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UNITED STATES OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __________)*
Wood Bancorp, Inc.
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(Name of Issuer)
Common Stock Par Value $0.01 Per Share
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(Title of Class of Securities)
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(CUSIP Number)
Marty E. Adams, President and Chief Operating Officer
Sky Financial Group, Inc.
221 South Church Street
Bowling Green, Ohio 43402
(419) 327-6300
Copies to:
W. Granger Souder, Esq.
Sky Financial Group, Inc.
221 South Church Street
Bowling Green, Ohio 43402
(419) 327-6300
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
December 16, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. / /
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section 240.13d-7
for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes.)
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POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM
DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1746 (2-98)
CUSIP No.
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of Above Persons (entities only).
Sky Financial Group, Inc.
IRS # 34-1372535
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2. Check the Appropriate Box if a Member of a Group
(a)
(b)
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3. SEC Use Only
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4. Source of Funds WC
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization Ohio
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Number of
Shares 7. Sole Voting Power up to 560,926 as of December 16, 1998,
Bene- subject to adjustment so as to constitute 19.9% of outstanding
ficially Common Stock*
Owned
by Each
Reporting
Person
With
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8. Shared Voting Power None
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9. Sole Dispositive Power up to 560,926 as of December 16,
1998, subject to adjustment so as to constitute 19.9% of outstanding
Common Stock*
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10. Shared Dispositive Power None
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11. Aggregate Amount Beneficially Owned by Each Reporting Person up to
560,926 as of December 16, 1998, subject to adjustment so as to constitute 19.9%
of outstanding Common Stock*
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12. Check if the Aggregate Amount in Row (11) Excludes
Certain Shares*
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13. Percent of Class Represented by Amount in Row (11) up to 19.9%
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14. Type of Reporting Person CO
* Beneficial Ownership of 560,926 shares of Common Stock reported hereunder is
so being reported solely as a result of the Stock Option Agreement described in
Item 6. The Binding Option (as defined in Item 3) granted pursuant to the Stock
Option Agreement has not yet become exercisable. Because the Binding Option will
not become exercisable unless and until certain specified events occur, Sky
Financial Group, Inc. expressly disclaims beneficial ownership of all such
shares.
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ITEM 1. SECURITY AND ISSUER
This statement relates to the common stock, par value $0.01 per share
("Common Stock"), of Wood Bancorp, Inc., a corporation formed under the laws of
Delaware (the "Issuer"), the principal executive offices of which are located at
124 E. Court Street, Bowling Green, Ohio 43402.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c) AND (f) This statement is being filed by Sky Financial Group,
Inc., an Ohio corporation ("Sky"), which is a bank holding company registered
under the Bank Holding Company Act of 1956, as amended. The principal business
offices of Sky are located at 221 South Church Street, Bowling Green, Ohio
43402. As of the date of this Schedule 13D, Sky provides diversified financial
services including banking and trust services. Sky's banking affiliates include
Mid American National Bank and Trust Company, Toledo, Ohio; The Citizens Banking
Company, Salineville, Ohio; and The Ohio Bank, Findlay, Ohio. The Company's
financial services affiliates include Mid Am Recovery Services, Inc.,
Clearwater, Florida; MFI Investment Corp., Bryan, Ohio; Mid Am Credit Corp.,
Columbus, Ohio; Mid Am Private Trust, N.A., Cincinnati, Ohio; Mid Am Financial
Services, Inc., Carmel, Indiana; Simplicity Mortgage Consultants, Marion,
Indiana; Mid Am Title Insurance Agency, Inc., Adrian, Michigan; Sky Technology
Resources, Inc., Bowling Green, Ohio; ValueNet, Inc., Lisbon, Ohio; Freedom
Financial Life Insurance Company, Phoenix, Arizona; and Freedom Express, Inc.,
Salineville, Ohio.
The names of the directors and executive officers of Sky and their
respective business addresses, citizenship and present principal occupations or
employment, as well as the names, principal businesses and addresses of any
corporations and other organizations in which such employment is conducted, are
set forth on Schedule I, which Schedule is incorporated herein by reference.
Other than executive officers and directors, to the best of Sky's
knowledge, there are no persons controlling or ultimately in control of Sky.
(d)-(e) Neither Sky nor, to the best of its knowledge, any of the
persons listed in Schedule I has, during the last five years, been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors).
Neither Sky nor, to the best of its knowledge, any of the persons listed in
Schedule I has, during the last five years, been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEMS 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
This statement relates to the Stock Option Agreement, dated December
16, 1998, by and between Sky and the Issuer (the "Stock Option Agreement") in
which Sky acquired a binding option to purchase from the Issuer up to 19.9%
(560,926 shares as of the date of the Stock Option Agreement) of the Issuer's
outstanding Common Stock for a purchase price of $16.00 per share (the "Binding
Option"). This acquisition gives Sky deemed beneficial ownership of 19.9% of the
Issuer's outstanding Common Stock, thus triggering this reporting requirement.
If exercised, Sky will use its working capital to purchase the Common Stock
available to it pursuant to the Binding Option.
ITEM 4. PURPOSE OF TRANSACTION
(a)-(j) SUMMARY OF THE TERMS OF THE MERGER AGREEMENT:
The Issuer has granted to Sky the Binding Option in furtherance of an
Agreement and Plan of Merger, dated December 16, 1998, by and between Sky and
the Issuer (the "Merger Agreement"), pursuant to which the Issuer will be merged
with and into Sky (the "Merger"). The Merger Agreement calls for each
outstanding share of Common Stock to be converted in the Merger into .7315
shares of Sky common stock, without par value, in a tax-free exchange, subject
to certain adjustments based on the then current closing price of Sky's common
stock on the NASDAQ National Market System. The Articles of Incorporation and
the Code of Regulations of Sky that are in effect immediately prior to the
effective date of the Merger will become the Articles of Incorporation and the
Code of Regulations of the surviving corporation after the Merger. The directors
and officers of Sky immediately before the effective date of the Merger, will
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remain the directors and officers of the surviving corporation; however, the
size of the Board of Directors of Sky will be increased to include one person
who was a member of the Issuer's Board of Directors immediately before the
effective time of the Merger.
Upon consummation of the Merger, the Common Stock will be delisted from
trading on the NADSAQ National Market System, where it currently trades under
the symbol "FFWD," and the Issuer will no longer be required to file periodic
reports under Section 12(b) of the Act (although the Issuer may have continuing
reporting obligations under Section 15(d) of the Act by reason of various
outstanding debt securities).
The Merger Agreement contains certain customary restrictions on the
conduct of the business of the Issuer pending consummation of the Merger.
Consummation of the Merger is subject to the satisfaction or waiver of certain
conditions, including, but not limited to, approval of the Merger by the holders
of shares of Common Stock, the receipt of certain regulatory approvals, and the
satisfaction of certain other customary conditions set forth in the Merger
Agreement.
A copy of the Merger Agreement and the Stock Option Agreement are filed
herein. The summary of the terms of the Merger Agreement and the Stock Option
Agreement contained in this Schedule 13D is not intended to be complete and is
qualified in its entirety by reference to such exhibits.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Sky may be deemed to be the beneficial owner of the shares of
Common Stock issuable upon the exercise of the Binding Option. As provided in
the Stock Option Agreement, Sky may exercise the Binding Option only upon the
happening of one or more events, none of which has occurred. (See Item 6.) If
the Binding Option were exercised, the shares of Common Stock issuable to Sky
would represent 19.9% of the currently issued and outstanding shares of Common
Stock (without giving effect to the issuance of such shares of Common Stock and
excluding in the calculation shares of Common Stock held by a subsidiary of the
Issuer). Sky has no right to vote or dispose of the shares of Common Stock
subject to the Binding Option and expressly disclaims beneficial ownership of
all such shares. Except as set forth above, neither Sky nor, to the best of its
knowledge, any of the persons listed in Schedule I beneficially owns any shares
of Common Stock.
(b) If Sky were to exercise the Binding Option, it would have sole
power to vote and, subject to the terms of the Stock Option Agreement, sole
power to direct the disposition of the shares of Common Stock issuable pursuant
to the Binding Option.
(c) Sky acquired the Binding Option in connection with the Merger
Agreement. (See Item 4). Neither Sky nor, to the best of its knowledge, any of
the persons listed in Schedule I has effected any transactions in the Common
Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Sky has entered into the following contracts, arrangements,
understandings or relationships (legal or otherwise) with respect to the
securities of the Issuer:
STOCK OPTION AGREEMENT. On December 16, 1998, Sky entered into
a Stock Option Agreement with the Issuer, whereby Sky was granted a Binding
Option to purchase up to 19.9% of the Company's outstanding Common Stock
(560,926 shares as of the date of the Stock Option Agreement) at an exercise
price of $16.00 per share. Sky may exercise the Binding Option at any time or
from time to time upon the occurrence of an "Initial Triggering Event" and a
"Subsequent Triggering Event" prior to an "Exercise Termination Event", each as
defined in the Stock Option Agreement, provided that Sky shall have sent notice
of exercise within six months of such "Subsequent Triggering Event".
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In the event Sky elects to exercise the Binding Option, Sky
must send written notice to the Issuer specifying the total number of shares it
will purchase and the place and date, not later than 60 business days after the
notice date, for the closing of such purchase. At the closing, Sky must pay to
the Issuer the aggregate purchase price for the Common Stock purchased in
immediately available funds by wire transfer and surrender the Stock Option
Agreement. Simultaneous with the delivery of funds, the Issuer must deliver to
Sky certificates representing the number of shares of Common Stock purchased.
The Stock Option Agreement further provides that, at any time following a
"Repurchase Event", as defined in the Stock Option Agreement, Sky may relinquish
the Stock Option Agreement to the Issuer in exchange for a "Surrender Price" of
$2.8 million, (i) plus, if applicable, Sky's purchase price with respect to any
option shares and (ii) minus, if applicable, the excess of any proceeds from
Sky's sale of the option shares over the purchase price of the option shares.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Agreement and Plan of Merger, dated as of December 16, 1998, by and between
Sky Financial Group, Inc. and Wood Bancorp, Inc.
2. Stock Option Agreement, dated as of December 16, 1998, by and between Sky
Financial Group, Inc. and Wood Bancorp, Inc.
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 24, 1998 SKY FINANCIAL GROUP, INC.
By: /s/ W. Granger Souder
Name: W. Granger Souder
Title: Executive Vice
President/General Counsel
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EXHIBIT INDEX
Exhibit
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A Agreement and Plan of Merger, dated as of December
16, 1998, by and between Sky Financial Group, Inc.
and Wood Bancorp, Inc. (Reference is made to Exhibit
2 to Sky's Report on Form 8-K filed December 28, 1998
which Exhibit is incorporated herein by reference).
B Stock Option Agreement, dated as of December 16,
1998, by and between Sky Financial Group, Inc. and
Wood Bancorp, Inc.
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF SKY FINANCIAL GROUP, INC.
The names, business addresses and present principal occupations of the
directors and executive officers of Sky Financial Group, Inc. are set forth
below. If no business address is given, the director's or executive officer's
business address is 221 South Church Street, Bowling Green, Ohio 43402. The
business address of each of the directors of Sky Financial Group, Inc. is also
the business address of such director's employer, if any. Unless otherwise
indicated, all directors and officers listed below are citizens of the United
States.
DIRECTORS
MARTY E. ADAMS
President, Chief Operating Officer
and Director of Sky Financial Group.
GERALD D. ALLER
President, Aller's Pharmacy, Inc., a
retail pharmacy
127 N. Main Street
North Baltimore, OH 45872
DAVID A. BRYAN
Partner in the law firm of Wasserman,
Bryan, Landry & Honold
405 N. Huron, 300 Inns of Court Building
Toledo, OH 43604
KEITH D. BURGETT
Veterinarian and owner of Carrollton
Animal Hospital and owner of Burgett
Angus Farms
1225 Canton Road
Carrolton, OH 44615
GEORGE N. CHANDLER II
Vice President-Reduced Iron,
Cleveland-Cliffs, Inc.
1100 Superior Avenue
Cleveland, OH 44114
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WILLARD L. DAVIS
President of SPM Fleet Services, Inc.,
an auto leasing company, and Vice
President of State Park Motors, Inc.,
an auto dealership, both in
Wintersville, Ohio. Mr. Davis is also
co-owner of Cardinal Motors, Inc., an
auto dealership in Cadiz, Ohio.
P.O. Box 2328
Wintersville, OH 43953
DAVID R. FRANCISCO
Chairman, Chief Executive Officer and
Director of Sky Financial Group.
DEL E. GOEDEKER
Vice President/Corporate Development of
Tuscarora, Inc.
200 Geneva Drive
Aliquippa, PA 15001
D. JAMES HILLIKER
Vice President, Better Food Systems,
Inc., a company that owns and
operates Wendy's
Restaurant franchises.
101 West Columbus Avenue
Bellefontaine, OH 43311
RICHARD R. HOLLINGTON, JR.
Senior Partner in the law firm of
Baker & Hostetler LLP
3200 National City Center, 1900 East
9th Street
Cleveland, OH 44114
FRED H. JOHNSON, III
Director and President of Summitcrest,
Inc., a cattle farm
Box 5
Summitville, OH 43962
H. LEE KINNEY. Senior Vice President,
Citizens Banking Company
100 North Fourth Street
Steubenville, OH 43952
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GERARD P. MASTROIANNI
President of the Buckeye Village
Market, Inc., a grocery store chain,
and President of Alliance Ventures,
a real estate holding company
1800 West State Street
Alliance, OH 44601
MARILYN O. MCALEAR
Vice President and Treasurer, Service Spring
Corp, a manufacturer of spring products
4370 Martin-Moline Road
Millbury, OH 43557
JAMES C. MCBANE
Vice Chairman of Sky Financial Group.
Principal and Chief Executive Officer
of McBane Insurance Agency, Inc.
School Street - Box 340
Bergholz, OH 43908
KENNETH E. MCCONNELL
Owns/operates McConnell's Farms
and is a partner in McConnell's Farm
Market, a meat market
2189 State Route 43
Richmond, OH 43944-9732
THOMAS S. NONEMAN
President, Tomco Plastic, a custom
plastic injection molding manufacturer
730 East South Street
Bryan, OH 43506
EDWARD J. REITER
Senior Chairman of Sky Financial Group
PATRICK W. ROONEY
Chairman of the Board, President and
CEO, The Cooper Tire Company
701 Lima Avenue
Findlay, OH 45840
EMERSON J. ROSS, JR.
Manager of Corporate Community
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Relations, Owens-Corning Fiberglas, a
manufacturer of building materials
and composite products
Fiberglas Tower, 19th Floor
Toledo, OH 43659
DOUGLAS J. SHIERSON
Private Investor
555 Budlong
Adrian, MI 49221
C. GREGORY SPANGLER
Chairman and CEO, Spangler Candy
Company, a manufacturer of candy
products
400 North Portland Street, PO Box 71
Bryan, OH 43506
ROBERT E. STEARNS, DDS
Dentist, Drs. Stearns and Zouhary,
DDS, Inc.
849 Dixie Highway
Rossford, OH 43460
GLENN F. THORNE
President and CEO of Thorne
Management, Inc., which owns and
operates supermarkets in Ohio and
Pennsylvania and a leasing company in
Ohio. Manager of Bias Realty, Ltd.,
which owns and operates
a supermarket and commercial rental
properties in Ohio. General partner of
CPW Properties, Ltd., which owns and
operates commercial and residential
properties in Ohio.
1452 Franklin Avenue
Salem, OH 44460
JOSEPH N. TOSH, II
President and Chief Executive Officer
of Century National Bank, a subsidiary
of Sky Financial
One Century Place
Rochester, PA 15074
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OFFICERS
FRANK J. KOCH
EVP/Credit Administration
10 East Main Street
Salineville, OH 43945
W. GRANGER SOUDER
EVP/General Counsel
KEVIN T. THOMPSON
EVP/Chief Financial Officer
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EXHIBIT B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 16, 1998, between Sky
Financial Group, Inc., an Ohio corporation ("Grantee"), and Wood Bancorp, Inc.,
a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer are simultaneously entering into an Agreement
and Plan of Merger (the "Merger Agreement");
WHEREAS, as an inducement to the willingness of Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 560,926 fully paid and nonassessable shares of the common stock,
par value $.01 per share, of Issuer ("Common Stock") at a price per share equal
to $16.00; PROVIDED, HOWEVER, that in the event Issuer issues or agrees to issue
any shares of Common Stock (other than shares of Common Stock issued pursuant to
stock options granted pursuant to any employee and director benefit plans prior
to the date hereof) at a price less than such price per share (as adjusted
pursuant to subsection (b) of Section 5), such price shall be equal to such
lesser price (such price, as adjusted if applicable, the "Option Price");
PROVIDED, FURTHER, that in no event shall the number of shares for which this
Option is exercisable exceed 19.9% of the issued and outstanding shares of
Common Stock. 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 any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, 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
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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 six (6) months following such Subsequent Triggering Event (or
such later period as provided in Section 10). Each of the following shall be an
Exercise Termination Event: (i) the Effective Time 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 8.01(b) of the Merger
Agreement (but only if the breach giving rise to the termination was willful)
(a "Listed Termination"); or (iii) the passage of eighteen (18) months (or such
longer period as provided in Section 10) after termination of the Merger
Agreement if such termination follows the occurrence of an Initial Triggering
Event or is a Listed Termination. The term "Holder" shall mean the holder or
holders of the Option. Notwithstanding anything to the contrary contained
herein, (i) the Option may not be exercised at any time when Grantee shall be in
material breach of any of its representations, warranties, covenants or
agreements contained in the Merger Agreement such that Issuer shall be entitled
to terminate the Merger Agreement pursuant to Section 8.01(b) thereof and (ii)
this Agreement shall automatically terminate upon the proper termination of the
Merger Agreement by Issuer pursuant to Section 8.01(b) thereof as a result of
the material breach by Grantee of its representations, warranties, covenants or
agreements contained in the Merger Agreement.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or its financial institution subsidiary (the "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 thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer (the "Issuer Board") shall have
recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction other than as contemplated by the Merger
Agreement. For purposes of this Agreement, (a) "Acquisition Transaction"
shall mean (x) a merger or consolidation, or any similar transaction,
involving Issuer or the Issuer Subsidiary (other than mergers,
consolidations or similar transactions involving solely Issuer and/or one
or more wholly-owned Subsidiaries of the Issuer, PROVIDED, any such
transaction is not entered into in violation of the terms of the Merger
Agreement), (y) a purchase, lease or other acquisition of all or any
substantial part of the assets or deposits of Issuer or the 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 the Issuer
Subsidiary and (b) "Subsidiary" shall have the meaning set forth in Rule
12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the
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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 thereunder);
(iii) The shareholders of Issuer shall have voted and failed to adopt
the Merger Agreement at a meeting which has been held for that purpose or
any adjournment or postponement thereof, or such meeting shall not have
been held in violation of the Merger Agreement or shall have been
cancelled prior to termination of the Merger Agreement if, prior to such
meeting (or if such meeting shall not have been held or shall have been
cancelled, prior to such termination), it shall have been publicly
announced that any person (other than Grantee or any of its Subsidiaries)
shall have made, or disclosed an intention to make, a proposal to engage
in an Acquisition Transaction;
(iv) The Issuer Board 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 Merger Agreement, or Issuer
or the 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;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
made a proposal to Issuer or its shareholders to engage in an Acquisition
Transaction and such proposal shall have been publicly announced;
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy statement with
the Securities and Exchange Commission (the "SEC") with respect to a
potential vote by its shareholders to approve the issuance of shares to be
offered in such an exchange offer);
(vii) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach Grantee would be
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
(viii) Any person other than Grantee or any Grantee Subsidiary shall
have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or other federal or
state bank regulatory or antitrust authority, which application or notice
has been accepted for processing, for approval to engage in an Acquisition
Transaction.
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(c) The term "Subsequent Triggering Event" shall mean any 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 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (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 (or any portion thereof), 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 (the "Closing Date");
PROVIDED, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, 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. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the 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 and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, PROVIDED that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement 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 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.
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<PAGE> 16
(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, dated as of December 16,
1998, between the registered holder hereof and Issuer 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 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 in the opinion of Counsel to the Holder;
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.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or 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; (ii)
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;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) 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 or other federal banking law, prior approval
of or notice to the
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<PAGE> 17
Federal Reserve Board or to any state or other federal 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 or other federal 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
(iv) promptly to take all action provided herein to protect the rights of the
Holder against dilution.
4. 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 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.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to 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.
(a) In the event of any change in, or distributions in respect of, 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 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 (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(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
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<PAGE> 18
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.
6. 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 twelve (12) months (or such later period as provided in Section
10) 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 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 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 promptly 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
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer 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 offer and sale
of the Option Shares would interfere 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 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 Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder 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 sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for 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
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<PAGE> 19
the number of registrations that Issuer is obligated to effect be increased by
reason of the fact that there shall be more than one Holder as a result of any
assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), 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 (A) the
market/offer price (as defined below) exceeds (B) 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 prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) 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 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 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, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer 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 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 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, a copy of this 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. As promptly as practicable, and in any event within 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, 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 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, 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
8
<PAGE> 20
cause to be delivered, from time to time, to 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, 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 reasonable best efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), the Holder or
Owner may revoke its notice of repurchase of the Option and/or the Option Shares
whether 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 and/or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new 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 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, and/or (B) to the Owner, a certificate
for the Option Shares it is then so prohibited from repurchasing. If an Exercise
Termination Event shall have occurred prior to the date of the notice by Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Holder shall nonetheless have the right to exercise the
Option until the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 50%.
8. (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, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or
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<PAGE> 21
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
or plan of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or the Issuer Subsidiary's assets or
deposits 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 (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.
(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 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 in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement 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
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<PAGE> 22
Stock for which the Option was exercisable immediately prior to the event
described in the first sentence of Section 8(a), 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 was
exercisable immediately prior to the event described in the first sentence of
Section 8(a) 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.
(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.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (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 rights 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/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the
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<PAGE> 23
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 the portion thereof which the Substitute
Option Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer 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 Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which 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, 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 reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/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 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 (A) 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, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute
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<PAGE> 24
Option Holder shall nevertheless have the right to exercise the Substitute
Option until the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full 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
Issuer Board prior to the date hereof 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 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 thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. 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 an Initial 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; PROVIDED, HOWEVER,
that until the date 15 days following the date on which the Federal Reserve
Board has approved an application by Grantee to acquire the shares of Common
Stock subject to the Option, 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 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 Board.
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<PAGE> 25
13. 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, 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.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish 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; PROVIDED, HOWEVER, that Grantee may not exercise its
rights pursuant to this Section 14 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 $2.8 million (i) plus, if applicable, Grantee's
purchase price with respect to any Option Shares and (ii) minus, if applicable,
the excess of (B) 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 unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 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, 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 it is no longer prohibited from paying,
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 surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
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, (B) 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 (c) 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
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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 this Section 14(c) (during which period
Grantee may exercise any of its rights hereunder, including any and all rights
pursuant to this Section 14).
15. 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. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. 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 l(a) hereof (as adjusted pursuant to Section l(b) or Section
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.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio, without regard to the conflict of law principles
thereof (except to the extent that mandatory provisions of Federal law or of the
VSCA are applicable).
19. 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.
20. 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.
21. 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 thereof, 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 assignees.
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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
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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.
WOOD BANCORP, INC.
By /s/ Richard L. Gordley
Richard L. Gordley
President and Chief Executive Officer
SKY FINANCIAL GROUP, INC.
By /s/ Marty E. Adams
Marty E. Adams
President and Chief Operating Officer
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