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Exhibit 4.1
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated as of November 20, 2000 (the
"Agreement"), by and between Old Kent Financial Corporation, a Michigan
corporation ("Issuer"), and Fifth Third Bancorp, an Ohio corporation
("Grantee").
W I T N E S S E T H:
WHEREAS, concurrently herewith Issuer and Grantee are entering
into an Agreement and Plan of Merger of even date herewith (the "Merger
Agreement"), providing for, among other things, the merger (the "Merger") of
Issuer with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's
willingness to enter into the Merger Agreement and in consideration therefor,
Issuer has agreed to grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, Issuer and Grantee agree as follows:
Section 1. Grant of Option; Adjustment. (a) Subject to the terms and conditions
set forth herein, Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase that number of fully paid and non-assessable
shares of common stock, par value $1.00 per share, of Issuer ("Common Stock")
equal to 19.9% of the currently issued and outstanding shares of Common Stock,
without giving effect to any shares subject to or issued pursuant to the Option,
at a purchase price of $25.00 per share (the "Option Price"). The number of
shares of Common Stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of this Agreement,
the number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance or redemption,
repurchase, retirement or other action, such number equals 19.9% of the number
of shares of Common Stock then issued and outstanding without giving effect to
any shares subject or issued pursuant to the Option. Nothing contained in this
Section 1(b) or elsewhere in this Agreement shall be deemed to authorize Issuer
or Grantee to breach any provision of the Merger Agreement.
Section 2. Exercise of Option. (a) The holder or holders of
the Option (the "Holder") may exercise the Option, in whole or in part, at any
time or from time to
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time, if, but only if, both an Initial Triggering Event (as hereinafter defined)
and a Subsequent Triggering Event (as hereinafter defined) shall have occurred
prior to the occurrence of an Exercise Termination Event (as hereinafter
defined); provided that the Holder shall have sent the written notice of such
exercise (as provided in subsection (e) of this Section 2) within 90 days
following such Subsequent Triggering Event. Each of the following shall be an
"Exercise Termination Event": (i) the Effective Time (as defined in the Merger
Agreement) of the Merger; (ii) termination of the Merger Agreement in accordance
with the provisions thereof, if such termination occurs prior to the occurrence
of an Initial Triggering Event, except a termination by Grantee pursuant to
Section 8.1(e) of the Merger Agreement (unless the breach by Issuer giving rise
to such right of termination is non-volitional); or (iii) the passage of 12
months after termination of the Merger Agreement, if such termination follows
the occurrence of an Initial Triggering Event or is a termination by Grantee
prior to the occurrence of an Initial Triggering Event pursuant to Section
8.1(e) of the Merger Agreement (unless the breach by Issuer giving rise to such
right of termination is non-volitional).
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the
term "person" for purposes of this Agreement having the meaning
assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations promulgated thereunder) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary"). For purposes of this
Agreement, "Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving Issuer or any
Significant Subsidiary (as defined in Rule 1-02(w) of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease or other acquisition or assumption of all
or a substantial portion of the assets or deposits of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or
otherwise) of beneficial ownership (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the Exchange Act, and the rules and regulations
thereunder) of securities representing 15% or more of the voting power
of Issuer, or (z) any substantially similar transaction; provided,
however, that in no event shall any merger, consolidation, purchase or
similar transaction involving only the Issuer and one or more Issuer
Subsidiaries or involving only any two or more Issuer Subsidiaries, be
deemed to be an Acquisition Transaction; provided that any such
transaction is not entered into in violation of the terms of the Merger
Agreement;
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(ii) (x) Issuer or any Significant Subsidiary of
Issuer, or the Board of Directors of Issuer, without having received
Grantee's prior written consent, shall have authorized, recommended to
its stockholders, proposed or publicly announced its intention to
authorize, recommend to its stockholders or propose, to engage in an
Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary, (y) the Board of Directors of Issuer shall have failed to
make its recommendation that the Issuer stockholders approve the Merger
Agreement and the transactions contemplated thereby in anticipation of
engaging in an Acquisition Transaction or (z) the Board of Directors of
Issuer shall have publicly withdrawn or modified, or publicly announced
its intention to withdraw or modify, in any manner adverse to Grantee,
its recommendation that the stockholders of Issuer approve the
transactions contemplated by the Merger Agreement in anticipation of
engaging in an Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in
the ordinary course of its business shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 15% or more
of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the 1934 Act, and the rules and regulations
promulgated thereunder);
(iv) Any person other than Grantee or any Grantee
Subsidiary shall have made a bona fide proposal to Issuer or its
stockholders by public announcement or written communication that is or
becomes the subject of public disclosure to engage in an Acquisition
Transaction;
(v) After an overture is made by a third party to
Issuer or its stockholders to engage in an Acquisition Transaction,
Issuer shall have breached any covenant or obligation contained in the
Merger Agreement (other than a non-volitional breach) and such breach
(x) would entitle Grantee to terminate the Merger Agreement and (y)
shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to which
Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board, or other federal
or state bank regulatory authority, which application or notice has
been accepted for processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean either
of the following events or transactions occurring after the date hereof:
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(i) The acquisition by any person (other than Grantee
or any Grantee Subsidiary) of beneficial ownership of 25% or more of
the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in paragraph (i) of subsection (b) of this Section 2, except
that the percentage referred to in clause (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event of
which it has notice (together, a "Triggering Event"), it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date of which
being herein referred to as the "Notice Date") specifying (i) the total number
of shares it will purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (a "Closing"; and the date of such
Closing, a "Closing Date"); provided that if prior notification to or approval
of the Federal Reserve Board or any other regulatory agency is required in
connection with such purchase, the Holder shall promptly file the required
notice or application for approval and shall expeditiously process the same and
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired or
been terminated, or such approvals have been obtained, and any requisite waiting
period or periods shall have passed. For purposes of determining the timeliness
of exercise, any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) At a Closing, the Holder shall pay to Issuer an amount
equal to the Option Price multiplied by the number of shares of Common Stock
purchased pursuant to the exercise of the Option in immediately available funds
by wire transfer to a bank account designated by Issuer, provided that failure
or refusal of Issuer to designate such a bank account shall not preclude the
Holder from exercising the Option.
(g) At such Closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder, which shares shall
be free and clear of all liens, charges or encumbrances, and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder, and
the Holder shall deliver to Issuer this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
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(h) Certificates for Common Stock delivered at a Closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Issuer, dated as of November 20,
2000, and to resale restrictions arising under the Securities
Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a
written request therefor."
It is understood and agreed that:
(i) The reference to the resale restrictions of the
Securities Act of 1933, as amended (the "1933 Act"), in the above
legend shall be removed by delivery of substitute certificate(s)
without such reference if the Holder shall have delivered to Issuer a
copy of a letter from the staff of the SEC, or an opinion of counsel,
in form and substance reasonably satisfactory to Issuer, to the effect
that such legend is not required for purposes of the 1933 Act;
(ii) The reference to the provisions to this
Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the shares have
been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of
such reference; and
(iii) The legend shall be removed in its entirety if
the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. Issuer shall pay all expenses, and any and all United States
federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee, transferee or
designee.
Section 3. Additional Covenants of Issuer. Issuer agrees: (a)
that it shall at all times maintain, free from preemptive rights, sufficient
authorized but unissued or
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treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Common
Stock; (b) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (c) promptly to take all action as may from time to time be required
(including (i) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and the regulations
promulgated thereunder and (ii) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (d) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
Section 4. Exchange, Loss, Theft, etc. of Agreement. This
Agreement and the Option granted hereby are exchangeable, without expense, at
the option of the Holder, upon presentation and surrender of this Agreement at
the principal office of Issuer, for other Agreements providing for Options of
different denominations entitling the holder thereof to purchase, on the same
terms and subject to the same conditions as are set forth herein, in the
aggregate the same number of shares of Common Stock purchasable hereunder. The
terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
Section 5. Adjustments upon Changes in Capitalization, etc. In
addition to the adjustment in the number of shares of Common Stock that are
purchasable upon exercise of the Option pursuant to subsection (b) of Section 1
of this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by
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reason of reclassifications, recapitalizations, stock dividends, stock splits,
split-ups, mergers, combinations, subdivisions, conversions, exchanges of
shares, dividends, dividends payable in other securities, distributions on or in
respect of the Common Stock, or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof and the Option Price therefor
(including for purposes of repurchase thereof pursuant to Section 7) shall be
appropriately adjusted in such manner as shall fully preserve the economic
benefits provided hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper adjustment and the
full satisfaction of the Issuer's obligations hereunder.
Section 6. Registration Rights. Upon the occurrence of a
Subsequent Triggering Event that occurs prior to an Exercise Termination Event,
Issuer shall, at the request of Grantee delivered within 90 days of such
Subsequent Triggering Event (whether on its own behalf or on behalf of any
subsequent Holder of this Option, or part thereof, or any of the shares of
Common Stock issued pursuant hereto), promptly prepare, file and keep current a
shelf registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of this Option and any shares of
Common Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee. Issuer
will use its reasonable best efforts to cause such registration statement first
to become effective and then to remain effective for such period not in excess
of 180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering of shares of Common
Stock, and if, in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering, the registration of the Holder's Option or Option Shares at such
time would interfere with the successful marketing of the shares of Common Stock
then being offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be registered for the account of the Holder shall constitute at least
25% of the total number of shares to be sold by the Holder and Issuer in the
aggregate; and provided further, however, that if such reduction occurs, then
the Issuer shall file a registration statement for the balance as promptly as
practicable and no reduction pursuant to this Section 6 shall thereafter occur.
Each Holder on behalf of which registration is requested shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the
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sale of such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in secondary offering underwriting agreements for the Issuer. Upon
receiving any request under this Section 6 from any Holder, Issuer agrees to
send a copy thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Grantee as a result of any assignment or division of this Agreement.
Section 7. Repurchase of Option. (a) From and after a
Repurchase Event (as defined below), (i) following a request of the Holder,
delivered prior to an Exercise Termination Event, Issuer (or any successor
thereto) shall repurchase the Option from the Holder at a price (the "Option
Repurchase Price") equal to the amount by which (x) the Market/Offer Price (as
defined below) exceeds (y) the Option Price, multiplied by the number of shares
for which this Option may then be exercised and (ii) at the request of the owner
of Option Shares from time to time (the "Owner"), delivered within 90 days of
such occurrence (or such later period as provided in Section 10), Issuer shall
repurchase such number of Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated,
provided, however, that the Option Purchase Price and Option Share Repurchase
Price shall be subject to the limitations set forth in Section 24. The term
"Market/Offer Price" shall mean the highest of (i) the price per share of Common
Stock at which a tender offer or exchange offer therefor has been made, (ii) the
price per share of Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (iii) the highest closing price for shares of Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives notice
of the required repurchase of Option Shares, as the case may be, and (iv) in the
event of a sale of all or a substantial portion of Issuer's assets, the sum of
the price paid in such sale for such assets and the current market value of the
remaining assets of Issuer, less the current market value of the remaining
liabilities of Issuer, each such value as determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case may be,
and reasonably acceptable to the Issuer, divided by the number of shares of
Common Stock of Issuer outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, this
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Agreement or certificates for Option Shares, as applicable, accompanied by a
written notice or notices stating that the Holder or the Owner, as the case may
be, elects to require Issuer to repurchase this Option and/or the Option Shares
in accordance with the provisions of this Section 7. Such notice or notices
shall also contain representations and warranties to the effect that the Holder
owns the Option Shares to be repurchased, free and clear of all Liens, with full
power, right and authority to present such Option Shares for repurchase
hereunder. Within the latter to occur of (i) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (ii) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof, if any,
that Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation or as a consequence of administrative policy arising
thereunder from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation or as a consequence of administrative policy
arising thereunder from repurchasing the Option or the Option Shares, as the
case may be, or from delivering to the Holder and/or the Owner, as appropriate,
the Option Repurchase Price and the Option Share Repurchase Price, respectively,
in full (and Issuer hereby undertakes to use its best efforts to obtain all
required regulatory and legal approvals and to file any required notices, in
each case as promptly as practicable in order to accomplish such repurchase),
the Holder or Owner may revoke its notice of repurchase of the Option or the
Option Shares either in whole or to the extent of the prohibition, whereupon, in
the latter case, Issuer shall promptly (i) deliver to the Holder and/or the
Owner, as appropriate, that portion of the Option Repurchase Price or the Option
Share Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (x) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (y) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
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(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred (i) upon the consummation of any merger,
consolidation or similar transaction involving Issuer or any purchase, lease or
other acquisition of all or a substantial portion of the assets of Issuer, other
than any such transaction which would not constitute an Acquisition Transaction
pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then outstanding
shares of Common Stock, provided that no such event described in clause (i) or
(ii) shall constitute a Repurchase Event unless a Subsequent Triggering Event
shall have occurred prior to an Exercise Termination Event. The parties hereto
agree that Issuer's obligations to repurchase the Option or Option Shares under
this Section 7 shall not terminate upon the occurrence of an Exercise
Termination Event, unless no Subsequent Triggering Event shall have occurred
prior to the occurrence of an Exercise Termination Event.
Section 8. Substitute Option. (a) In the event that prior to
an Exercise Termination Event, Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or a Grantee
Subsidiary, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or a
Grantee Subsidiary, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other person or cash or any other property or the then
outstanding shares of Common Stock shall after such merger represent less than
50% of the outstanding voting shares and voting share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the
continuing or surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (y) Issuer in a merger in which Issuer
is the continuing or surviving person, and (z) the transferee of all or
substantially all of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise of
the Substitute Option.
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(iii) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(iv) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in question,
but in no event higher than the closing price of the shares of
Substitute Common Stock on the 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 the person merging into Issuer or by any company
which controls or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then holder or holders of the
Substitute Option (the "Substitute Option Holder") in substantially the same
form as this Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
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Section 9. Repurchase of Substitute Option. (a) At the request
of the Substitute Option Holder, the Substitute Option Issuer shall repurchase
the Substitute Option from the Substitute Option Holder at a price (the
"Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at the
request of the owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to the Highest Closing Price multiplied by the number of
Substitute Shares so designated. The term "Highest Closing Price" shall mean the
highest closing price for shares of Substitute Common Stock within the six-month
period immediately preceding the date the Substitute Option Holder gives notice
of the required repurchase of the Substitute Option or the Substitute Share
Owner gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option Issuer
to repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable, and in any
event within five business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or, in either case, the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation or as a consequence of administrative policy arising thereunder from
so delivering.
(c) To the extent the Substitute Option Issuer is prohibited
under applicable law or regulation or as a consequence of administrative policy
arising thereunder from repurchasing the Substitute Option and/or the Substitute
Shares in part or in full, the Substitute Option Issuer following a request for
repurchase pursuant to this Section 9 shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited from
delivering, within five business days after the date on which
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the Substitute Option Issuer is no longer so prohibited; provided, however, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation or as a consequence of administrative policy
arising thereunder from delivering to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the Substitute Option Repurchase Price
and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its best efforts to obtain all required
regulatory and legal approvals, in each case as promptly as practicable, in
order to accomplish such repurchase), the Substitute Option Holder or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (x) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (y) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
Section 10. Extension of Exercise Period. The 90-day period
for exercise of certain rights under Sections 2, 6, 7 and 13 shall be extended:
(a) to the extent necessary to obtain all regulatory approvals for the exercise
of such rights and for the expiration of all statutory waiting periods; and (b)
to the extent necessary to avoid liability under Section 16(b) of the 1934 Act
by reason of such exercise.
Section 11. Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement or
to consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the
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termination of this Agreement in accordance with its terms will have reserved
for issuance upon the exercise of the Option, that number of shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, and all such shares, upon issuance pursuant
hereto, will be duly authorized, validly issued, fully paid, non-assessable, and
will be delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including, if required,
amending or terminating the Rights Agreement dated as of January 20, 1997, as
amended, between Issuer and Old Kent Bank, as rights agent, or redeeming all of
the rights ("Rights") under such Rights Agreement) so that the entering into
this Agreement, the acquisition of shares of Common Stock hereunder and the
other transactions contemplated hereby do not and will not result in the grant
of any rights to any person under the Rights Agreement or enable or require the
Rights to be exercised, distributed or triggered.
Section 12. 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 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 and validly executed and delivered by
Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the 1933 Act.
Section 13. Assignment. Neither of the parties hereto may
assign any of its rights or obligations under this Agreement or the Option
created hereunder to any other person, without the express written consent of
the other party, except that in the event a Subsequent Triggering Event shall
have occurred prior to an Exercise Termination Event, Grantee, subject to the
express provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 90 days following such Subsequent Triggering Event
(or such later period as provided in Section 10); provided, however, that until
the date 15 days following the date on which the Federal Reserve Board approves
an application by Grantee under the BHCA to acquire the shares of Common Stock
subject to the Option, Grantee may not assign its rights under the Option,
except in (a) a widely dispersed public distribution, (b) a private placement in
which no one party acquires the right to purchase in excess of 2% of the voting
shares of Issuer, (c) an assignment to a single party (e.g., a broker or
investment banker) for the
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purpose of conducting a widely dispersed public distribution on Grantee's behalf
or (d) any other manner approved by the Federal Reserve Board.
Section 14. Further Assurances. Each of Grantee and Issuer
will use its reasonable best efforts to make all filings with, and to obtain
consents of, all third parties and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement, including
without limitation making application to list the shares of Common Stock
issuable hereunder on the New York Stock Exchange upon official notice of
issuance and applying to the Federal Reserve Board under the BHCA for approval
to acquire the shares issuable hereunder, but Grantee shall not be obligated to
apply to state banking authorities for approval to acquire the shares of Common
Stock issuable hereunder until such time, if ever, as it deems appropriate to do
so.
Section 15. Surrender. (a) Grantee may, at any time during
which Issuer would be required to repurchase the Option or any Option Shares
pursuant to Section 7, surrender the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price (as defined below); provided, however, that Grantee may
not exercise its rights pursuant to this Section 15 if Issuer has repurchased
the Option (or any portion thereof) or any Option Shares pursuant to Section 7.
The "Surrender Price" shall be equal to (i) $150 million, plus (ii) if
applicable, the aggregate purchase price previously paid pursuant hereto by
Grantee with respect to any Option Shares, minus (iii) if applicable, the sum of
(x) the excess of (1) the net cash amounts, if any, received by Grantee pursuant
to the arms' length sale of Option Shares (or any other securities into which
such Option Shares were converted or exchanged) to any party not affiliated with
Grantee, over (2) the aggregate purchase price previously paid pursuant hereto
by Grantee with respect to such Option Shares and (y) the net cash amounts, if
any, received by Grantee pursuant to an arms' length sale of a portion of the
Option to any party not affiliated with Grantee.
(b) Grantee may exercise its right to surrender the Option and
any Option Shares pursuant to this Section 15 by surrendering to Issuer, at its
principal office, this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
surrender the Option and Option Shares, if any, in accordance with the
provisions of this Section 15 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable
law or regulation or as a consequence of administrative policy arising
thereunder from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver or cause to be delivered,
from time to time, to Grantee, the portion of the Surrender Price that Issuer is
no longer prohibited from paying, within five business
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days after the date on which Issuer is no longer so prohibited, provided,
however, that if Issuer at any time after delivery of a notice of surrender
pursuant to paragraph (b) of this Section 15 is prohibited under applicable law
or regulation or as a consequence of administrative policy arising thereunder
from paying to Grantee the Surrender Price in full (i) Issuer shall (x) use its
reasonable best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to make
such payments, (y) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (z) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for the
provisions of subsection (c) of this Section 15 (during which period Grantee may
exercise any of its rights hereunder, including any and all rights pursuant to
this Section 15).
(d) Grantee shall have rights substantially identical to those
set forth in subsections (a), (b) and (c) of this Section 15 with respect to the
Substitute Option and the Substitute Option Issuer during any period in which
the Substitute Option Issuer would be required to repurchase the Substitute
Option pursuant to Section 9.
Section 16. Equitable Relief. The parties hereto acknowledge
that damages would be an inadequate remedy for a breach of this Agreement by
either party hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other equitable relief.
Section 17. Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated. If for any reason such
court or regulatory agency determines that the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the
full number of shares of Common Stock provided in Section 1(a) hereof (as
adjusted pursuant to Section 1(b) or 5 hereof), it is the express intention of
Issuer to allow the Holder to acquire or to require Issuer to repurchase such
lesser number of shares as may be permissible, without any amendment or
modification hereof.
Section 18. Delivery. All notices, requests, claims, demands
and other communications hereunder shall be deemed to have been duly given when
delivered in person, by cable, telegram, telecopy or telex, or by registered or
certified mail (postage
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prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
Section 19. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof (except to the extent that mandatory provisions of federal or
state law apply).
Section 20. Counterparts. This Agreement may be executed in
two counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 21. Expenses. Except as otherwise expressly provided
herein, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
Section 22. Entire Agreement; No Third Party Beneficiaries.
Except as otherwise expressly provided herein or in the Merger Agreement, this
Agreement contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
Section 23. Capitalized Terms. Capitalized terms used in this
Agreement and not defined herein shall have the meanings assigned thereto in the
Merger Agreement.
Section 24. Limitation on Grantee's Total Profit. (a)
Notwithstanding any other provision herein, in no event shall Grantee's Total
Profit (as defined in subsection (c) of this Section 24) exceed $200 million
(the "Maximum Profit"), and, if the Total Profit would otherwise exceed such
amount, Grantee, at its sole election, shall either (i) reduce the number of
shares subject to the Option (and any Substitute Option), (ii) deliver to
Issuer, or Substitute Issuer, as the case may be, for cancellation shares of
Common Stock or Substitute Common Stock, as the case may be, previously
purchased by Grantee valued at fair market value at the time of delivery, (iii)
pay cash to Issuer, or Substitute Issuer, as the case may be, (iv) reduce the
amount of the Section 7 Option Repurchase Price or Section 9 Substitute Option
Repurchase Price, or (v) undertake any combination of the foregoing, so that
Grantee's actually realized Total
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Profit shall not exceed the Maximum Profit after taking into account the
foregoing actions.
(b) Notwithstanding any other provision of this Agreement, the
Option may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined in subsection (d) of
this Section 24) of more than the Maximum Profit and, if exercise of the Option
would otherwise result in the Notional Total Profit exceeding such amount,
Grantee, in its discretion, may take any of the actions specified in subsection
(a) of this Section 24 so that the Notional Total Profit shall not restrict any
subsequent exercise of the Option which at such time complies with this
sentence.
(c) For purposes of this Agreement, the term "Total Profit"
shall mean the aggregate amount (before taxes) of the following: (i) the excess
of (x) the net cash amounts or fair market value of any property received by
Grantee pursuant to the sale of the Option or the Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, other than any amount received by Grantee upon the
repurchase of the Option or the Option Shares, respectively, by Issuer pursuant
to Section 7 hereof, after payment of application brokerage or sales commissions
and discounts, over (y) Grantee's aggregate purchase price for such Option
Shares (or other securities), plus (ii) all amounts received by Grantee upon the
repurchase of the Option or the Option Shares by Issuer pursuant to Section 7
hereof, plus (iii) all equivalent amounts with respect to the Substitute Option
and Substitute Shares and any amounts paid pursuant to Section 9 hereof.
(d) For purposes of this Agreement, the term "Notional Total
Profit" with respect to any number of shares as to which Grantee may propose to
exercise the Option shall be the Total Profit, determined as of the date of such
proposed exercise assuming that the Option were exercised on such date for such
number of shares, and assuming that such shares, together with all other Option
Shares held by Grantee and its affiliates as of such date, were sold for cash at
the closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions). For purposes of
this Section 24, transactions by a wholly-owned subsidiary transferee of Grantee
in respect of the Option Shares transferred to it shall be treated as if made by
Grantee.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
OLD KENT FINANCIAL CORPORATION
By: /s/ David J. Wagner
----------------------------------------
Name: David J. Wagner
Title: Chairman of the Board, President
and Chief Executive Officer
FIFTH THIRD BANCORP
By: /s/ George A. Schaefer, Jr.
----------------------------------------
Name: George A. Schaefer, Jr.
Title: President and Chief Executive
Officer
Signature Page to Stock Option Agreement
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