages
authorized by all necessary corporate action on the part of Grantee. This
Agreement has been duly executed and delivered by Grantee.
(b) PURCHASE NOT FOR DISTRIBUTION. This Option is not being, and
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 and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities Act
and applicable state securities laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of
a stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the
documentation pertaining to such transaction so that Holder shall receive,
upon exercise of the Option, the number and class of shares or other
securities or property that Holder would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior to such
event, or the record date therefor, as applicable. If any additional shares
of Issuer Common Stock are issued after the date of this Agreement (whether
upon exercise of stock options or otherwise but excluding any issuance
pursuant to an event described in the first sentence of this Section 7(a)),
the number of shares of Issuer Common Stock subject to the Option shall be
adjusted so that, after such issuance, such number of shares, together with
any shares of Issuer Common Stock previously issued pursuant hereto, equals
nineteen percent (19%) of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option (with any fractional share being rounded up to
the next full share). Issuer agrees that in no event shall the number of
shares of Issuer Common Stock issued after the date of this Agreement
pursuant to the preceding sentence, together with the number of shares of
Issuer Common Stock subject to the Option, adjusted as aforesaid, exceed the
number of available authorized but unissued and unreserved shares of Issuer
Common Stock.
(b) In the event that Issuer shall, prior to the occurrence of an
event set forth in Section 3(a) terminating the Holder's right to exercise
the Option, enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its subsidiaries, to merge
into Issuer and Issuer shall be the continuing or surviving corporation, but,
in connection with such merger, the then outstanding shares of Issuer Common
Stock shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or the outstanding
shares of Issuer Common Stock immediately prior to such merger shall after
such merger represent less than fifty percent (50%) of the outstanding shares
and share equivalents of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its consolidated assets or deposit
liabilities to any person other than
7
Page 51 of 69 Pages
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
(A) the Acquiring Corporation (as defined below), or (B) any person that
controls the Acquiring Corporation, (such person being referred to as the
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
PROVIDED THAT if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee. The Substitute Option
Issuer shall also enter into an agreement with the then holder or holders of
the Substitute Option in substantially the same form as this Agreement (after
giving effect for such purposes to the provisions of this Agreement), which
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as is hereinafter defined) as is equal
to the Assigned Value (as is hereinafter defined) multiplied by the number of
shares of the Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as is hereinafter defined). The
exercise price of the Substitute Option per share of the Substitute Common
Stock (the "Substitute Purchase Price") shall then be equal to the Purchase
Price multiplied by a fraction in which the numerator is the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable
and the denominator is the number of shares of the Substitute Common Stock
for which the Substitute Option is exercisable.
(e) As used herein, the following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, and (C) the transferee of all or any substantial part of
the Issuer's assets (or the assets of its subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (A) the
price per share of the Issuer Common Stock at which a Tender Offer or
Exchange Offer therefor has been made by any person (other than Grantee or a
subsidiary of Grantee), (B) the price per share of the Issuer Common Stock to
be paid by any person (other than Grantee or a subsidiary of Grantee)
pursuant to an agreement with Issuer, and (C) the highest closing price per
share of Issuer Common Stock as quoted on the principal trading market or
securities exchange on which such shares are traded as reported by a
recognized source within the six-month period immediately preceding the
effective date of the agreement governing the transaction described in
Section 7(b) which gave rise to the Substitute Option; PROVIDED,
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HOWEVER, that in the event of a sale of less than all of Issuer's
consolidated assets or deposit liabilities, the Assigned Value shall be the
sum of the price paid in such sale for such assets or deposit liabilities and
the current market value of the remaining consolidated net assets of Issuer
as determined by a nationally recognized investment banking firm selected by
the Holder (or by a majority in interest of the Holders if there shall be
more than one Holder (a "Holder Majority")) and reasonably acceptable to
Issuer, divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. In the event that an exchange offer is
made for the Issuer Common Stock or an agreement is entered into for a merger
or consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized investment
banking firm by Holder (or a Holder Majority) and reasonably acceptable to
Issuer.
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding
the effective date of the consolidation, merger or sale in question, but in
no event higher than the closing price of the shares of the Substitute Common
Stock on the day preceding such consolidation, merger or sale; PROVIDED THAT
if Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls or is controlled by such
merging person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than nineteen percent
(19%) of the aggregate of the shares of the Substitute Common Stock
outstanding prior to exercise of the Substitute Option (with any fractional
share being rounded up to the next full share).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder and take all other actions that may be
necessary so that the provisions of this Section 7 are given full force and
effect (including, without limitation, any action that may be necessary so
that the shares of Substitute Common Stock are in no way distinguishable from
or have lesser economic value than other shares of common stock issued by the
Substitute Option Issuer).
(h) At the written request of Holder delivered to the Substitute
Option Issuer prior to the occurrence of an event set forth in Section 3(a)
above terminating the Substitute Option, the Substitute Option Issuer shall
repurchase from Holder (i) the Substitute Option and/or (ii) all Substitute
Common Stock theretofore purchased by Holder pursuant hereto with respect to
which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 7(h) is referred to as the
"Substitute Option Request Date." Such repurchase shall be at an aggregate
price (the "Substitute Option Repurchase Consideration") equal to the sum of
(A) the excess, if any, of (1) the Highest Closing Price (as defined below)
for each share of Substitute Common Stock over (2) the Substitute
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Purchase Price per share of Substitute Common Stock, multiplied by the number
of shares of Substitute Common Stock for which the Substitute Option may then
be exercised and as to which Holder has exercised its repurchase right
hereunder, plus (B) the Highest Closing Price for each share of Substitute
Common Stock multiplied by the number of shares of Substitute Common Stock
acquired by Holder upon exercise of the Option or Substitute Option and as to
which Holder has exercised its repurchase right hereunder. The term "Highest
Closing Price" shall mean the highest bid price per share of Substitute
Common Stock as quoted by the brokerage firms acting as market makers for the
Substitute Common Stock prior to the listing of the Substitute Common Stock
on any national securities exchange and thereafter as reported by the
principal trading market or securities exchange on which such shares are
traded, during the sixty (60) business days preceding the Substitute Option
Request Date.
(i) The provisions of Sections 8(b), 8(c), 9 and shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and as applicable, references in such
sections to "Issuer", "Option", "Purchase Price", "Issuer Common Stock",
"Repurchase Consideration", and "Request Date" shall be deemed to be
references to "Substitute Option Issuer", "Substitute Option", "Substitute
Purchase Price", "Substitute Common Stock", "Substitute Option Repurchase
Consideration", and "Substitute Option Request Date", respectively.
8. REPURCHASE AT THE OPTION OF GRANTEE.
(a) At any time after the first occurrence of a Repurchase Event
(as defined in Section 8(e) below), at the written request of Holder
delivered to Issuer prior to the occurrence of an event set forth in Section
3(a) above terminating the Option, Issuer shall repurchase from Holder (i)
the Option and (ii) all Option Shares theretofore purchased by Holder
pursuant hereto with respect to which Holder then has beneficial ownership.
The date on which Holder exercises its rights under this Section 8 is
referred to as the "Request Date." Such repurchase shall be at an aggregate
price (the "Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any
Option Shares acquired pursuant to the Option with respect to which Holder
then has beneficial ownership;
(ii) the excess, if any, of (A) the Applicable Price (as
defined below) for each Option Share over (B) the Purchase Price per Option
Share (subject to adjustment pursuant to Section 7(a)), multiplied by the
number of Option Shares with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7(a)) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for each
Option Share with respect to which the Option has been
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exercised and with respect to which Holder then has beneficial ownership,
multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten (10) business days after the Request Date, pay the
Repurchase Consideration to Holder in immediately available funds, and Holder
shall surrender to Issuer the Option and the certificates evidencing the
Option Shares purchased thereunder with respect to which Holder then has
beneficial ownership and has designated to be repurchased, and Holder shall
warrant that it has sole record and beneficial ownership of such shares and
that the same are then free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever.
(c) Notwithstanding the provisions hereof to the contrary, to the
extent that Issuer is prohibited under applicable law, regulation or
administrative policy from repurchasing all or any portion of the Option or
Option Shares, then (i) Issuer shall promptly give notice of such fact to
Holder; (ii) Issuer shall, from time to time subject to the last sentence of
this Section 8(c), deliver to Holder that portion of the Repurchase
Consideration that it is not then so prohibited from paying; (iii) at
Holder's request, Issuer shall promptly file any required notice or
application for approval and expeditiously process the same. After Holder's
receipt of such notice from Issuer, Issuer shall not be in breach of its
repurchase obligation hereunder to the extent it is or remains, despite
reasonable efforts to obtain any required approvals, legally prohibited from
repurchasing the Option or Option Shares. Holder shall have the right (A) to
revoke its request for repurchase with respect to the portion of the Option
or Option Shares that Issuer is prohibited from repurchasing, (B) to require
Issuer to deliver to Holder the Option and/or Option Shares Issuer is
prohibited from repurchasing, and (C) to exercise the Option as to the number
of Option Shares for which the Option was exercisable at the Request Date
less the number of such Option Shares in respect of which the Repurchase
Consideration has been lawfully paid. Notwithstanding anything herein to the
contrary, Issuer shall not be obligated to repurchase all or any part of the
Option or Option Shares pursuant to more than one written request from
Holder, except that Issuer shall be obligated to repurchase, pursuant to more
than one written request, any Option or Option Shares in the event that
Holder (1) has revoked its request for repurchase in accordance with the
provisions of this Section 8 prior to the occurrence of an event set forth in
Section 3(a) terminating the Holder's right to exercise the Option and (2)
has delivered, prior to such event, a new written notice requesting a
repurchase. If an event set forth in Section 3(a) terminating the Holder's
right to exercise the Option occurs prior to, or is scheduled to occur
within, sixty (60) days after the date of the notice by Issuer described in
clause 8(c)(i) above, then, notwithstanding the occurrence of such
terminating event, Holder shall have the right to receive the Repurchase
Consideration to the extent Issuer is or becomes, within a sixty (60) day
period from the date of such notice by Issuer, legally permitted to
repurchase. Except as set forth in the preceding sentence, Holder's
repurchase rights under this Agreement shall terminate concurrently with the
termination of Holder's right to exercise the Option, pursuant to Section
3(a).
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(d) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of Issuer Common Stock paid
for any such share by the person or groups described in Section 8(e)(i), (ii)
the price per share of Issuer Common Stock received by holders of Issuer
Common Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the
highest closing price per share of Issuer Common Stock as quoted on the
principal trading market or securities exchange on which such shares are
traded as reported by a recognized source during the sixty (60) business days
preceding the Request Date; PROVIDED, HOWEVER, that in the event of a sale of
less than all of Issuer's assets, the Applicable Price shall be the sum of
the price paid in such sale for such assets or deposit liabilities and the
current market value of the remaining consolidated net assets of Issuer as
determined by a nationally recognized investment banking firm selected by
Holder (or the Holder Majority) and reasonably acceptable to Issuer, divided
by the number of shares of the Issuer Common Stock outstanding at the time of
such sale. If the consideration to be offered, paid or received pursuant to
either of the foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm selected by Holder
(or the Holder Majority) and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this Agreement.
(e) As used herein, a "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act and the rules and
regulations promulgated thereunder) shall have been formed which beneficially
owns, or has the right to acquire beneficial ownership of, fifty percent
(50%) or more of the then outstanding shares of Issuer Common Stock or (ii)
any of the transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
shall be consummated.
9. LISTING. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are not then authorized for quotation on
the NASDAQ Stock Market National Market System or any securities exchange,
Issuer, upon the request of Holder, will promptly file an application to
authorize for quotation the shares of Issuer Common Stock or other securities
to be acquired upon exercise of the Option on the NASDAQ Stock Market
National Market System or such other securities exchange and will use its
best efforts to obtain approval of such listing as soon as practicable.
10. DIVISION OF OPTION. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
agreements providing for other options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "other agreements" and
"other options" as used in the preceding sentence mean any other agreements
and related options for which this Agreement (and the Option granted hereby)
may be
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exchanged. Upon receipt by Issuer of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Agreement, and
(in the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Agreement, if
mutilated, Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
11. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in Section 9, each of
the parties hereto and any Holder shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including, without 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.
(c) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY. This Agreement,
together with the Reorganization Agreement and the other documents and
instruments referred to herein and therein (i) constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof and (ii) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
(d) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court or a federal or state regulatory
authority of competent jurisdiction to be invalid, void or unenforceable,
such invalid, void or unenforceable term, provision, covenant or restriction
shall, if it is so susceptible, be deemed modified to the minimum extent
necessary to render the same valid and enforceable and, in all events, 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. Without limiting the foregoing, if for any
reason such court or regulatory authority determines that Holder may not
legally acquire, or Issuer may not legally repurchase, the full number of
shares of Issuer Common Stock as provided in Sections 3 and 8 (as adjusted
pursuant to Section 7), it is the express intention of Issuer to allow Holder
to acquire or to require Issuer to repurchase the maximum number of shares as
may be legally permissible without any amendment or modification hereof.
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(e) GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of California without regard to any
applicable conflicts of law rules.
(f) 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.
(g) NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be given
(and shall be deemed to have been duly received if so given) by personal
delivery, by telecopy (PROVIDED THAT copy is concurrently sent by first class
U.S. mail, postage prepaid), or by mail (registered or certified mail,
postage prepaid, return receipt requested) to the parties as follows:
If to Issuer: Cupertino National Bancorp
20230 Stevens Creek Boulevard
Cupertino, CA 95014
Attn: C. Donald Allen, President
Fax No.: 408-996-2465
If to Grantee: Mid-Peninsula Bancorp
420 Cowper Street
Palo Alto, CA 94301-1504
Attn: David L. Kalkbrenner, President
Fax No.: 415-323-7421
or to such other address as a party may have furnished to the others in
writing in accordance with this paragraph, except that notices of change of
address shall only be effective upon receipt. Any notice, demand or other
communication given pursuant to the provisions of this Section 11(g) shall be
deemed to have been given on the date actually delivered or on the third day
following the date mailed, whichever first occurs.
(h) 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.
(i) 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 without the prior written consent of the other
party, except that Grantee may assign this Agreement to a wholly-owned
subsidiary of Grantee upon compliance with applicable laws. 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.
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(j) FURTHER ASSURANCES. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
(k) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for
any failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
CUPERTINO NATIONAL BANCORP MID-PENINSULA BANCORP
By-------------------- By-----------------------------
C. Donald Allen David L. Kalkbrenner
President President
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