Exhibit 99(b)
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of November 7, 2001, by and between AREA BANCSHARES CORPORATION, a Kentucky
corporation ("Area" or "Issuer"), and BB&T CORPORATION, a North Carolina
corporation ("Grantee").
R E C I T A L S :
WHEREAS, Grantee and Issuer have entered into that certain Agreement and
Plan of Reorganization, dated this date (the "Merger Agreement"), providing
for, among other things, the merger of Issuer with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's execution of the Merger
Agreement, Grantee has required that Issuer agree, and Issuer has agreed, to
grant to Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
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 Merger Agreement.
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 4,750,000 shares (as adjusted as set forth herein, the "Option
Shares," which term shall refer to the Option Shares before and after any
transfer of such Option Shares), of the common stock of Issuer, no par value
("Issuer Common Stock"), at a purchase price per Option Share (subject to
adjustment as set forth herein, the "Purchase Price") equal to $16.75
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction
in the United States shall be in effect, 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 hereinafter defined); provided, that the
Option shall terminate and be of no further force and effect upon the
earliest to occur of (A) the Effective Time, (B) subject to clause (E)
below, termination of the Merger Agreement in accordance with the terms
thereof prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (as hereinafter defined) (other than a termination of the
Merger Agreement by Grantee pursuant to Section 7.1(b) thereof (a "Default
Termination")), (C) 12 months after a Default Termination, (D) 12 months
after any termination of the Merger Agreement (other than a Default
Termination) following the occurrence of a Purchase Event or a Preliminary
Purchase Event, and (E) subject to clause (D) above, 12 months after
termination of the Merger Agreement pursuant to Section 7.1(e) thereof;
provided further, that 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 (the "BHC
Act"). Subject to compliance with Section 12(h) hereof, the term "Holder"
shall mean the holder or holders of the Option from time to time, including
initially Grantee. The rights set forth in Section 8 hereof shall terminate
when the right to exercise the Option terminates (other than as a result of
a complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following events
subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any Subsidiary of
Grantee) to effect an Acquisition Transaction (as defined below). 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 transactions solely between Issuer's
Subsidiaries or between Issuer's Subsidiaries and Issuer), (B) the
disposition, by sale, lease, exchange or otherwise, of assets of Issuer
or any of its Subsidiaries representing in either case 15% or more of
the consolidated assets of Issuer and its Subsidiaries (other than a
sale of loan receivables in a financing transaction in the normal
course of business consistent with past practices), or (C) the
issuance, sale or other disposition (including by way of merger,
consolidation, share exchange or any similar transaction) of securities
representing 15% or more of the voting power of Issuer or any of its
Subsidiaries; or
(ii) 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), other than a group of which Grantee or
any of the Subsidiaries of Grantee is a member, shall have been formed
which beneficially owns or has the right to acquire beneficial
ownership of, 15% or more of the then-outstanding shares of Issuer
Common Stock.
(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 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 15% 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
(ii) the holders of Issuer Common Stock shall not have approved the
Merger Agreement at the meeting of such shareholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have
been held or shall have been canceled prior to termination of the
Merger 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 Merger Agreement, in
each case after 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, (B) commenced a
Tender Offer or filed a registration statement under the Securities Act
with respect to an Exchange Offer, or (C) filed an application (or
given a notice), whether in draft or final form, under any federal or
state statute or regulation (including an application or notice filed
under the BHC Act, the Bank Merger Act, the Home Owners' Loan Act or
the Change in Bank Control Act of 1978) seeking the consent to an
Acquisition Transaction from any federal or state governmental or
regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Notwithstanding the foregoing, the obligation of Area to issue
Option Shares upon exercise of the Option shall be deferred (but shall not
terminate): (i) until the receipt of all required governmental or
regulatory approvals or consents necessary for Area to issue the Option
Shares or Holder to exercise the Option, or until the expiration or
termination of any waiting period required by law, or (ii) so long as any
injunction or other order, decree or ruling issued by any federal or state
court of competent jurisdiction is in effect which prohibits the sale or
delivery of the Option Shares.
(e) In the event Holder wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends
to purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 15 business days from the Notice
Date for the closing (the "Closing") of such purchase (the "Closing Date").
If prior consent of any governmental or regulatory agency or authority is
required in connection with such purchase, Issuer shall cooperate with
Holder in the filing of the required notice or application for such consent
and the obtaining of such consent at Holder's expense, and the Closing
shall occur not earlier than three business days nor later than 15 business
days following receipt of such consents (and expiration of any mandatory
waiting periods).
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 referenced in
Section 12(f) hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a)
hereof, (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 subject to no
preemptive rights, and (B) if the Option is exercised in part only, an
executed new agreement with the same terms as this Agreement evidencing the
right to purchase the balance of the shares of Issuer Common Stock
purchasable hereunder, and (ii) Holder shall deliver to Issuer a letter
evidencing Holder's agreement not to offer, sell or otherwise dispose of
such Option Shares in violation of applicable federal and state law or of
the provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION
AGREEMENT DATED AS OF , 2001. A COPY OF SUCH AGREEMENT
WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Holder shall
have delivered to Issuer a copy of a letter from the staff of the
Commission, 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.
5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter into
this Agreement and, subject to its obtaining any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly
executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other 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, the
number of 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 hereof
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 hereof, 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 shareholder of Issuer.
6. Representations and Warranties of Grantee. Grantee hereby represents and
warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to its obtaining any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly
executed and delivered by Grantee.
(b) Grantee represents that it is acquiring the Option for Grantee's own
account and not with a view to, or for sale in connection with, any
distribution of the Option or the Option Shares. Grantee represents that it
is aware that neither the Option nor the Option Shares is the subject of a
registration statement filed with and declared effective by the Commission
pursuant to Section 5 of the Securities Act, but instead each is being
offered in reliance upon the exemption from the registration requirement
provided by Section 4(2) thereof and the representations and warranties
made by Grantee in connection therewith. Grantee represents that neither
the Option nor the Option Shares will be transferred or otherwise disposed
of except in a transaction registered or exempt from registration under the
Securities Laws, and that with respect to any transfer or other disposition
proposed to be made in reliance upon an exemption from registration, such
transfer or other disposition shall not be made unless Area first receives
an opinion of counsel in form and substance reasonably acceptable to it
regarding the availability of such exemption.
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
agreements governing 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 (other than
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, it, when added to the number of
shares of Issuer Common Stock previously issued pursuant hereto, equals
19.9% 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.
(b) In the event that Issuer shall enter into an agreement (prior to
termination of the Option pursuant to Section 3(a) hereof): (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and Issuer 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 50% of the outstanding shares and share
equivalents of the merged company; (iii) to permit any person, other than
Grantee or one of its Subsidiaries, to acquire all of the outstanding
shares of Issuer Common Stock pursuant to a statutory share exchange; or
(iv) to sell or otherwise transfer all or substantially all of its assets
to any person, other than Grantee or one of its Subsidiaries, then, and in
each such case, the agreement governing such transaction shall make proper
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, deemed granted by either (x) the Acquiring
Corporation (as defined below), (y) any person that controls the Acquiring
Corporation, or (z) in the case of a merger described in clause (ii), the
Issuer (in each case, 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 identical to those of 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, which agreement 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 hereinafter defined) as is equal to the
Assigned Value (as 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 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 for which the
Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), Issuer in a merger in which Issuer is the continuing or
surviving person, the corporation that shall acquire all of the
outstanding shares of Issuer Common Stock pursuant to a statutory share
exchange, or the transferee of all or substantially all 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 (x) 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), (y)
the price per share of the Issuer Common Stock to be paid by any person
(other than the Grantee) pursuant to an agreement with Issuer, and (z)
the highest closing sales price per share of Issuer Common Stock quoted
on the Nasdaq National Market System within the six-month period
immediately preceding the agreement; provided, that in the event of a
sale of less than all of Issuer's assets, the Assigned Value shall be
the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by Grantee (or
by a majority in interest of the Grantees if there shall be more than
one Grantee (a "Grantee Majority")), 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 mutually selected by Grantee and Issuer (or if applicable,
Acquiring Corporation). (If there shall be more than one Grantee, any
such selection shall be made by a Grantee Majority.)
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one-year period immediately
preceding effectiveness of the consolidation, merger, share
exchange 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
the effectiveness of such consolidation, merger, share exchange 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 merger person, as
Grantee may elect.
(f) In no event pursuant to any of the foregoing sections shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of
the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of
Substitute Common Stock but for this clause (f), the Substitute Option
Issuer shall make a cash payment to Grantee equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in
this clause (f) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (f). This difference in value shall
be determined by a nationally recognized investment banking firm selected
by Grantee (or a Grantee Majority).
(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) The provisions of Sections 8, 9, 10 and 11 hereof 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" and "Issuer Common
Stock" shall be deemed to be references to "Substitute Option Issuer,"
"Substitute Option," "Substitute Purchase Price" and "Substitute Common
Stock," respectively.
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a) hereof, at the request
of Holder at any time commencing upon the first occurrence of a Repurchase
Event (as defined in Section 8(d)) and ending 12 months immediately
thereafter, Issuer shall repurchase from Holder the Option and all shares
of Issuer Common Stock 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 "Section 8
Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares of
Issuer Common Stock acquired by Holder pursuant to the Option with
respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase
Price (subject to adjustment pursuant to Section 7), multiplied by the
number of shares of Issuer Common Stock 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) 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 share of Issuer Common Stock 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 business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has beneficial
ownership, 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.
Notwithstanding the foregoing, to the extent that prior notification to or
the consent or approval of any governmental or regulatory agency or
authority is required in connection with the payment of all or any portion
of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 8, in whole
or in part, or to require that Issuer deliver from time to time that
portion of the Section 8 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or application
for approval and expeditiously process the same (and each party shall
cooperate with the other in the filing of any such notice or application
and the obtaining of any such approval), in which case the ten business day
period of time that would otherwise run pursuant to the preceding sentence
for the payment of the portion of the Section 8 Repurchase Consideration
shall run instead from the date on which, as the case may be, any 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. If any governmental or regulatory agency or authority disapproves
of any part of Issuer's proposed repurchase pursuant to this Section 8,
Issuer shall promptly give notice of such fact to Holder. If any
governmental or regulatory agency or authority prohibits the repurchase in
part but not in whole, then Holder shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by such agency or
authority, determine whether the repurchase should apply to the Option
and/or Option Shares and to what extent to each, and Holder shall thereupon
have the right to exercise the Option as to the number of Option Shares for
which the Option was exercisable at the Request Date less the sum of the
number of shares covered by the Option in respect of which payment has been
made pursuant to Section 8(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Holder shall
notify Issuer of its determination under the preceding sentence within five
business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's rights
under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a) hereof.
(c) 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(d)(i) hereof,
(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 Sections 7(b)(i), 7(b)(ii), 7(b)(iii)
or 7(b)(iv) hereof, or (iii) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if Issuer
Common Stock is not quoted on the Nasdaq National Market, the highest bid
price per share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Holder) during the 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 and the current market value of the remaining assets
of Issuer as determined by an independent nationally recognized investment
banking firm selected by Holder and reasonably acceptable to Issuer (which
determination shall be conclusive for all purposes of this Agreement),
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 and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any Subsidiary of Grantee) or "group" (within the
meaning of the Exchange Act) shall have acquired beneficial ownership of
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), 7(b)(iii)
or 7(b)(iv) shall be consummated.
9. Registration Rights.
(a) For a period of 24 months following termination of the Merger
Agreement, Issuer shall, subject to the conditions of subsection (c) below,
if requested by any Holder, including Grantee and any permitted transferee
of the Option Shares ("Selling Holder"), as expeditiously as possible
prepare and file a registration statement under the Securities Laws if
necessary in order to permit the sale or other disposition of any or all
shares of Issuer Common Stock or other securities that have been acquired
by or are issuable to Selling Holder upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
the Selling Holder in such request, including, without limitation, a
"shelf" registration statement under Rule 415 under the Securities Act or
any successor provision, and Issuer shall use its best efforts to qualify
such shares or other securities for sale under any applicable state
securities laws.
(b) If Issuer at any time after the exercise of the Option proposes to
register any shares of Issuer Common Stock under the Securities Laws in
connection with an underwritten public offering of such Issuer Common
Stock, Issuer will promptly give written notice to Holder of its intention
to do so and, upon the written request of Holder given within 30 days after
receipt of any such notice (which request shall specify the number of
shares of Issuer Common Stock intended to be included in such underwritten
public offering by Selling Holder), Issuer will cause all such shares, the
holders of which shall have requested participation in such registration,
to be so registered and included in such underwritten public offering;
provided, that Issuer may elect to cause any such shares not to be so
registered (i) if the underwriters in good faith object for a valid
business reason, or (ii) in the case of a registration solely to implement
a dividend reinvestment or similar plan, an employee benefit plan or a
registration filed on Form S-4 or any successor form, or a registration
filed on a form which does not permit registration of resales; provided,
further, that such election pursuant to clause (i) may be made only one
time. If some but not all the shares of Issuer Common Stock, with respect
to which Issuer shall have received requests for registration pursuant to
this subsection (b), shall be excluded from such registration, Issuer shall
make appropriate allocation of shares to be registered among Selling
Holders and any other person (other than Issuer or any person exercising
demand registration rights in connection with such registration) who or
which is permitted to register their shares of Issuer Common Stock in
connection with such registration pro rata in the proportion that the
number of shares requested to be registered by each Selling Holder bears to
the total number of shares requested to be registered by all persons then
desiring to have Issuer Common Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each registration
statement referred to in subsection (a) above to become effective and to
obtain all consents or waivers of other parties which are required therefor
and to keep such registration statement effective, provided, that Issuer
may delay any registration of Option Shares required pursuant to subsection
(a) above for a period not exceeding 90 days in the event that Issuer shall
in good faith determine that any such registration would adversely affect
an offering or contemplated offering of other securities by Issuer, and
Issuer shall not be required to register Option Shares under the Securities
Laws pursuant to subsection (a) above:
(i) prior to the occurrence of a Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration
referred to in subsection (b) above pursuant to which the Selling
Holders concerned were afforded the opportunity to register such shares
under the Securities Laws and such shares were registered as requested;
and
(v) unless a request therefor is made to Issuer by Selling Holders
holding at least 25% or more of the aggregate number of Option Shares
then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of
nine months from the effective date of such registration statement. Issuer
shall use all reasonable efforts to make any filings, and take all steps,
under all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares,
provided, that Issuer shall not be required to consent to general
jurisdiction or qualify to do business in any state where it is not
otherwise required to so consent to such jurisdiction or to so qualify to
do business.
(d) Except where applicable state law prohibits such payments, Issuer
will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and
expenses of counsel), accounting expenses, legal expenses, including
reasonable fees and expenses of one counsel to the Selling Holders whose
Option Shares are being registered, printing expenses, reasonable expenses
of underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so require,
and the reasonable fees and expenses of any necessary special experts) in
connection with each registration pursuant to subsection (a) or (b) above
(including the related offerings and sales by Selling Holders) and all
other qualifications, notifications or exemptions pursuant to subsection
(a) or (b) above. Underwriting discounts and commissions relating to Option
Shares and any other expenses incurred by such Selling Holders in
connection with any such registration shall be borne by such Selling
Holders.
(e) In connection with any registration under subsection (a) or (b)
above Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against
all expenses, losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments
or supplements thereto) or any preliminary prospectus, or caused by any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such expenses, losses, claims, damages or liabilities of such indemnified
party are caused by any untrue statement or alleged untrue statement or
omission or alleged omission that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon and in
conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such
Selling Holder, or by such underwriter, as the case may be, for all such
expenses, losses, claims, damages and liabilities caused by any untrue or
alleged untrue statement or omission or alleged omission that was included
by Issuer in any such registration statement or prospectus or notification
or offering circular (including any amendments or supplements thereto) in
reliance upon, and in conformity with, information furnished in writing to
Issuer by such holder or such underwriter, as the case may be, expressly
for such use.
Promptly upon receipt by a party indemnified under this subsection (e)
of notice of the commencement of any action against such indemnified party
in respect of which indemnity or reimbursement may be sought against any
indemnifying party under this subsection (e), such indemnified party shall
notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any indemnified
party under this subsection (e). In case notice of commencement of any such
action shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent
it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense of such action at its own expense, with counsel
chosen by it and satisfactory to such indemnified party. The indemnified
party shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of such
counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party
unless (i) the indemnifying party agrees to pay them, (ii) the indemnifying
party fails to assume the defense of such action with counsel satisfactory
to the indemnified party, or (iii) the indemnified party has been advised
by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interest of the indemnified
party, in which case the indemnifying party shall be entitled to assume the
defense of such action notwithstanding its obligation to bear fees and
expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this subsection (e) is
unavailable to a party otherwise entitled to be indemnified in respect of
any expenses, losses, claims, damages or liabilities referred to herein,
then the indemnifying party, in lieu of indemnifying such party otherwise
entitled to be indemnified, shall contribute to the amount paid or payable
by such party to be indemnified as a result of such expenses, losses,
claims, damages or liabilities in such proportion as is appropriate to
reflect the relative benefits received by Issuer, all Selling Holders and
the underwriters from the offering of the securities and also the relative
fault of Issuer, all Selling Holders and the underwriters in connection
with the statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the
expenses, losses, claims, damages and liabilities referred to above shall
be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any
action or claim; provided, that in no case shall any Selling Holder be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with
other holders.
In connection with any registration pursuant to subsection (a) or (b)
above, Issuer and each Selling Holder (other than Grantee) shall enter into
an agreement containing the indemnification provisions of this subsection
(e).
(f) Issuer shall comply with all reporting requirements and will do all
such other things as may be necessary to permit the expeditious sale at any
time of any Option Shares by the Selling Holders in accordance with and to
the extent permitted by any rule or regulation promulgated by the
Commission from time to time, including, without limitation, Rules 144 and
144A. Issuer shall at its expense provide the Selling Holders with any
information necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securities Laws, or
required pursuant to any state securities laws or the rules of any stock
exchange.
(g) Issuer will pay all stamp taxes in connection with the issuance and
the sale of the Option Shares and in connection with the exercise of the
Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of Issuer Common Stock
or other securities to be acquired upon exercise of the Option on the Nasdaq
National Market or any other securities exchange or any automated quotations
system maintained by a self-regulatory organization and will use its best
efforts to obtain approval, if required, of such quotation or listing as soon
as practicable.
11. Division of Option. This Agreement (and the Option granted hereby) is
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 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 "Agreement" and "Option" as used herein
include 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.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided, herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(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; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
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 (b) is not intended to confer upon any person
other than the parties hereto (other than any transferees of the Option
Shares or any permitted transferee of this Agreement pursuant to Section
12(h) hereof) any rights or remedies hereunder. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or a federal or state governmental or regulatory agency or
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated. If for any reason such court or regulatory agency determines
that the Option does not permit Holder to acquire, or does not require
Issuer to repurchase, the full number of shares of Issuer Common Stock as
provided, in Sections 3 and 8 hereof (as adjusted pursuant to Section 7
hereof), it is the express intention of Issuer to allow Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of North Carolina without
regard to any applicable conflicts of law rules, except to the extent that
the federal laws of the United States shall govern.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger
Agreement (or at such other address for a party as shall be specified by
like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment; Transfer. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned or
transferred by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party, except
that Grantee may assign this Agreement to a wholly owned subsidiary of
Grantee and Grantee may assign or transfer its rights hereunder in whole or
in part after the occurrence of a Purchase Event. In the case of any
permitted assignment or transfer of the Option, Issuer shall do all things
necessary to facilitate the same, and the Holder to whom the Option is
assigned or transferred shall make the representations contained in Section
6 hereof (with Holder substituted for Grantee) and shall agree in writing
to the terms and conditions hereof. 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 assigns.
(i) 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.
(j) 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.
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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.
AREA BANCSHARES CORPORATION
BB&T CORPORATION
/s/ Thomas R. Brumley /s/ John A. Allison, IV
By: _________________________________ By: _________________________________
Name: Thomas R. Brumley Name: John A. Allison, IV
Title: President and Chief Title: Chairman and Chief
Executive Officer Executive Officer