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EXHIBIT 4.1
RIGHTS AGREEMENT
This Agreement, dated as of May 23, 2000, is between CITIZENS BANKING
CORPORATION, a Michigan corporation (the "Company"), and CITIZENS BANK, a
Michigan banking corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors has authorized and declared a dividend
distribution of one Right for each share of Common Stock outstanding at the
close of business on the Record Date, and has authorized the issuance of one
Right in respect of each share of Common Stock issued after the Record Date and
before the earlier of the Distribution Date or the Expiration Date, and under
certain other circumstances, each Right initially representing the right to
purchase one one-thousandth of a share of Preferred Stock upon the terms and
subject to the conditions hereinafter set forth;
WHEREAS, the Company desires to appoint the Rights Agent to act on
behalf of the Company, and the Rights Agent is willing to so act, in connection
with the issuance, transfer, exchange and replacement of Right Certificates, the
exercise of Rights and other matters referred to herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
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SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
"ACQUIRING PERSON" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the shares of Common Stock issued and outstanding at such time, but
shall not include:
(a) the Company or any Subsidiary of the Company, or any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan;
(b) any Person who would otherwise be an Acquiring Person but
whom the Board of Directors determines in good faith became such inadvertently,
if such Person divests as promptly as practicable a sufficient number of shares
of Common Stock so that such Person would no longer be an Acquiring Person,
provided that such determination by the Board of Directors shall not apply to
any subsequent acquisition of Beneficial Ownership by such Person;
(c) any Person who becomes the Beneficial Owner of 15% or more
of the shares of Common Stock issued and outstanding at such time as the result
of an acquisition of Common Stock by the Company which, by reducing the number
of shares outstanding, increases the proportionate number of shares Beneficially
Owned by such Person to 15% or more of the Common Stock issued and outstanding
at such time, provided that if such Person thereafter becomes the Beneficial
Owner of any additional shares of Common Stock (other than as a result of a
stock dividend, stock split or other pro rata distribution or division of
shares), then the exception in this paragraph (c) shall not apply.
"ADJUSTMENT SHARES" shall have the meaning set forth in Section 11(a).
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement.
"AGREEMENT" shall mean this Rights Agreement, as amended or
supplemented from time to time.
A Person shall be deemed the "BENEFICIAL OWNER", to have "BENEFICIAL
OWNERSHIP" and to "BENEFICIALLY Own" any securities:
(a) which such Person, or any Affiliate or Associate of such
Person, directly or indirectly, beneficially owns (as determined pursuant to
Rule 13d-3 of the Exchange Act) or otherwise has sole or shared voting or
investment power with respect thereto pursuant to any agreement, arrangement or
understanding (whether or not in writing), provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own", any
security pursuant to this paragraph (a) as a result of an agreement, arrangement
or understanding to vote such security if such agreement, arrangement or
understanding (i) arises solely from a revocable
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proxy or consent given in response to a public proxy or consent solicitation
made pursuant to and in accordance with the applicable rules and regulations of
the Exchange Act and (ii) is not then reportable by such Person pursuant to
Section 13(d) of the Exchange Act (or any successor section);
(b) which such Person, or any Affiliate or Associate of such
Person, directly or indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time and whether or not on
condition of the happening of any contingency or otherwise) pursuant to any
written or unwritten agreement, arrangement, pledge (other than a pledge of the
type described in Rule 13d-3(d)(3) under the Exchange Act) or understanding or
upon the exercise of any conversion right, exchange right, right, warrant or
option, or otherwise, provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own", (i) any security deposited or
tendered pursuant to any tender or exchange offer made by such Person or any
Affiliate or Associate of such Person until such deposited or tendered security
has been accepted for purchase or exchange, or (ii) any security issuable upon
exercise of Rights at any time prior to the occurrence of a Triggering Event, or
(iii) any security issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person or
any such Person's Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 18 (or pursuant to Section 13 in connection
with an adjustment made with respect to any such Rights); or
(c) which are Beneficially Owned, directly or indirectly, by
any other Person, or any Affiliate or Associate of such Person, with which such
Person (or any Affiliate or Associate thereof) has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in paragraph (a) of
this definition) or disposing of any Common Shares;
provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the "Beneficial Owner" of, or
to "Beneficially Own", any securities acquired through such Person's
participation in good faith in a firm commitment underwriting (including,
without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Regulation M under the Exchange
Act, or to cover overallotments created in connection with a public offering)
until the expiration of 40 days after the date of such acquisition. For purposes
of this Agreement, in determining the percentage of the outstanding Common
Shares with respect to which a Person is or is deemed to be the Beneficial
Owner, all Common Shares as to which such Person is deemed the Beneficial Owner
shall be deemed outstanding (whether or not actually issued and outstanding at
such time).
"BOARD OF DIRECTORS" shall mean the board of directors of the Company
or any duly constituted and empowered committee thereof.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of Michigan are authorized or
obligated by law or executive order to close.
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"CLOSE OF BUSINESS" on any given date shall mean 4:30 P.M., Flint,
Michigan time, on such date; provided, however, that if such date is not a
Business Day it shall mean 4:30 P.M., Flint, Michigan time, on the next
succeeding Business Day.
"CLOSING PRICE" of any security on any given day shall be the last sale
price, regular way, of such security or, if no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on the
principal exchange or trading market on which such security is then traded.
"COMMON SHARES" shall mean shares of the Common Stock of the Company.
"COMMON STOCK" when used with reference to the Company shall mean the
Common Stock, no par value, of the Company. The term "common stock", when used
with reference to any Person other than the Company, shall mean the capital
stock with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person or, if
such Person is a Subsidiary of another Person, the Person which ultimately
controls such first-mentioned Person.
"CURRENT MARKET PRICE" of any security on any date of determination
shall be deemed to be the average of the daily Closing Prices per share or
trading unit of such security for the 30 consecutive Trading Days immediately
prior to such date (or, if such security first began publicly trading less than
30 Trading Days prior to such date, then the Current Market Price shall be the
average of the daily Closing Prices per share or trading unit from the date such
security was first publicly traded through the last Trading Day immediately
prior to the date of determination), and for the purpose of any computation in
Section 11(b), the "Current Market Price" per share on any date shall be deemed
to be the average of the daily closing prices per Common Share for 10
consecutive Trading Days immediately following such date; provided, however,
that with respect to capital stock, in the event that the Current Market Price
per share is determined during the period following the announcement by the
issuer of such stock of (A) a dividend or distribution on such stock payable in
shares of such stock or securities convertible into shares of such stock (other
than the Rights), or (B) any subdivision, combination or reclassification of
such stock, and prior to the expiration of the 30 Trading Day or 10 Trading Day
period, as the case may be, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "Current Market Price" shall
be appropriately adjusted to take into account ex-dividend trading. If the
Preferred Stock is not publicly held or not so listed or traded, the "Current
Market Price" per share of Preferred Stock shall be conclusively deemed to be
the product of 1,000 multiplied by the Current Market Price per Common Share
(appropriately adjusted for stock splits, stock dividends, recapitalizations and
similar transactions with respect to the Common Stock as set forth above);
provided, however, that if the Common Stock is not publicly held or not so
listed or traded, then the "Current Market Price" shall be determined pursuant
to the next sentence. Except as otherwise provided in the immediately preceding
sentence, if any security is not publicly held or not so listed or traded,
"Current Market Price" per share or trading unit shall mean the fair value per
share as determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this
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Agreement, the "Current Market Price" of one one-thousandth of a share of
Preferred Stock shall mean the "Current Market Price" per share of Preferred
Stock divided by 1000.
"CURRENT VALUE" shall mean the product of the Current Market Price per
Common Share multiplied by the number of Common Shares for which the Right
otherwise would be exercisable if there were sufficient shares available.
"DISTRIBUTION DATE" shall mean the Close of Business on the day which
is the earlier of (i) the tenth Business Day after the Shares Acquisition Date
or (ii) the tenth Business Day (or such later date as the Board of Directors may
determine from time to time) following the commencement of, or the first public
announcement of the intent to commence, a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, or any employee benefit
plan of the Company or of any Subsidiary of the Company or any Person or any
entity organized, appointed or established by the Company for or pursuant to the
terms of any such plan) if, upon the successful consummation thereof, such
Person, together with its Affiliates and Associates, would be an Acquiring
Person.
"EQUIVALENT PREFERRED STOCK" shall mean shares having the same rights,
privileges and preferences as the shares of Preferred Stock.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder, and any
successor laws or regulations thereto.
"EXCHANGE RATIO" shall have the meaning set forth in Section 20(a).
"EXPIRATION DATE" shall mean the earliest of (i) the Final Expiration
Date, (ii) the date on which the Rights are redeemed pursuant to Section 19, or
(iii) the date on which the Rights are exchanged pursuant to Section 20.
"FINAL EXPIRATION DATE" shall mean the Close of Business on May 23,
2010.
"PERSON" shall mean an individual, body corporate, partnership,
syndicate or other form of unincorporated association, government, government
agency or instrumentality, entity or group whether or not legally formed and any
of the foregoing acting in any derivative, representative or fiduciary capacity.
"PREFERRED STOCK" shall mean shares of Series B Preferred Stock, no par
value, of the Company having the rights and preferences set forth in the Form of
Certificate of Designations attached to this Agreement as Exhibit A.
"PRINCIPAL PARTY" shall have the meaning set forth in Section 12(b).
"PURCHASE PRICE" shall have the meaning set forth in Section 7(b).
"RECORD DATE" shall mean the Close of Business on June 12, 2000.
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"REDEMPTION PRICE" shall mean $.001 per Right, as appropriately
adjusted from time to time to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof.
"RIGHT" shall mean a right to purchase Preferred Stock or other
securities granted in accordance with, and governed by, the terms of this
Agreement.
"RIGHT CERTIFICATE" shall mean a certificate representing a Right or
Rights, in the form provided in Section 4.
"SECURITIES ACT" shall mean the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder, and any successor
laws or regulations thereto.
"SHARES ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such;
provided that, if such Person is determined not to be an Acquiring Person
pursuant to paragraph (b) of the definition of "Acquiring Person", then no
Shares Acquisition Date shall be deemed to have occurred.
"SUBSIDIARY" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
"SUMMARY OF RIGHTS" shall mean the Summary of Rights to Purchase
Preferred Stock, in substantially the form attached hereto as Exhibit C.
"TRADING DAY" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of the
Common Stock are not listed or admitted to trading on any national securities
exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on which banking
institutions in the State of Michigan are not authorized or obligated by law or
executive order to close.
"TRIGGERING EVENT" shall mean any event described in Section 11(a) or
Section 12(a).
SECTION 2. RIGHTS AGENT.
(a) APPOINTMENT. The Company hereby appoints the Rights Agent
to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof shall prior to the Distribution Date also be
the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents, and may divide the duties of
the Rights Agent among such Co-Rights Agents, as it may deem necessary or
desirable.
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(b) COMPENSATION AND INDEMNIFICATION. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises. The Rights Agent shall
be protected and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate for Common Stock
or for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
(c) MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(i) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation, succeeding to the corporate
trust business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 2(e). If such corporation is not so
eligible, it shall promptly give notice of its resignation as Rights Agent
pursuant to Section 2(e). The purchase of all or substantially all of the Rights
Agent's assets employed in the performance of transfer agent activities shall be
deemed a merger or consolidation for purposes of this Section 2(c). In case at
the time such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and if at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent. In all such cases, such Right Certificates shall
have the full force provided in the Right Certificates and in the Agreement.
(ii) In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned, and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name. In all such cases, such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
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(d) DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(i) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(ii) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the President, any Senior or Executive Vice President,
the Treasurer or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(iii) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(iv) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(v) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 11, 12 or 13 or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of the Common Stock to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
shares of the Common Stock will, when issued, be validly authorized and issued,
fully paid and nonassessable.
(vi) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
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(vii) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, any Senior
or Executive Vice President, the Secretary or the Treasurer of the Company, and
to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.
(viii) The Rights Agent and any shareholder,
director, officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money on commercial terms to the Company or otherwise act
as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(ix) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(x) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(xi) If, with respect to any Right Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with, and receiving instructions from, the Company.
(e) CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Preferred Stock and Common Stock by registered or certified mail, and to
the holders of the Right Certificates by first class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Preferred Stock and Common Stock by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
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period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of Michigan (or of any other state of the United States so long as
such corporation is authorized to do business as a transfer agent or banking
institution in the State of Michigan), in good standing under the laws of its
jurisdiction of incorporation, which is authorized under such laws to exercise
corporate trust powers or stock transfer powers and is subject to supervision or
examination by federal or state authority or which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed, but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred Stock
and Common Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 2(e), however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
SECTION 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution
Date, (i) the Rights will be evidenced by the certificates for the Common Stock
registered in the names of the holders of the Common Stock (which certificates
shall be deemed also to be Right Certificates) and not by separate Right
Certificates, and (ii) the right to receive Right Certificates will be
transferable only in connection with the transfer of the Common Stock. As soon
as practicable after the Distribution Date, the Rights Agent will send, by
first-class, postage prepaid mail, to each record holder of the Common Stock as
of the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate evidencing one Right
for each share of the Common Stock so held. As of and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates. The
Company will promptly notify the Rights Agent of the occurrence of a
Distribution Date.
(b) On July 21, 2000 or as soon as practicable after the
Record Date, the Company will send a copy of a Summary of Rights by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Record Date, at the address of such holder shown on the
records of the Company.
(c) Rights shall be issued in respect of all Common Shares
which are issued and outstanding on or after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date. Certificates
representing such shares of Common Stock shall bear the following legend:
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This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Citizens
Banking Corporation and Citizens Bank, Rights Agent, dated as of May
23, 2000 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Citizens Banking Corporation. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Citizens Banking Corporation will mail
to the holder of this certificate a copy of the Rights Agreement (as in
effect on the date of mailing), without charge, promptly after receipt
of a written request therefor. Under certain circumstances, Rights
which are or were beneficially owned by Acquiring Persons or their
Affiliates or Associates (as such terms are defined in the Rights
Agreement) and any subsequent holder of such Rights may become null and
void.
In the event that the Company purchases or acquires any shares of the Common
Stock after the Record Date but prior to the Distribution Date, any Rights
associated with such shares of the Common Stock shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Stock which is no longer outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES. (a) The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11, 12, 13 and 18, the Right Certificates, whenever
issued, shall be dated as of the Record Date, and on their face shall entitle
the holders thereof to purchase such number of one-thousandths of a share of
Preferred Stock as shall be set forth therein at the Purchase Price, but the
number of such one-thousandths of a share of Preferred Stock and the Purchase
Price shall be subject to adjustment as provided herein.
(b) Subject to paragraph (b) of the definition of "Acquiring
Person" but notwithstanding any other provision of this Agreement, any Right
Certificate issued pursuant to Section 3(a) or Section 18 hereof that represents
Rights Beneficially Owned by (i) an Acquiring Person or any Associate or
Affiliate thereof, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
has determined is part of a plan,
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arrangement or understanding which has as a primary purpose or effect avoidance
of Section 7(e) hereof, any Right Certificate issued at any time to any nominee
of such Acquiring Person, Associate or Affiliate, and any Right Certificate
issued pursuant to Section 6 or Section 13 upon transfer, exchange, replacement
or adjustment of any other Right Certificate referred to in this sentence, shall
contain the following legend:
The Rights represented by this Right Certificate are or were
Beneficially Owned by a Person who was or became an Acquiring Person or
an Affiliate or an Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Right Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right
Certificates shall be executed on behalf of the Company in the manner provided
in the Bylaws of the Company for Common Stock certificates. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any Person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office (or other place not
inconsistent with the rules of any stock exchange upon which the Common Stock
may then be listed), books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates and the date of each of the Right
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a)
Subject to the provisions of Sections 4(b), 7(e), 14 and 20 hereof, at any time
after the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Right Certificate or Certificates (other than Right
Certificates representing Rights that have become void pursuant to Section 7(e)
hereof or that have been exchanged pursuant to Section 20 hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one-thousandths of a share of Preferred Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets, as the case may be) as the
Right Certificate or Right Certificates surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any registered
13
holder desiring to transfer, split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights Agent for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 4(b), 7(e), 14 and 20 hereof, countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right Certificate
if mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Subject to Sections 7(e) and 20 hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby in whole or in part
at any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at its principal corporate trust office, together with
payment of the Purchase Price for each one-thousandth of a share of Preferred
Stock (or other securities or property, as the case may be) as to which the
Rights are exercised, at or prior to the Close of Business on the Expiration
Date. Notwithstanding anything in this Agreement to the contrary, the Rights
shall not be exercisable prior to the Distribution Date.
(b) The purchase price for each one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $65,
shall be subject to adjustment from time to time as provided in Sections 11, 12
and 13 hereof (such price, as adjusted from time to time, the "Purchase Price")
and shall be payable in lawful money of the United States of America in
accordance with Section 7(c).
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment of the Purchase Price (except in the case
of an exchange pursuant to Section 20) for the one one-thousandths of a share of
Preferred Stock (or other shares, securities or property, as the case may
14
be) to be purchased and an amount equal to any applicable transfer tax in cash,
or by certified check or bank draft payable to the order of the Company, the
Rights Agent shall, subject to Section 2(c)(xi) hereof, thereupon promptly (i)
requisition from any transfer agent of the Preferred Stock (or make available,
if the Rights Agent is the transfer agent) certificates for the total number of
one-thousandths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) if the Company shall have elected to deposit the total number of
shares of Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one-thousandths of a share of Preferred Stock as are
to be purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (iii) when appropriate, requisition from any transfer agent
of the Common Stock certificates for the total number of shares of Common Stock
to be paid in accordance with this Agreement, (iv) when appropriate, requisition
from the Company any cash or other securities or property to be paid in
accordance with Section 11(b), (v) requisition from the Company the amount of
cash to be paid in lieu of fractional shares in accordance with Section 14, (vi)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (vii) after receipt, promptly deliver such cash to or upon the order
of the registered holder of such Right Certificate. In the event that the
Company is obligated to issue securities, distribute property or pay cash
pursuant to Section 11(b), the Company will make all arrangements necessary so
that cash, property or securities are available for issuance, distribution or
payment by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the time when a Person becomes an Acquiring Person, any
Rights that are or were Beneficially Owned by (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall immediately become null and void and no holder of such
Rights shall have any right with respect to such Rights under any provision of
this Agreement or otherwise. No Right Certificate shall be
15
issued pursuant to Section 3 that represents Rights Beneficially Owned by an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate, Affiliate or transferee thereof whose Rights would be void
pursuant to the preceding sentence; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate, Affiliate or
transferee thereof whose Rights would be void pursuant to the preceding sentence
or to any nominee of such Acquiring Person, Associate, Affiliate or transferee;
and any Right Certificate delivered to the Rights Agent for transfer to an
Acquiring Person or an Associate, Affiliate or transferee thereof whose Rights
would be void pursuant to the preceding sentence shall be canceled. The Company
shall use all reasonable efforts to insure that the provisions of this Section
7(e) and Section 4(b) hereof are complied with, but shall have no liability to
any holder of Right Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificate upon the occurrence of any purported exercise thereof unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF CAPITAL STOCK. (a)
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock (and will
use its best efforts, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities), the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the
16
exercise of Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after a Shares Acquisition Date
on which the consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(b) or as soon as is
required by law following the Distribution Date, whichever is earlier, a
registration statement under the Securities Act with respect to the Rights and
the securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date on which the Rights are no
longer exercisable for such securities and (B) the Expiration Date. The Company
will also take such action as may be appropriate under the securities laws of
the various states. The Company may temporarily suspend, for a period of time
not to exceed 90 days, the exercisability of the Rights in order to prepare and
file such registration statements. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement and notice to the
Rights Agent at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one-thousandths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any one-thousandths of a share of Preferred Stock (or Common
Shares and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required (i) to pay any transfer tax which
may be payable in respect of any transfer involved in the transfer or delivery
of Right Certificates or the issuance or delivery of certificates or depositary
receipts for the one-thousandths of a share of Preferred Stock (or Common Shares
and/or other securities, as the case may be) in a name other than that of the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or (ii) to issue or deliver any certificates or depositary receipts for
a number of one-thousandths of a share of Preferred Stock upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax is due.
17
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for a number of one-thousandths of a share of Preferred Stock (or
shares of Common Stock and/or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such fractional shares of Preferred Stock (or shares of
Common Stock and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open.
SECTION 11. FLIP-IN EVENT. (a) Subject to Section 20, in the event any
Person shall become an Acquiring Person, then each holder of a Right (except as
provided in Section 7(e)) shall thereafter have a right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of a number of one-thousandths of a share of
Preferred Stock, such number of Common Shares as shall equal the result obtained
by (x) multiplying the then current Purchase Price by the number of
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (y) 50% of the Current Market Price per
Common Share on the date on which such Person became an Acquiring Person (such
number of shares are hereinafter referred to as the "Adjustment Shares").
(b) In the event that there shall not be sufficient authorized
but unissued Common Shares to permit the exercise in full of the Rights in
accordance with the foregoing Section 11(a), the Company shall (A) determine the
Current Value of the Adjustment Shares and (B) with respect to each Right, make
adequate provision to (i) pay cash equal to the Current Value of the Adjustment
Shares in lieu of issuing Common Shares and require payment of the Purchase
Price, (ii) pay cash equal to the excess of the Current Value of the Adjustment
Shares over the Purchase Price in lieu of issuing Common Shares and requiring
payment of the Purchase Price, (iii) issue debt or equity securities, or a
combination thereof, having a value equal to the Current Value of the Adjustment
Shares (including, without limitation, shares, or units of shares, of common or
preferred stock, which may include the Common Stock and/or the Preferred Stock),
where the value of such securities shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors, in lieu
of issuing Common Shares and require payment of the Purchase Price, or (iv)
deliver any combination of cash, property, Common Stock and/or other securities
having a value equal to the Current Value, and require payment of all or any
requisite portion of the Purchase Price. To the extent that the Company
determines that some action need be taken pursuant to the preceding sentence,
the Board of Directors may suspend the exercisability of the Rights for a period
of up to 45 days following the date on which the event described in Section
11(a) shall have occurred in order to decide the appropriate form of
distribution to be made pursuant to the preceding sentence and to determine the
value thereof. If the Board of Directors shall determine in good faith that it
is likely that
18
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, the Board of Directors may suspend the
exercisability of the Rights for a period of up to 90 days following the date on
which the event described in Section 11(a) shall have occurred in order that the
Company may seek shareholder approval for the authorization of such additional
shares. In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect.
SECTION 12. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) In the event that, following the Shares Acquisition Date,
directly or indirectly, (w) the Company shall consolidate with, or merge with
and into, any other Person and the Company shall not be the continuing or
surviving entity of such consolidation or merger, (x) any Person shall
consolidate with or merge with and into the Company, the Company shall be the
continuing or surviving entity of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, (y) the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or (z) the Company shall
enter into a plan of share exchange with any Person under the Michigan Business
Corporation Act pursuant to which the Company becomes a Subsidiary of such other
Person, then, and in each such case, (i) each holder of a Right (except as
provided in Section 7(e)) shall thereafter have the right to receive, upon the
exercise thereof at the then-current Purchase Price in accordance with the terms
of this Agreement, such number of shares of validly issued, fully paid,
non-assessable and freely tradable common stock of the Principal Party, not
subject to any rights of call or first refusal or other adverse claim, as shall
be equal to the result obtained by (1) multiplying the then current Purchase
Price by the number of Common Shares for which a Right is then exercisable (or
the number of Common Shares for which a Right was exercisable immediately prior
to the occurrence of any other Triggering Event if a Triggering Event has
previously occurred) and dividing that product by (2) 50% of the Current Market
Price per share of the voting common stock of such Principal Party on the date
of consummation of such consolidation, merger, sale, transfer or share exchange;
(ii) the Principal Party shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale, transfer or share exchange, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 13 hereof shall apply to
such Principal Party; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its common stock in accordance with Section 9) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of common stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean (i) in the case of any
transaction described in (w), (x) or (z) of the first sentence of Section 12(a),
(A) the Person that is the issuer of any
19
securities into which Common Shares are converted in such merger, consolidation
or share exchange, or, if there is more than one such issuer, the issuer of the
common stock of which has the greatest aggregate market value, or (B) if no
securities are so issued, (1) the Person that survives such consolidation or is
the other party to the merger and survives such merger, or, if there is more
than one such Person, the Person the common stock of which has the greatest
aggregate market value or (2) if the Person that is the other party to the
merger does not survive the merger, the Person that does survive the merger
(including the Company if it survives); and (ii) in the case of any transaction
described in clause (y) of the first sentence of Section 12(a), the Person that
is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each Person
that is a party to such transaction or transactions receives the same portion of
the assets or earning power so transferred, or if the Person receiving the
greatest portion of the assets or earning power cannot be determined, the Person
the common stock of which has the greatest aggregate market value; provided,
however, that in any such case, (x) if the common stock of such Person is not at
such time and has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the common stock of which is and has been
so registered, "Principal Party" shall refer to such other Person; (y) if such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
common stocks of all of which are and have been so registered, "Principal Party"
shall refer to whichever of such Persons is the issuer of the common stock
having the greatest market value of shares held by the public; and (z) if such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (x) and (y) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
Subsidiary of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 12 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale, transfer or share exchange unless such Principal Party shall have a
sufficient number of authorized shares of its common stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 12 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Sections 12(a) and
12(b) and further providing that, as soon as practicable after the date of any
such consolidation, merger, sale, transfer or share exchange mentioned in
Section 12(a), the Principal Party will (i) prepare and file a registration
statement under the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, or any other
comparable statement or document as would be required by the appropriate
governmental authority to permit the Principal Party to make a public
distribution of the securities purchasable upon exercise of the Rights, will use
its best efforts to cause such registration statement or other statement or
document to become effective as soon as practicable after such filing and will
use its best efforts to cause such registration statement or other statement or
document to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date; and (ii) will
deliver to holders of the Rights historical financial statements for the
Principal Party and each of
20
its Affiliates which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
(d) The Company shall not, at any time after the Shares
Acquisition Date, (i) consolidate with, (ii) merge with and into, (iii) sell or
transfer (or permit any of its subsidiaries to sell or transfer), in one or more
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, or (iv)
enter into a plan of share exchange with, any other Person if (x) at the time of
or immediately after such consolidation, merger, sale or share exchange there
are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
shareholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 12(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates.
(e) The provisions of this Section 12 shall similarly apply to
successive mergers, consolidations, sales, other transfers or share exchanges.
In the event that one of the transactions described in Section 12(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a) hereof, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 12(a).
SECTION 13. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 13.
(a) In the event the Company shall at any time after the date
of this Agreement (i) declare a dividend on the Preferred Stock payable in
shares of the Preferred Stock, (ii) subdivide the outstanding Preferred Stock,
(iii) combine the outstanding Preferred Stock into a smaller number of shares or
(iv) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in Section 11(a) and Section 7(e)
hereof, the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification and the number and kind of shares of Preferred Stock or capital
stock, as the case may be, issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of Preferred Stock
or capital stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock transfer
books of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both Section 13(a) and Section 11(a), the adjustment provided
for in this Section 13(a) shall be in addition to, and shall be made prior to
any adjustment required pursuant to Section 11(a).
21
(b) If the Company shall fix a record date for the issuance of
options, rights or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock or Equivalent Preferred Stock (or
securities convertible into Preferred Stock or Equivalent Preferred Stock) at a
price per share of Preferred Stock or Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
Equivalent Preferred Stock) less than the Current Market Price per share of
Preferred Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of shares of Preferred Stock which the aggregate offering price
of the total number of shares of Preferred Stock and/or Equivalent Preferred
Stock so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current Market
Price and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Stock to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend out of the
earnings or retained earnings of the Company), assets, subscription rights or
warrants (excluding those referred to in Section 13(b)), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Price per share of Preferred
Stock on such record date, less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one share of Preferred Stock and the denominator of which
shall be such Current Market Price per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) Notwithstanding anything in this Agreement to the
contrary, no adjustment in the Purchase Price shall be required unless such
adjustment would require an
22
increase or decrease of at least 1% in such price; provided, however, that any
adjustments which by reason of this Section 13(d) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 13 shall be made to the nearest cent or to
the nearest millionth of a share of Preferred Stock or ten-thousandth of any
other share or security as the case may be. Notwithstanding the first sentence
of this Section 13(d), any adjustment required by this Section 13 shall be made
no later than the earlier of (i) three years from the date of the transaction
which mandates such adjustment or (ii) the Expiration Date.
(e) If as a result of an adjustment made pursuant to Section
11, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in paragraphs (a) through (m) of Section 13 and the
provisions of Sections 7, 9, 10, 11, 12 and 14 with respect to the Preferred
Stock shall apply on like terms to any such other shares; provided, however,
that the Company shall not be liable for its inability to reserve and keep
available for issuance upon exercise of the Rights pursuant to Section 11 a
number of shares of its Common Stock greater than the number then authorized by
the Company's Amended and Restated Articles of Incorporation but not outstanding
or reserved for any other purpose.
(f) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(g) Unless the Company shall have exercised its election as
provided in Section 13(h), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 13(b) and 13(c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one-thousandths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one-thousandths of
a share covered by a Right immediately prior to such adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(h) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one-thousandths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
23
Price by the Purchase Price in effect immediately after the adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment to be
made and, if known, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
13(h), the Company shall, as promptly as practicable, cause to be distributed to
holders of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase
Price or the number of one-thousandths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of one-thousandths of a share which
were expressed in the initial Right Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the then par value, if
any, of a share of Preferred Stock issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable one-thousandths of a share of such Preferred Stock
at such adjusted Purchase Price.
(k) In any case in which this Section 13 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the number of one-thousandths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 13 to the contrary
notwithstanding, the Company, acting by resolution of its Board of Directors,
shall be entitled to make such reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 13, as and to
24
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of Preferred Stock, issuance wholly
for cash of any of the shares of Preferred Stock at less than the Current Market
Price, issuance wholly for cash of the Preferred Stock or securities which by
their terms are convertible into or exchangeable for Preferred Stock, stock
dividends or issuance of rights, options or warrants, hereafter made by the
Company to holders of its Preferred Stock shall, if practicable, not be taxable
to such shareholders.
(m) The Company covenants and agrees that, after the Shares
Acquisition Date, it will not, except as permitted by Sections 19, 20 and 23
hereof, take (nor will it permit any of its Subsidiaries to take) any action if
at the time such is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(n) In the event that the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (i) declare or pay any
dividend on the Common Stock of the Company payable in such Common Stock or (ii)
subdivide the outstanding Common Stock of the Company into a greater number of
shares (by reclassification or otherwise than by payment of dividends in such
Common Stock) or (iii) combine or consolidate the outstanding Common Stock of
the Company into a smaller number of shares, then in any such case, (x) the
number of one-thousandths of a share of Preferred Stock purchasable after such
event upon proper exercise of each Right shall be determined by multiplying the
number of one-thousandths of a share of Preferred Stock so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of shares of Common Stock of the Company outstanding immediately before
such event and the denominator of which is the number of shares of such Common
Stock outstanding immediately after such event and (y) action shall be taken
such that each share of Common Stock of the Company outstanding immediately
after such event shall have issued with respect to it that number of Rights
which each share of such Common Stock outstanding immediately prior to such
event had issued with respect to it. The adjustments provided for in this
Section 13(n) shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is effected. If an
event occurs which would require an adjustment under Section 11 and this Section
13(n), the adjustments provided for in this Section 13(n) shall be in addition
and prior to any adjustment required pursuant to Section 11.
(o) Whenever an adjustment is made as provided in Sections 11,
12 and 13, the Company shall (i) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (ii) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such certificate
and (iii) mail a brief summary thereof to each holder of a Right Certificate
(or, if prior to the Distribution Date, to each holder of a certificate
representing shares of Common Stock) in accordance with Section 22. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained. Notwithstanding the foregoing sentence, the
failure of the Company to make such certificate or give such notice shall not
affect the validity or the force or effect of the requirement for such
adjustment. Unless otherwise provided in this
25
Agreement, any adjustment to be made pursuant to Sections 11, 12 and 13 shall be
effective as of the date of the event giving rise to such adjustment.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the Current Market Price of a whole
Right.
(b) The Company shall not be required to issue fractions of
shares (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock) upon exercise or exchange of the Rights or to
distribute certificates which evidence fractional shares (other than fractions
which are integral multiples of one one-thousandth of a share of Preferred
Stock). Fractions of shares of Preferred Stock in integral multiples of one
one-thousandth of a share may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, however, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as Beneficial Owners of
the shares of Preferred Stock represented by such depositary receipts. In lieu
of fractional shares that are not integral multiples of one one-thousandth of a
share of Preferred Stock, the Company may pay to the registered holders of Right
Certificates at the time such Right Certificates are exercised as herein
provided an amount in cash equal to the same fraction of the Current Market
Price of one one-thousandth of a share of Preferred Stock for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common Stock upon
exercise or exchange of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised or exchanged as herein provided an amount in cash
equal to the same fraction of the Current Market Price of one Common Share for
the Trading Day immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right except as set forth in Section 14(b).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, except those vested in the Rights Agent pursuant to Section 2, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock). Any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in such holder's own behalf and for such holder's own
benefit, enforce, and may institute
26
and maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement and subject to any limitations set forth in
such Right Certificates and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
evidenced by the certificates for shares of the Common Stock and will be
transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject to Sections 6(a), 7(e) and 7(f), the Company and
the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its
reasonable best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of
one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any
27
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 21), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
SECTION 18. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price per share and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date
(other than upon exercise of a Right) and prior to the redemption, exchange or
expiration of the Rights, the Company shall, with respect to Common Shares so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and may, in any other case, if deemed
necessary or appropriate by the Board of Directors, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Right Certificate shall be issued
if and to the extent that the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences to
the Company or the Person to whom such Right Certificate would be issued and
(ii) no such Right Certificate shall be issued if and to the extent that
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 19. REDEMPTION. (a) The Board of Directors may, at its option,
at any time prior to the Close of Business on the earlier of (x) the Shares
Acquisition Date or (y) the Final Expiration Date, redeem all but not less than
all of the then outstanding Rights at the Redemption Price. The redemption of
the Rights by the Board of Directors may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole discretion
may establish. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable pursuant to Section 11(a) or
Section 12(a) prior to the expiration of the Company's right of redemption
pursuant to this Section 19(a). The Company may, at its option, pay the
Redemption Price in cash, Common Shares (valued at the Current Market Price), or
any other form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights, and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; provided, however,
that the failure to give or any defect in any such notice shall not affect the
validity of such redemption. Within 10 days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of
28
the then outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 19 or in Section 20 hereof, and
other than in connection with the repurchase of Common Stock prior to the
Distribution Date.
SECTION 20. EXCHANGE. (a) The Board of Directors may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for Common
Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio, as it may from time to
time be so adjusted, being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to Section 20(a) and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(c) In the event that there shall not be sufficient authorized
but unissued Common Shares to permit any exchange of Rights, the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exchange of the Rights. If the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such
additional Common Shares, the Company shall substitute fractional
29
shares of Preferred Stock (or Equivalent Preferred Stock) for Common Shares
exchangeable for Rights, at the initial rate of one one-thousandth of a share of
Preferred Stock (or Equivalent Preferred Stock) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to the terms thereof, so that the fraction of a share
of Preferred Stock (or Equivalent Preferred Stock) delivered in lieu of each
Common Share shall have the same voting, dividend and liquidation rights as one
Common Share; provided, that such whole or fractional shares of Preferred Stock
(or Equivalent Preferred Stock) shall, unless required otherwise by law, vote
collectively with holders of Common Shares as one class on all matters submitted
to a vote of shareholders of the Company.
SECTION 21. NOTICE OF CERTAIN EVENTS. In case the Company shall propose
at any time following the Distribution Date (a) to pay any dividend payable in
stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular periodic
cash dividend), or (b) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities, rights or
options, or (c) to effect any reclassification of its Preferred Stock (other
than a reclassification involving only the subdivision of outstanding Preferred
Stock), or (d) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to, any other Person, or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 22, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(a) or (b) above at least 20 days prior to the record date for determining
holders of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Preferred Stock, whichever shall be the earlier. In case any Triggering Event
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Right, in accordance with Section 22, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a) or Section
12(a), as the case may be.
SECTION 22. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Citizens Banking Corporation
328 S. Saginaw St.
Flint, Michigan 48502
Attention: General Counsel
30
Subject to the provisions of Section 2(e), any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
CITIZENS BANK
328 S. Saginaw St.
Flint, Michigan 48502
Attention: Senior Trust Officer
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 23. SUPPLEMENTS AND AMENDMENTS. The Company may and the Rights
Agent shall from time to time, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, or (iii) to make any other change or supplement to the
provisions of this Agreement which the Board may deem necessary or desirable;
provided, however, from and after the time any Person becomes an Acquiring
Person, this Agreement shall not be amended in any manner which adversely
affects the interests of the holders of Rights (other than Rights which have
become null and void pursuant to Section 7(e)). Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
23, the Rights Agent shall execute such supplement or amendment unless the
Rights Agent shall have determined in good faith that such supplement or
amendment would adversely affect its interests under this Agreement. Prior to
the Distribution Date, the interests of the holders of Rights (other than Rights
which have become null and void pursuant to Section 7(e)) shall be deemed
coincident with the interests of the holders of Common Stock.
SECTION 24. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 25. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. The
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board of Directors or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to interpret the provisions of this Agreement, and make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for
31
purposes of clause (ii) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors in good faith, shall (i) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Right Certificates and all other parties, and (ii) not subject the Board of
Directors to any liability to the holders of the Right Certificates.
SECTION 26. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement. This Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
SECTION 27. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 19 hereof shall be
reinstated and shall not expire until the Close of Business on the tenth day
following the date of such determination by the Board of Directors.
SECTION 28. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Michigan and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
SECTION 29. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 30. DESCRIPTIVE HEADINGS AND CONSTRUCTION. Descriptive headings
of the several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof. The words "herein", hereof", "hereunder" and "hereto" refer to this
Agreement as a whole and not to any particular section. Unless otherwise
specified, references to sections are to sections of this Agreement. Male gender
references shall also be construed to include female and neuter genders.
32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
CITIZENS BANKING CORPORATION
By: /s/Robert J. Vitito
---------------------------------------------
Title: Chairman, President and Chief Executive Officer
CITIZENS BANK
By /s/John W. Ennest
---------------------------------------------
Title: Vice Chairman and Chief Financial Officer
33
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
ESTABLISHING AND DESIGNATING THE SERIES AND
FIXING AND DETERMINING THE RELATIVE RIGHTS AND PREFERENCES
OF THE SERIES B PREFERRED STOCK
OF
CITIZENS BANKING CORPORATION
There is hereby established a series of serial preferred stock to which
the following provisions shall be applicable:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series B Preferred Stock" (the "Preferred Stock") and the number
of shares constituting the Preferred Stock shall be 200,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors
(hereinafter called the "Board of Directors" or the "Board") of Citizens Banking
Corporation (the "Company"); provided, that no decrease shall reduce the number
of shares of Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock of the Company (or any similar stock) ranking prior
and superior to the Preferred Stock with respect to dividends, the holders of
shares of Preferred Stock, in preference to the holders of Common Stock, no par
value per share (the "Common Stock"), of the Company, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Preferred Stock. In the event the Company shall at any time after May 23, 2000
(the "Rights Declaration Date") declare or pay any dividend on the Common
34
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Preferred Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, subject to the prior and superior rights of the
holders of any shares of any series of preferred stock with respect to
dividends, a dividend of $1 per share on the Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the shareholders of the Company. In
the event the Company shall at any time after the Rights Declaration Date
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of
35
Common Stock) into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of shares of
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of preferred stock or any similar
stock, or by law, the holders of shares of Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Company having general
voting rights shall vote together as one class on all matters submitted to a
vote of shareholders of the Company.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Preferred Stock outstanding
shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Preferred
Stock, except dividends paid ratably on the Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Stock, provided that
the Company may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Company ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Preferred Stock, or any shares of stock ranking on a
parity with the Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board
36
of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Preferred Stock purchased
or otherwise acquired by the Company in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of preferred stock and
may be reissued as part of a new series of preferred stock subject to the
conditions and restrictions on issuance set forth herein, in the Amended and
Restated Articles of Incorporation or in any other Certificate of Designations
creating a series of preferred stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Preferred Stock unless,
prior thereto, the holders of shares of Preferred Stock shall have received
$1,000 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Liquidation Preference"). Following the payment of the full amount of the
Liquidation Preference, no additional distributions shall be made to the holders
of shares of Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Liquidation Preference by
(ii) 1,000 (as appropriately adjusted as set forth in subparagraph (C) below to
reflect such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Preferred
Stock and Common Stock, respectively, and the payment of liquidation preferences
of all other shares of capital stock which rank prior to or on a parity with
Preferred Stock, holders of Preferred Stock and holders of shares of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with respect
to such Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there are not
sufficient assets
37
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Company shall at any time after the
Rights Declaration Date declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Preferred Stock were entitled
immediately prior to such event under paragraph (A) of this Section 6 shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Company
shall at any time after the Rights Declaration Date declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Preferred Stock shall not be
redeemable.
Section 9. Rank. The Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any
other class of the Company's preferred stock.
Section 10. Amendment. The Amended and Restated Articles of
Incorporation of the Company shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Preferred Stock,
voting together as a single class.
Section 11. Fractional Shares. Preferred Stock may be issued in
fractions of a share (in one one-thousandths (1/1000ths) of a share and integral
multiples thereof) which shall entitle the
38
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Preferred Stock.
39
Exhibit B
[Form of Right Certificate]
Certificate No. Rights
---------- --------
NOT EXERCISABLE AFTER MAY 23, 2010 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE
RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME
NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]*
* The portion of the legend in brackets shall be inserted only if applicable.
Right Certificate
CITIZENS BANKING CORPORATION
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of May 23, 2000 (the "Rights Agreement") between Citizens Banking
Corporation, a Michigan corporation (the "Company"), and Citizens Bank (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 4:30 P.M.
(Flint, Michigan time) on May 23, 2010 at the office of the Rights Agent, or its
successors as Rights Agent, in Flint, Michigan, one one-thousandth of a fully
paid non-assessable share of the Series B Preferred Stock, no par value (the
"Preferred Stock"), of the Company, at a purchase price of $65 per one
one-thousandth of a share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price per share set forth above, are the number and Purchase
Price as of May 23, 2000 based on the Preferred Stock of the Company as
constituted at such date.
Upon the occurrence of certain events (as set forth in the Rights
Agreement), if the Rights evidenced by this Right Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights
40
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate who becomes a transferee after the Acquiring Person becomes such, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of a person who becomes an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, prior to or concurrently with such transfer,
such Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
one one-thousandths of a share of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right or may be called for exchange for newly issued shares
of Common Stock or Preferred Stock.
No fractional shares will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock which may, at the election of
the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders
41
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of May 23, 2000.
ATTEST: CITIZENS BANKING CORPORATION
By
- ---------------------------- ------------------------------
Secretary Title:
Countersigned:
By
-------------------------
Authorized Signature
42
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED hereby
sells, assigns and transfers to (please print name and
address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , 20
------------------ ---- -------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , 20
------------------ ---- -------------------------
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
43
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights represented
by the Right Certificate.)
To Citizens Banking Corporation:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase one one-thousandths of a share
of Series B Preferred Stock (or, in certain circumstances, a combination of
cash, other property, preferred stock, Common Stock, and/or other securities)
upon the exercise of such Rights and requests that certificates for such shares
be issued in the name of:
Please insert social security
or other identifying number
----------------------------------------
Please print name and address
--------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
----------------------------------------
Please print name and address
--------------------------------------
Dated: , 20
--------------- ---- ------------------------------------
Signature
(signature must conform in all
respects to name of holder as
specified on the face of this Right
Certificate)
Signature Guaranteed:
44
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: , 20
--------------- ---- ------------------------------------
Signature
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
45
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On May 23, 2000, the Board of Directors of Citizens Banking Corporation
declared a dividend of one Right for each outstanding share of Citizens common
stock. The distribution was payable on July 21, 2000 to Citizens shareholders of
record at the close of business on June 12, 2000. Each Right entitles the
registered holder to purchase from Citizens one one-thousandth of a share of
Series B Preferred Stock at an exercise price of $65, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement, dated
as of May 23, 2000, between Citizens and Citizens Bank, as Rights Agent.
Initially, the Rights will be attached to all common shares, the Rights
will be evidenced by the common stock certificates instead of separate Right
certificates and may be transferred only with the common stock. Common stock
certificates issued after June 12, 2000 will bear a legend incorporating the
Rights Agreement by reference and the surrender for transfer of any common stock
certificate will also constitute the transfer of the Rights associated with the
common stock represented by such certificate.
The Rights will separate from the common stock and will become
exercisable at the close of business on the earlier of (i) the tenth business
day following the first public announcement that a person or group have
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding shares of the common stock and (ii) the tenth business day
(or a later date if determined by the Board of Directors) following the
commencement of, or the announcement of an intention to commence, a tender or
exchange offer by any person (other than Citizens) if, upon consummation, such
person would be the beneficial owner of 15% or more of the outstanding shares of
the common stock. The date on which the Rights become exercisable and separately
tradeable is called the "Distribution Date". However, even if a Distribution
Date has occurred, the Rights are not exercisable until Citizens' right to
redeem the Rights has expired. The holder of a Right, as such, will have no
rights as a shareholder of Citizens, such as the right to vote or to receive
dividends, until the Right is exercised.
As soon as practicable following the Distribution Date, Right
certificates will be mailed to Right holders and, thereafter, such separate
Right Certificates alone will evidence the Rights. Citizens generally will issue
one Right with each new share of common stock issued before the Distribution
Date.
Subject to the Board's right to exchange shares of common stock for
Rights described below, if any person or group (other than those exempted in the
Rights Agreement) becomes a beneficial owner of 15% or more of the outstanding
shares of the common stock, then each holder of a Right, other than Rights that
were or are beneficially owned by such beneficial
46
owner, shall thereafter have the right to receive upon exercise that number of
shares of common stock having a market value of two times the exercise price of
the Right. If an insufficient number of shares of common stock is authorized,
then Citizens will be required to take action to authorize additional shares or
to substitute cash, property or other securities for the common stock. All
Rights that were or are beneficially owned by a beneficial owner of 15% or more
of the outstanding shares of the common stock (and Rights owned by its
affiliates, associates or transferees) will become null and void.
Following the first public announcement that any person or group has
become a beneficial owner of 15% or more of the outstanding shares of the common
stock, if (i) Citizens is acquired in a merger or other business combination
transaction in which it is not the surviving corporation or in connection with
which all or a part of the common stock is changed into or exchanged for stock
or other securities of any other person or cash or any other property, (ii) 50%
or more of Citizens' assets or earning power are sold or (iii) Citizens enters
into a plan of share exchange pursuant to which Citizens becomes a subsidiary of
such other person, then each holder of a Right, other than Rights that were or
are beneficially owned by the beneficial owner of 15% or more of the outstanding
shares of the common stock (which will have become null and void), shall
thereafter have the right to receive upon exercise that number of shares of
common stock of the acquiring company (or, in some cases, its parent) which at
the time of such transaction would have a market value of two times the exercise
price of the Right.
The exercise price and the number of one one-thousandths of a share of
Preferred Stock or other securities or property issuable upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock; (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for shares of the
Preferred Stock or convertible securities at less than the current market value
of the Preferred Stock; or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends out of earnings or retained earnings) or of subscription
rights or warrants (other than those referred to above). With certain
exceptions, no adjustment in the exercise price will be required until
cumulative adjustments require an adjustment of at least 1% in the exercise
price. An adjustment in cash will be made in lieu of the issuance of fractional
shares based upon the current market value of one share of Preferred Stock on
the date of exercise.
At any time after any person or group becomes a beneficial owner of 15%
or more of the outstanding shares of the common stock but prior to the time such
beneficial owner has acquired 50% or more of the outstanding common stock, the
Board may require holders of Rights to exchange all or part of their Rights for
shares of common stock at an initial ratio of one share of common stock per
Right, subject to adjustment. As soon as the Board has determined to make such
exchange, the Rights may no longer be exercised.
At any time prior to the close of business on the earlier of (i) the
date of the first public announcement that a person or group has become a
beneficial owner of 15% or more of the outstanding shares of the common stock,
or (i) May 23, 2010, the Board of Directors may
47
redeem the Rights at a price of $.001 per Right (subject to adjustment and
payable in cash, securities or other consideration deemed appropriate by the
Board). As soon as the Board of Directors takes action to redeem the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the redemption price. The Rights will expire on May
23, 2010 unless redeemed or called for exchange by Citizens before that date.
The provisions of the Rights Agreement may be amended by the Board of
Directors in order to cure any ambiguity, correct any defect or inconsistency
and make any other changes deemed to be necessary or desirable, provided that
after any person or group has become a beneficial owner of 15% or more of the
outstanding shares of the common stock, the Rights Agreement may not be amended
in any way which adversely affects the interests of the holders of the Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 8-K. A copy of the
Rights Agreement is available free of charge from Citizens. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated herein
by reference.