Exhibit 2.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of April 27, 1999 (this
"Agreement"), between Zions Bancorporation, a Utah corporation ("Grantee"), and
Regency Bancorp, a California corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer are entering into an Agreement and
Plan of Merger dated as of the date hereof (the "Plan"), which is being executed
by the parties simultaneously with the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering
into the Plan and in consideration therefor, Issuer has agreed to grant Grantee
the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Plan, the parties
hereto agree as follows:
SECTION 1. GRANT OF OPTION. (a) Subject to the terms and
conditions of this Agreement, Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 522,374 fully paid and nonassessable shares of Common Stock, no par value per
share ("Common Stock"), of Issuer at a price per share equal to $17.08 (the
"Initial Price"); PROVIDED, HOWEVER, that in the event Issuer issues or agrees
to issue (other than pursuant to options and warrants to issue Common Stock
outstanding as of the date hereof) any shares of Common Stock at a price less
than the Initial Price (as adjusted pursuant to Section 5(b)), such price shall
be equal to such lesser price (such price, as adjusted as hereinafter provided,
the "Option Price"); and, PROVIDED FURTHER, HOWEVER, that in no event shall the
number of shares of Common Stock for which the Option is exercisable exceed
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.
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 issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to
this Agreement and other than pursuant to an event described in Section 5(a)
hereof), the number of shares of Common Stock subject to the Option shall be
increased so that after such issuance such number together with any shares of
Common Stock previously issued pursuant hereto 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 l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer
to issue shares in breach of any provision of the Plan.
SECTION 2. EXERCISE OF OPTION.
(a) TIMING OF EXERCISE, TERMINATION. Provided that (i) Grantee
shall not be in material breach of the agreements or covenants contained in this
Agreement or the Plan and (ii) no preliminary or permanent injunction or other
order against delivery of shares covered by the Option issued by any court of
competent jurisdiction in the United States shall be in effect, Grantee may
exercise the Option, in whole or part, at any time and from time to time
following the occurrence of a Purchase Event (as defined below); PROVIDED that
the Option shall terminate and be of no further force and effect upon the
earliest to occur of:
(i) the time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase Event;
(iii) 18 months after the termination of the Plan following
the occurrence of a Preliminary Purchase Event (as defined below);
(iv) termination of the Plan in accordance with the terms
thereof prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (other than a termination of the Plan by Grantee
pursuant to Section 8.01(b)(i) or (ii) thereof or by Grantee and Issuer
pursuant to Section 8.01(a) thereof if Grantee shall at that time have
been entitled to terminate the Plan pursuant to Section 8.01(b)(i) or
(ii) thereof (provided that the breach of Issuer giving rise to such
termination or such right to terminate was willful) or by Grantee
pursuant to Section 8.01(e) or Section 8.01(f)) thereof, or
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(v) 18 months after the termination of the Plan by Grantee
pursuant to Section 8.01(b)(i) or (ii) thereof or by Grantee and Issuer
pursuant to Section 8.01(a) thereof if Grantee shall at that time have
been entitled to terminate the Plan pursuant to Section 8.01(b)(i) or
(ii) thereof (provided that the breach of Issuer giving rise to such
termination or such right to terminate was willful) or by Grantee
pursuant to Section 8.01(e) or Section 8.01(f) thereof.
The events described in clauses (i) - (v) in the preceding sentence are
hereinafter collectively referred to as an "Exercise Termination Event."
Anything herein to the contrary notwithstanding, any purchase of shares upon
exercise of the Option shall be subject to compliance with applicable law. The
rights set forth in Section 7 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) PRELIMINARY PURCHASE EVENT. The term "Preliminary Purchase
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") shall have entered into an agreement to engage in an
Acquisition Transaction (as defined below) 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 (the "Exchange Act"), and the rules and regulations thereunder)
other than Grantee or any of its subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer shall have recommended
that the shareholders of Issuer approve or accept any Acquisition
Transaction with any Person other than Grantee or any Grantee
Subsidiary. For purposes of this Agreement, "Acquisition Transaction"
shall mean (x) a merger or consolidation, or any similar transaction,
involving Issuer or any Issuer Subsidiary, (y) a purchase, lease or
other acquisition of all or substantially all of the assets of or
assumption of all or substantially all the deposits of Issuer or any
Issuer Subsidiary or (z) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Issuer or
any Issuer Subsidiary, provided that the term "Acquisition Transaction"
does not include any internal merger or consolidation involving only
Issuer and/or Issuer Subsidiaries;
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(ii) Any Person (other than Grantee or any Grantee Subsidiary
or any Issuer Subsidiary acting in a fiduciary capacity in the ordinary
course of business) shall have acquired Beneficial Ownership or the
right to acquire Beneficial Ownership, of shares of Common Stock (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) such that, upon the consummation of
such acquisition, such Person would have Beneficial Ownership, in the
aggregate, of 10% or more of the then outstanding shares of Common
Stock;
(iii) Any Person other than Grantee or any Grantee Subsidiary
shall have made a BONA FIDE proposal to Issuer or its shareholders, by
public announcement or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction
(including, without limitation, any situation in which any Person other
than Grantee or any Grantee Subsidiary 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 of 1933, as
amended (the "Securities Act"), with respect to, a tender offer or
exchange offer to purchase any shares of Common Stock such that, upon
consummation of such offer, such Person would own or control 10% or
more of the then outstanding shares of Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer",
respectively));
(iv) After a proposal is made by a third party to Issuer or
its shareholders to engage in an Acquisition Transaction, or such third
party states its intention to make such a proposal if the Plan
terminates and/or the Option expires, Issuer shall have breached any
covenant or obligation contained in the Plan and such breach would
entitle Grantee to terminate the Plan (without regard to the cure
period provided for therein unless such cure is promptly effected
without jeopardizing consummation of the Merger pursuant to the terms
of the Plan);
(v) (A) The holders of Common Stock shall not have approved
the Plan by the requisite vote at the meeting of such shareholders held
for the purpose of voting on the Plan or (B) such meeting shall not
have been held or shall have been canceled prior to termination of the
Plan after it shall have been publicly announced that any Person (other
than Grantee or any Grantee Subsidiary) shall
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have (x) made, or disclosed an intention to make, a BONA FIDE proposal
to engage in an Acquisition Transaction, (y) commenced a Tender Offer
or filed a registration statement under the Securities Act with respect
to an Exchange Offer or (z) filed an application (or given a notice)
with, whether in draft of final form, the Board of Governors of the
Federal Reserve System (the "Federal Reserve") or any other
governmental authority or regulatory or administrative agency or
commission (each, a "Governmental Authority"), for approval to engage
in an Acquisition Transaction;
(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 or other Governmental
Authority for approval to engage in an Acquisition Transaction; or
(vii) The Issuer's Board of Directors shall have withdrawn or
modified (or publicly announced its intention to withdraw or modify) in
any manner adverse in any respect to Grantee its recommendation that
the shareholders of Issuer approve the transactions contemplated by the
Plan, or Issuer or any Issuer Subsidiary shall have authorized,
recommended, proposed (or publicly announced its intention to
authorize, recommend or propose) an agreement to engage in an
Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary.
(c) PURCHASE EVENT. The term "Purchase Event" shall mean
either of the following events or transactions occurring after the date hereof:
(i) The acquisition by any Person other than Grantee or any
Grantee Subsidiary of Beneficial Ownership of shares of Common Stock,
such that, upon the consummation of such acquisition, such Person would
have Beneficial Ownership, in the aggregate, of 25% or more of the then
outstanding shares of Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described
in Section 2(b)(i) hereof except that the percentage referred to in
clause (z) shall be 25%.
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(d) NOTICE BY ISSUER. Issuer shall notify Grantee promptly in
writing of the occurrence of any Preliminary Purchase Event or Purchase Event;
PROVIDED, HOWEVER, that the giving of such notice by Issuer shall not be a
condition to the right of Grantee to exercise the Option.
(e) NOTICE OF EXERCISE. In the event that Grantee is entitled
to and wishes to exercise the Option, it shall send to Issuer a written notice
(the "Option Notice" and the date of which being hereinafter referred to as the
"Notice Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise, (ii) the aggregate purchase price as
provided herein, (iii) a date for the closing (that shall not be less than three
(3) Business Days nor more than thirty (30) Business Days) from the Notice Date
(the "Closing Date") and (iv) a place at which the closing of such purchase
shall take place (subject to Issuer's approval which shall not be unreasonably
withheld); PROVIDED, THAT, if prior notification to or approval of the Federal
Reserve or any other Governmental Authority is required in connection with such
purchase (each, a "Notification" or an "Approval," as the case may be), (a)
Grantee shall promptly file, or cause to be filed, the required notice or
application for approval ("Notice/Application"), (b) Grantee shall expeditiously
process, or cause to be expeditiously processed, the Notice/Application and (c)
for the purpose of determining the Closing Date pursuant to clause (iii) of this
sentence, the period of time that otherwise would run from the Notice Date shall
instead run from the later of (x) in connection with any Notification, the date
on which any required notification periods have expired or been terminated and
(y) in connection with any Approval, the date on which such approval has been
obtained and any requisite waiting period or periods shall have expired;
PROVIDED FURTHER that the Option Notice must be made, and the Notice Date must
be, no later than the date on which the Exercise Termination Event occurs. For
purposes of Section 2(a) hereof, any exercise of the Option shall be deemed to
occur on the Notice Date relating thereto. On or prior to the Closing Date,
Grantee shall have the right to revoke its exercise of the Option in the event
that the transaction constituting a Purchase Event that gives rise to such right
to exercise shall not have been consummated.
(f) PAYMENTS. At the closing referred to in Section 2(e)
hereof, Grantee shall present and surrender this Agreement and pay to Issuer the
aggregate Option Price for the shares of Common Stock specified in the Option
Notice in immediately available funds by wire transfer to a bank account
designated by Issuer; PROVIDED, HOWEVER, that
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failure or refusal of Issuer to designate such a bank account shall not preclude
Grantee from exercising the Option.
(g) DELIVERY OF COMMON STOCK. At such closing, simultaneously
with the delivery of immediately available funds and surrender of this Agreement
as provided in Section 2(f) hereof, (i) Issuer shall deliver to Grantee a
certificate or certificates representing the number of shares of Common Stock
specified in the Option Notice and, if the Option should be exercised in part
only, a new Option evidencing the rights of Grantee thereof to purchase the
balance of the shares of Common Stock purchasable hereunder and (ii) Grantee
shall deliver to Issuer a letter reasonably satisfactory to both Grantee and
Issuer by which Grantee makes agreements customary in the issuance of privately
placed securities with respect to the sale, transfer or other disposition by it
of such common stock, including, without limitation, agreements not to transfer
such shares in violation of this Agreement or applicable federal or state
securities laws.
(h) COMMON STOCK CERTIFICATES. Certificates for Common Stock
delivered at a closing hereunder shall be endorsed with a restrictive legend
substantially as follows:
The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended, and to certain provisions of an agreement between Zions
Bancorporation and Regency Bancorp ("Issuer") dated as of April 27,
1999. 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 in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (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 Securities Act; (ii) the reference to the
provisions of 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
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preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) HOLDER OF RECORD. Upon the giving by Grantee to Issuer of
an Option Notice and the tender of the applicable purchase price in immediately
available funds on the Closing Date, Grantee shall be deemed to be the holder of
record of the number of shares of Common Stock specified in the Option Notice,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then
actually be delivered to Grantee. 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 Grantee.
SECTION 3. ISSUER'S COVENANTS.
(a) AVAILABLE SHARES. The Issuer agrees that it shall at all
times until the termination of this Agreement have reserved for issuance upon
the exercise of the Option that number of authorized and reserved shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, all of which shares will, upon
issuance pursuant hereto, be duly authorized, validly issued, fully paid,
nonassessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights.
(b) COMPLIANCE. The Issuer agrees that it will not, by
amendment of its articles of incorporation 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) CERTAIN ACTIONS, APPLICATIONS AND ARRANGEMENTS. Issuer
shall promptly 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. ss. 18a and regulations promulgated
thereunder and (ii) in the event, under the Bank Holding Company Act of 1956, as
amended ("BHC Act"), 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 or to
any other Governmental Authority is necessary before the Option
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may be exercised, cooperating with Grantee in preparing such applications or
notices and providing such information to each such Governmental Authority as it
may require) in order to permit Grantee to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto, and to protect
the rights of Grantee against dilution.
SECTION 4. EXCHANGE OF OPTION. This Agreement and the Option
granted hereby are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of 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 in this Section 4 include any 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. The number of shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as follows:
(a) In the event of any change in the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the Option),
the number of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of Common Stock
previously issued pursuant to the exercise of the Option
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(as adjusted on account of any of the foregoing changes in the Common Stock), it
represents the same proportion of the number of shares of Common Stock then
issued and outstanding as such proportion before the applicable event described
in this Section 5(a).
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
SECTION 6. REGISTRATION RIGHTS. (a) Upon the occurrence of a
Purchase Event that occurs prior to an Exercise Termination Event, Issuer shall,
at the request of Grantee (whether on its own behalf or on behalf of any
subsequent holder of the Option (or part thereof) or any of the shares of Common
Stock issued pursuant hereto), promptly prepare, file and keep current a
registration statement under the Securities Act covering any shares issued and
issuable pursuant to the Option and shall use its best efforts to cause such
registration statement to become effective and remain current in order to permit
the sale or other disposition of any shares of Common Stock issued upon total or
partial exercise of the Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee. The Issuer will use its best efforts to cause
such registration statement first to become effective and then to remain
effective for such period not in excess of one hundred and eighty (180) days
from the day such registration statement first becomes effective. Grantee shall
have the right to demand two (2) such registrations at the Issuer's expense. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in the process of
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 offering or inclusion of the Option Shares would interfere
materially with the successful marketing of the shares of Common Stock 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
included in such offering for the account of Grantee shall constitute at least
thirty-three and one third percent (33_%) of the total number of shares of
Common Stock held by Grantee and Issuer covered in such registration statement;
PROVIDED FURTHER, HOWEVER, that if such reduction occurs, then Issuer shall
file a
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registration statement for the balance as promptly as practicable thereafter as
to which no reduction shall thereafter occur. In addition, if the Issuer
proposes to register its Common Stock or any other securities on a form that
would permit the registration of the Shares for public sale under the Securities
Act (whether proposed to be offered for sale by the Issuer or any other Person)
it will give prompt written notice to Grantee of its intention to do so,
specifying the relevant terms of such proposal, including the proposed maximum
offering price thereof. Upon the written notice of Grantee (whether on its own
behalf or on behalf of any subsequent holder of the Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto) delivered to the
Issuer within twenty (20) Business Days after the giving of any such notice,
which request shall specify the number of Shares desired to be disposed by
Grantee, the Issuer will use its best efforts to effect, in connection with its
proposed registration, the registration under the Securities Act of the Shares
set forth in such request. Grantee shall be entitled to two (2) such
registrations at the Issuer's expense. Grantee shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. In connection with any such registration, Issuer and Grantee
shall provide each other with representations, warranties, indemnities and other
agreements customarily given in connection with such registrations. If requested
by Grantee in connection with such registration, Issuer and Grantee shall become
a party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating themselves in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements.
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain any approval required to
exercise the Option as described in Section 9 hereof, the closing of the sale or
other disposition of the Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Option.
(c) 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), legal expenses, including the reasonable fees and expenses of one
counsel to the holders whose Option Shares are being registered, printing
expenses and the costs of special audits or "cold comfort" letters, expenses of
underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
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reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to this Section 6 (including the related
offerings and sales by holders of Option Shares) and all other qualifications,
notification or exemptions pursuant to this Section 6.
(d) In connection with any registration under this Section 6,
Issuer hereby indemnifies the Grantee, and each officer, director and
controlling person of Grantee, 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, or alleged untrue, statement contained in
any registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such expenses, losses, claims, damages or
liabilities of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by 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 Grantee, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by 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
Section 6(d) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this Section 6(d), such indemnified party
shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
Section 6(d). 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
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indemnifying party similarly notified, to assume the defense of such action at
its own expense, with counsel chosen by it and reasonably 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 either
agrees to pay the same, (ii) the indemnifying party fails to assume the defense
of such action with counsel reasonably 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
interests of the indemnified party. No indemnifying party shall be liable for
the fees and expenses of more than one separate counsel for all indemnified
parties or for any settlement entered into without its consent, which consent
may not be unreasonably withheld.
If the indemnification provided for in this Section 6(d) 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 fault of Issuer,
the Grantee and the underwriters in connection with the statements or omissions
which resulted in such expenses, losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; PROVIDED, HOWEVER, that in no case shall the Grantee 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 Grantee
to indemnify shall be several and not joint with other holders of Option Shares.
SECTION 7. OPTION REPURCHASE. (a) Upon the occurrence of a
Purchase Event that occurs prior to an Exercise Termination Event, (i) at the
request (the date of such request being the "Request Date") of Grantee,
delivered within thirty (30)
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days of the Purchase Event (or such later period as may be provided pursuant to
Section 9 hereof), Issuer shall repurchase the Option from Grantee at a price
(the "Option Repurchase Price") equal to (x) the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which the Option may then be exercised and (ii) at
the request (the date of such request being the "Request Date") of the owner of
Option Shares from time to time (the "Owner"), delivered within thirty (30) days
of a Purchase Event (or such later period as may be provided pursuant to Section
9 hereof), Issuer shall repurchase such number of the Option Shares from the
Owner as the Owner shall designate at a price (the "Option Share Repurchase
Price") equal to (x) the market/offer price multiplied by the number of Option
Shares so designated. 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 after the date hereof and on or prior to the
Request Date, (ii) the price per share of Common Stock paid or to be paid by any
third party pursuant to an agreement with Issuer (whether by way of a merger,
consolidation or otherwise), (iii) the highest last sales price for shares of
Common Stock within the 90-day period ending on the Request Date as reported on
NASDAQ (as reported in THE WALL STREET JOURNAL or, if not reported therein, in
another mutually agreed upon authoritative source) or (iv) in the event of a
sale of all or substantially all 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 as determined by a nationally-recognized independent investment
banking firm mutually selected by Grantee or the Owner, as the case may be, on
the one hand, and Issuer, on the other hand, 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 independent investment banking firm
mutually selected by Grantee or Owner, as the case may be, on the one hand, and
Issuer, on the other hand, whose determination shall be conclusive and binding
on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and/or any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
immediately as practicable, and in any event within five
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(5) Business Days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Issuer shall deliver or cause to be delivered to Grantee the Option
Repurchase Price or to the Owner the Option Share Repurchase Price or the
portion thereof that Issuer is not then prohibited from so delivering under
applicable law and regulation or as a consequence of administrative policy.
(c) Issuer hereby undertakes to use its best efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify Grantee and/or the Owner and thereafter deliver or cause
to be delivered, from time to time, to Grantee 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 (5) 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 Section 7(b) is prohibited under applicable law
or regulation, or as a consequence of administrative policy, from delivering to
Grantee and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full Grantee or Owner may revoke
its notice of repurchase of the Option or the Option Shares either in whole or
in part whereupon, in the case of a revocation in part, Issuer shall promptly
(i) deliver to Grantee and/or the Owner, as appropriate, that portion of the
Option Purchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Common Stock equal to
the number of shares of Common Stock purchasable immediately prior to the
delivery of the notice of repurchase less the number of shares of Common Stock
covered by the portion of the Option repurchased or (B) to the Owner, a
certificate for the number of Option Shares covered by the revocation.
(d) Issuer shall not enter into any agreement with any party
(other than Grantee or a Grantee Subsidiary) for an Acquisition Transaction
unless the other party thereto assumes all the obligations of Issuer pursuant to
this Section 7 in the event that a
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Grantee or Owner elects, in its sole discretion, to require such other party to
perform such obligations.
SECTION 8. SUBSTITUTE OPTION.
(a) GRANT OF SUBSTITUTE OPTION. In the event that prior to an
Exercise Termination Event, Issuer shall enter into an agreement (i) to
consolidate or merge with 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
fifty percent (50%) of the outstanding shares and share equivalents of the
merged company or (iii) to sell or otherwise transfer all or substantially all
of its or any Issuer Subsidiary's 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 such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (x) the Acquiring Corporation
(as defined below) or (y) any Person that controls the Acquiring Corporation
(the Acquiring Corporation and any such controlling Person being hereinafter
referred to as the "Substitute Option Issuer").
(b) EXERCISE OF SUBSTITUTE OPTION. The Substitute Option shall
be exercisable for such number of shares of the Substitute Common Stock (as is
hereinafter defined) as is equal to the market/offer price (as defined in
Section 7 hereof), MULTIPLIED by the number of shares of the Common Stock for
which the Option was theretofore exercisable, DIVIDED by the Average Price (as
is hereinafter defined). The exercise price of the Substitute Option per share
of the Substitute Common Stock (the "Substitute Purchase Price") shall then be
equal to the product of the Option Price MULTIPLIED by a fraction in which the
numerator is the number of shares of Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares for which
the Substitute Option is exercisable.
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(c) TERMS OF SUBSTITUTE OPTION. The Substitute Option shall
otherwise have the same terms as the Option, PROVIDED, HOWEVER, that if the
terms of the Substitute Option cannot, for legal reasons, be the same as the
Option, such terms shall be as similar as possible and in no event less
advantageous to Grantee.
(d) SUBSTITUTE OPTION DEFINITIONS. The following terms have
the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving Person, and (iii) the transferee of all or any
substantial part of the Issuer's assets (or the assets of any Issuer
Subsidiary);
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option; and
(iii) "Average Price" shall mean the average closing price of
a share of the Substitute Common Stock for the one (1) year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale;
PROVIDED, HOWEVER, that if such closing price is not ascertainable due
to an absence of a public market for the Substitute Common Stock,
"Average Price" shall mean the higher of (i) the price per share of
Substitute Common Stock paid or to be paid by any third party pursuant
to an agreement with the issuer of the Substitute Common Stock and (ii)
the book value per share, calculated in accordance with generally
accepted accounting principles, of the Substitute Common Stock
immediately prior to exercise of the Substitute Option; PROVIDED,
FURTHER, that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by Issuer, the Person merging into Issuer or by any company
which controls or is controlled by such merging Person, as Grantee may
elect.
(e) CAP ON SUBSTITUTE OPTION. In no event, pursuant to any of
the foregoing paragraphs, shall the Substitute Option be exercisable for more
than that proportion of the
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outstanding Substitute Common Stock equal to the proportion of the outstanding
Common Stock of the Issuer which Grantee had the right to acquire immediately
prior to the issuance of the Substitute Option. In the event that the Substitute
Option would be exercisable for more than the proportion of the outstanding
Substitute Common Stock referred to in the immediately preceding paragraph but
for this clause (e), 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 (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 Grantee and reasonably acceptable to the Acquiring
Corporation.
SECTION 9. EXTENSION OF EXERCISE RIGHT. Notwithstanding
Sections 2, 6 and 7 and 11 hereof, if Grantee has given the notice referred to
in one or more of such Sections, the exercise of the rights specified in any
such Section shall be extended (a) if the exercise of such rights requires
obtaining regulatory approvals (including any required waiting periods) to the
extent necessary to obtain all regulatory approvals for the exercise of such
rights, and (b) to the extent necessary to avoid liability under Section 16(b)
of the Exchange Act by reason of such exercise; PROVIDED, HOWEVER, that in no
event shall any closing date occur more than six (6) months after the related
Notice Date, and, if the closing date shall not have occurred within such period
due to the failure to obtain any required approval by the Federal Reserve or any
other Governmental Authority despite the best efforts of Issuer or the
Substitute Option Issuer, as the case may be, to obtain such approvals, the
exercise of the Option shall be deemed to have been rescinded as of the related
Notice Date. In the event (a) Grantee receives official notice that an approval
of the Federal Reserve or any other Governmental Authority required for the
purchase and sale of the Option Shares will not be issued or granted or (b) a
closing date has not occurred within six (6) months after the related Notice
Date due to the failure to obtain any such required approval, Grantee shall be
entitled to exercise the Option in connection with the resale of the Option
Shares pursuant to a registration statement as provided in Section 6.
SECTION 10. ISSUER'S REPRESENTATIONS AND WARRANTIES. Issuer
hereby represents and warrants to Grantee as follows:
(a) CORPORATE AUTHORITY. Issuer has full corporate power and
authority to execute and deliver this Agreement and, subject to any approvals or
consents referred to
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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 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 authorized, executed and delivered by the Issuer.
(b) AVAILABILITY OF SHARES. 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 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, encumbrances and security interests and not subject to any
preemptive rights.
(c) NO VIOLATIONS. The execution, delivery and performance of
this Agreement does not or will not, and the consummation by Issuer of any of
the transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, its articles of incorporation or
by-laws, or the comparable governing instruments of any of the Issuer
Subsidiaries, or (B) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of the Issuer Subsidiaries (with or without the giving
of notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which it or any of the Issuer Subsidiaries is subject, that
would, in any case give any other person the ability to prevent or enjoin
Issuer's performance under this Agreement in any material respect.
SECTION 11. GRANTEE'S REPRESENTATIONS AND WARRANTIES. Grantee
hereby represents and warrants to issuer as follows:
(a) CORPORATE AUTHORITY. 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
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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 authorized, executed and delivered by
Grantee.
(b) INVESTMENT INTENT. 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 Securities Act.
SECTION 12. ASSIGNMENT. Neither of the parties hereto may
assign any of its rights or delegate any of its obligations under this Agreement
or the Option created hereunder to any other Person without the express written
consent of the other party, except that Grantee may assign this Agreement to a
wholly owned subsidiary of Grantee and Grantee may assign its rights hereunder
in whole or in part after the occurrence of a Preliminary Purchase Event;
PROVIDED, HOWEVER, that until the date at which the Federal Reserve has approved
an application by Grantee under the BHC Act to acquire the shares of Common
Stock subject to the Option, other than to a wholly owned subsidiary of Grantee,
Grantee may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of two percent (2%) of the voting
shares of Issuer, (iii) an assignment to a single party (E.G., a broker or
investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve and, in each case, in compliance with all applicable federal or
state securities laws. The term "Grantee" as used in this Agreement shall also
be deemed to refer to Grantee's permitted assigns.
Any attempted assignment prohibited by this Section 12 is void and without
effect.
SECTION 13. FILINGS AND CONSENTS. Each of Grantee and Issuer
will use its reasonable 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 if necessary, for listing of the shares of Common
Stock issuable hereunder on any exchange or quotation system and applying to the
Federal Reserve under the BHC Act and to state banking authorities for approval
to acquire the shares issuable hereunder.
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SECTION 14. REMEDIES. 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 shall hereto be enforceable
by either party hereto through injunctive or 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.
SECTION 15. 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.
SECTION 16. NOTICES. 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 prepaid, return receipt requested) at the respective
addresses of the parties set forth in the Plan. Either party may change the
address to which such notices or other communications may be sent by giving
written notice thereof in accordance with this Section 16.
SECTION 17. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement and shall be effective
at the time of execution.
SECTION 18. 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 19. ENTIRE AGREEMENT. Except as otherwise expressly
provided herein or in the Plan or in the other documents or instruments referred
to herein or therein, 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 thereof, written or oral.
The terms and conditions of this
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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 except as assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. DEFINITIONS. Capitalized terms used in this
Agreement and not defined herein but defined in the Plan shall have the meanings
assigned thereto in the Plan.
SECTION 21. EFFECT ON PLAN. Nothing contained in this
Agreement shall be deemed to authorize Issuer or Grantee to breach any provision
of the Plan.
SECTION 22. SELECTIONS. In the event that any selection or
determination is to be made by Grantee hereunder and at the time of such
selection or determination there is more than one Grantee, such selection shall
be made by a majority in interest of such Grantees.
SECTION 23. FURTHER ASSURANCES. In the event of any exercise
of the option by Grantee, Issuer and such Grantee shall execute and deliver all
other documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
SECTION 24. VOTING. Except to the extent Grantee exercises the
Option, Grantee shall have no rights to vote or receive dividends or have any
other rights as a shareholder with respect to shares of Common Stock covered
hereby.
SECTION 25. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California.
SECTION 26. 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, PROVIDED such waiver is set forth in writing and
signed by such party. No modification, amendment or supplement to this Agreement
shall be effective unless set forth in writing and signed by both parties
hereto.
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IN WITNESS WHEREOF, each of the parties has caused this Stock
Option Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
ZIONS BANCORPORATION
By:
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Name: Dale M. Gibbons
Title: Chief Financial Officer
REGENCY BANCORP
By:
----------------------------------------
Name: Steven F. Hertel
Title: Chairman, President and Chief
Executive Officer
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