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EXHIBIT 1
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of the 18th day of April, 1999 (this
"Agreement"), between Citizens Banking Corporation ("Grantee") and F & M
Bancorporation, Inc. ("Issuer").
RECITALS:
A. Grantee and Issuer are parties to an Agreement and Plan of Merger,
dated as of the 18th day of April, 1999 (the "Plan").
B. As a condition and inducement to Grantee's not terminating the Plan
and in consideration therefor, Issuer is granting Grantee the Option (as defined
below).
AGREEMENT
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. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms of this Agreement, up to 3,097,908 fully paid and nonassessable (except as
provided in Section 180.0622(2)(b), of the Wisconsin Business Corporation Law,
as judicially interpreted) shares of common stock, par value $1.00 per share
("Common Stock"), of Issuer at a price per share equal to $35.55 (the "Option
Price"); provided, however, that in no event shall the number of shares of
Common Stock for which this Option is exercisable exceed 19.9% of the Issuer's
issued and outstanding shares of Common Stock without giving effect to any
shares subject to 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 set forth below.
SECTION 2. Exercise of Option.
(a) 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 (as defined in the Plan), (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 its terms prior to the
occurrence of a Purchase Event or a Preliminary Purchase Event, other than a
termination of the Plan by Parent pursuant to Section 7.1(c)(i) of the Plan
(unless the breach by Issuer giving rise to such right of termination is
non-volitional) or (v) 12 months after the termination of the Plan by Parent
pursuant to Section 7.1(c)(i) of the Plan (unless the breach by
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Issuer giving rise to such right of termination is non-volitional). The events
described in clauses (i)-(v) in the preceding sentence are collectively referred
to as an "Exercise Termination Event."
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring after the date of this Agreement:
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary") without having received Grantee's prior
written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as defined below)
with any person 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 (w) a merger or
consolidation, or any similar transaction, involving
Issuer or any of Issuer's subsidiaries, which either
individually or in the aggregate would constitute a
"Significant Subsidiary" (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange
Commission) ("Material Subsidiaries") or involving any of
Issuer's other bank subsidiaries, if such transaction
involves more than two such subsidiaries, (x) a purchase,
lease or other acquisition of all or substantially all of
the assets of Issuer or any Material Subsidiary (y) 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
a Material Subsidiary or (z) any substantially similar
transaction. The term "Acquisition Transaction" does not
include any internal merger or consolidation involving
only Issuer and/or Issuer Subsidiaries, provided that any
such transaction is not entered into in violation of the
terms of the Plan. The term "person," for purposes of this
Agreement, shall have assigned to such term in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Securities Exchange Act"), and the
rules and regulations thereunder.
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized,
recommended, proposed or publicly announced its intention
to authorize, recommend or propose, to engage in an
Acquisition Transaction with any person other than Grantee
or a Grantee Subsidiary, or the Board of Directors of
Issuer shall have publicly withdrawn or modified, or
publicly announced its interest to withdraw or modify, in
any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions
contemplated by the Plan in anticipation of engaging in an
Acquisition Transaction.
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(iii) Any person (other than Grantee, any Grantee Subsidiary or
any subsidiary of Issuer acting in a fiduciary capacity in
the ordinary course of its business) shall have acquired
beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of
Common Stock. The term "beneficial ownership" for purposes
of this Agreement shall have the meaning assigned to such
term in Section 13(d) of the Securities Exchange Act, and
the rules and regulations thereunder.
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its
stockholders, by public announcement or written
communication that is or becomes the subject of public
disclosure, to engage in an Acquisition Transaction
(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 Issuer Common
Stock such that, upon consummation of such offer, such
person would own or control 10% or more of the then
outstanding shares of Issuer Common Stock.) The offer
referred to in the preceding sentence shall be referred to
in this Agreement as a "Tender Offer" or an "Exchange
Offer."
(v) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction,
Issuer shall have breached any covenant or obligation
contained in the Plan and such breach would entitle
Grantee to terminate the Plan and shall not have been
cured prior to the Notice Date (as defined below).
(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 Board of Governors
of the Federal Reserve System (the "Federal Reserve
Board") or other governmental authority or regulatory or
administrative agency or commission (each, a "Governmental
Authority") for approval to engage in an Acquisition
Transaction.
(c) The term "Purchase Event" shall mean either of the following
events or transactions occurring after the date of this Agreement:
(i) The acquisition by any person other than Grantee or any
Grantee Subsidiary of beneficial ownership of 20% or more
of the then outstanding Common Stock; or
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(ii) The occurrence of a Preliminary Purchase Event described
in Section 2(b)(i) except that the percentage referred to
in clause (y) shall be 20%.
(d) 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) 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"). The
date of the Option Notice shall be referred to as the "Notice Date." Such Option
Notice shall specify: (i) the total number of shares of Common Stock Grantee
will purchase pursuant to such exercise and (ii) a date not less than three
business days nor more than thirty business days from the Notice Date (the
"Closing Date") and a place at which the closing of such purchase shall take
place; provided, that, if prior notification to or approval of the Federal
Reserve Board 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, 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. For purposes of Section 2(a), 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) At the closing referred to in Section 2(e), Grantee shall pay to
Issuer the aggregate purchase 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 failure or refusal of
Issuer to designate such a bank account shall not preclude Grantee from
exercising the option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f), 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 Grantee shall
deliver to Issuer a letter agreeing that Grantee will not offer to sell or
otherwise dispose of such shares in violation of applicable securities laws.
(h) Certificates for Common Stock delivered at a closing hereunder
shall be endorsed with a restrictive legend substantially as follows:
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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 Citizens Banking Corporation ("Grantee") and F & M
Bancorporation, Inc. ("Issuer") dated as of the 18th day of
April, 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
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
certificates without such reference, if the shares have been sold or transferred
in compliance with the provisions of this Agreement and under circumstances that
do not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by 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, foreign 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, or its assignee, transferee or designee.
SECTION 3. Agreements of Issuer. Issuer agrees: (i) 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; (ii) 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; (iii) promptly to take all action as may from time to time
be required (including (x) complying with all premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. ss. 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended ("BHC Act"), or
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the Change in Bank Control Act of 1978, as amended, or any state banking law,
prior approval of or notice to the Federal Reserve Board or to any other
Governmental Authority is necessary before the Option 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 to this Agreement; and (iv) to promptly
take all action provided in this Agreement 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 in this Agreement, in the aggregate the same
number of shares of Common Stock purchasable under this Agreement. The terms
"Agreement" and "Option" as used in this Agreement 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. Adjustment Upon Changes in Capitalization. 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 (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 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.
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SECTION 6. Registration Rights.
(a) At any time after 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 to this
Agreement), promptly prepare, file and keep current a shelf 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 to remain current and effective for a period
not in excess of 180 days from the day such registration statement first becomes
effective, 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;
provided, however, that Issuer may postpone filing a registration statement
relating to a registration request by Grantee under this Section 6 for a period
of time (not in excess of 60 days) if in its judgment such filing would require
the disclosure of material information that Issuer has a bona fide business
purpose for preserving as confidential. Grantee shall have the right to demand
two such registrations. The foregoing notwithstanding, if, at the time of any
request by Grantee for registration of 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 25% of the total number of shares of Grantee and Issuer covered in such
registration statement; 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(a) shall be permitted or occur and the Grantee shall thereafter be
entitled to one additional registration statement. 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. Upon receiving any request
under this Section 6 from any Grantee, Issuer agrees to promptly send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6. Notwithstanding the foregoing, (i) if Grantee
revokes any exercise notice or fails to exercise any Option with respect to any
exercise notice pursuant to Section 2(e), Issuer shall not be obligated to
continue any registration process with respect to the sale of Option Shares
issuable upon the exercise of such Option and Grantee shall not be deemed to
have demanded registration of Option Shares and (ii) in no event shall Issuer be
obligated to effect more
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than two registrations pursuant to this Section 6 by reason of the fact that
there shall be more than one Grantee as a result of any assignment or division
of this Agreement.
(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, 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.
SECTION 7. Repurchase of Option.
(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 "Option Repurchase Request Date") of Grantee, Issuer shall repurchase the
Option from Grantee 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 the Option may then
be exercised and (ii) at the request (the date of such request being the "Option
Share Repurchase Request Date") of the owner of Option Shares from time to time
(the "Owner"), 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 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 Option
Repurchase Request Date or the Option Share Repurchase Request Date, as the case
may be, (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 sale price for shares of
Common Stock within the 180-day period ending on the Option Repurchase Request
Date or the Option Share Repurchase Request Date, as the case may be, listed on
either the OTC Bulletin Board, The Nasdaq Stock Market or such other principal
market or exchange on which the Common Stock is traded (as reported by The Wall
Street Journal, or, if not reported thereby, another authoritative source), (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 selected by Grantee or the Owner, as the
case may be, 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 the value determined by a
nationally-recognized independent investment banking firm selected by Grantee or
the Owner, as the case may be, 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
promptly as practicable, and in any event within five
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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 any Option and/or any Option Shares in full, Issuer shall promptly
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
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 or the
Option Share Repurchase Price, respectively, in full, Grantee or the Owner, as
appropriate, 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 Grantee or the Owner elects, in its sole discretion,
to require such other party to perform such obligations.
SECTION 8. Substitution of Option.
(a) 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
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after such merger represent less than 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 Material 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) 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) multiplied by the number of
shares of the Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as is hereinafter defined). The
exercise price of the Substitute Option per share of the Substitute Common Stock
(the "Substitute Purchase Price") shall then be equal to the Option Price
multiplied by a fraction in which the numerator is the number of shares of the
Issuer Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares for which the Substitute Option is
exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, and provided further that the
terms of the Substitute Option shall include (by way of example and not
limitation) provisions for the repurchase of the Substitute Option and
Substitute Common Stock by the Substitute Option Issuer on the same terms and
conditions as provided in Section 7.
(d) 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 of Issuer's Material
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of
the Substitute Option.
(iii) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of
the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided
that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with
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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) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding immediately prior to the
issuance of the Substitute Option. In the event that the Substitute Option would
be exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (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 the
clause (e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee and the Substitute Option
Issuer.
SECTION 9. Approvals. Notwithstanding Sections 2, 6 and 7, 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 Securities Exchange Act by reason of
such exercise; provided that in no event shall any closing date occur more than
18 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 Board 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 Board 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 18
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. Subject to all other provisions of this
Agreement, nothing contained in this Agreement shall restrict Grantee from
specifying alternative means of exercising rights pursuant to Sections 2, 6 or 7
of this Agreement in the event that the exercising of any such rights shall not
have occurred due to the failure to obtain any required approval referred to in
this Section 9.
SECTION 10. Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved 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
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Agreement has been duly executed and delivered by, and constitutes a valid and
binding obligation of, Issuer, enforceable against Issuer in accordance with its
terms.
(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 hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
SECTION 11. Representations and Warranties of Grantee.
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option, will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
SECTION 12. Assignment.
(a) 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 Grantee is permitted under the BHC Act after the
Federal Reserve Board has approved an application by Grantee under the BHC Act
to acquire the shares of Common Stock subject to the Option, Grantee may not
assign its rights under the Option, other than to a wholly owned subsidiary of
Grantee, 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. The term "Grantee" as used in this Agreement shall
also be deemed to refer to Grantee's permitted assigns.
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(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions
arising under the Securities Act of 1933, as amended, and to
certain provisions of an agreement between Citizens Banking
Corporation ("Grantee") and F & M Bancorporation, Inc. ("Issuer")
dated as of the 18th day of April, 1999. A copy of such agreement
is on file at the principal office of Issuer and will be provided
to any permitted assignee of the option without change 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 assignments without such reference if Grantee 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 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 assignments without such reference if the Option has been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such assignments shall
bear any other legend as may be required by law.
SECTION 13. Consents. 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 for 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 Board under the BHC Act and to state and foreign banking
authorities for approval to acquire the shares issuable under this Agreement.
SECTION 14. Specific Performance. The parties to this Agreement
acknowledge that damages would be an inadequate remedy for a breach of this
Agreement by either party to this Agreement and that the obligations of the
parties to this Agreement shall be enforceable by either party to this Agreement
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
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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 Grantee is not permitted to acquire, or Issuer
is not permitted to repurchase pursuant to Section 7, the full number of shares
of Common Stock provided in Section 1 (as adjusted pursuant to this Agreement),
it is the express intention of Issuer to allow Grantee to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible, without
any amendment or modification of this Agreement.
SECTION 16. Notices. All notices, requests, claims, demands and
other communications under this Agreement 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.
SECTION 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin.
SECTION 18. 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 19. Expenses. Except as otherwise expressly provided in
this Agreement, each of the parties to this Agreement 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 20. Entire Agreement; No Third-Party Beneficiary. Except as
otherwise expressly provided in this Agreement or in the Plan, 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 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 21. 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 22. Conflict With Plan. Nothing contained in this
Agreement shall be deemed to authorize Issuer or Grantee to breach any provision
of the Plan.
SECTION 23. Majority in Interest. In the event that any selection
or determination is to be made by Grantee or the Owner hereunder and at the time
of such selection or determination there
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is more than one Grantee or Owner, such selection shall be made by a majority in
interest of such Grantees or Owners.
SECTION 24. 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 25. Shareholder Rights. 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 by this Agreement.
SECTION 26. Descriptive Headings. The descriptive headings
contained herein are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by their officers thereunto duly authorized, all as of
the date first above written.
F & M BANCORPORATION, INC.
By: Xxxx X. Xxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxx
Title: President and CEO
CITIZENS BANKING CORPORATION
By: Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and CEO
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