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EXHIBIT 2.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of the 27th day of January, 1997 (this
"Agreement"), between Citizens Banking Corporation ("Grantee") and CB Financial
Corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer, among others, are parties to an Agreement and
Plan of Merger, dated as of the 27th day of January, 1997 (the "Plan"), which
was executed by the parties hereto, among others; and
WHEREAS, as a condition and inducement to Grantee's not terminating the
Plan and in consideration therefor, Issuer is granting Grantee the option (as
defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Plan, the parties hereto agree as
follows:
SECTION 1. Grant of Option. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 557,409 fully paid and nonassessable shares of common
stock, par value $7.50 per share ("Common Stock"), of Issuer at a price per
share equal to $37.66 (the "Initial Price"); provided, however, that in the
event Issuer issues or agrees to issue (other than pursuant to options to issue
Common Stock in effect as of the date hereof) any shares of Common Stock at a
price less than the Initial Price (as adjusted pursuant to Section 5(b)), such
price shall be equal to such lesser price (such price, as adjusted as
hereinafter provided, the "Option Price"). The number of shares of Common
Stock that may be received upon the exercise of the Option and the Option Price
are subject to adjustment as herein set forth.
SECTION 2. Exercise of Option.
(a) Grantee may exercise the Option, in whole or part, at any time and
from time to time following the occurrence of a Purchase Event (as defined
below); provided that the Option shall terminate and be of no further force and
effect upon the earliest to occur of (i) the time immediately prior to the
Effective Time, (ii) 12 months after the first occurrence of a Purchase Event,
(iii) 18 months after the termination of the Plan following the occurrence of a
Preliminary Purchase Event (as defined below), (iv) termination of the Plan in
accordance with the terms thereof prior to the occurrence of a Purchase Event or
a Preliminary Purchase Event (other than a termination of the Plan by Parent
pursuant to Section 7.1(c)(i) thereof) or (v) 12 months after the termination of
the Plan by Parent pursuant to Section 7.1(c)(i) thereof. The events described
in clauses (i)-(v) in the preceding sentence are hereinafter collectively
referred to as an "Exercise Termination Event."
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(b) The term "Preliminary Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer Subsidiary")
without having received Grantee's prior written consent, shall
have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person"
for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934 (the "Securities Exchange Act"), and the
rules and regulations thereunder) other than Grantee or any of
its subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have modified, amended or withdrawn its
recommendation or approval of the Plan or recommended that the
shareholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or any Grantee
Subsidiary. For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any
similar transaction, involving Issuer or any of Issuer's bank
subsidiaries ("Material Subsidiaries"), (y) a purchase, lease or
other acquisition of all or substantially all of the assets of
Issuer or any Material Subsidiary or (z) a purchase or other
acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of
the voting power of Issuer or a Material Subsidiary; provided
that the term "Acquisition Transaction" does not include any
internal merger or consolidation involving only Issuer and/or
Issuer Subsidiaries;
(ii) Any person (other than Grantee or any Grantee
Subsidiary) shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the
outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the Securities Exchange
Act, and the rules and regulations thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its shareholders, by
public announcement or written communication that is or becomes
the subject of public disclosure, to engage in an Acquisition
Transaction (including, without limitation, any situation in
which any person other than Grantee or any subsidiary of Grantee
shall have commenced (as such term is defined in Rule 14d-2 under
the Exchange Act) or shall have filed a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 10%
or more of the then outstanding shares of Issuer Common Stock
(such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer", respectively));
(iv) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer
shall have breached any covenant or obligation contained in the
Plan and such breach would entitle Grantee to terminate the Plan
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or the holders of Issuer Common Stock shall not have approved
the Plan at the meeting of such stockholders held for the
purpose of voting on the Plan, such meeting shall not
have been held or shall have been canceled prior to termination
of the Plan or Issuer's Board of Directors shall have withdrawn
or modified in a manner adverse to Grantee the recommendation of
Issuer's Board of Directors with respect to the Plan; or
(v) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given
its prior written consent, shall have filed an application or
notice with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") or other governmental authority or
regulatory or administrative agency or commission (each, a
"Governmental Authority") for approval to engage in an
Acquisition Transaction.
(c) The term "Purchase Event" shall mean either of the following events or
transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any Grantee
Subsidiary of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) except that the percentage referred to in clause
(z) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Preliminary Purchase Event or Purchase Event; provided, however, that the
giving of such notice by Issuer shall not be a condition to the right of
Grantee to exercise the option.
(e) In the event that Grantee is entitled to and wishes to exercise the
option, it shall send to Issuer a written notice (the "Option Notice" and the
date of which being hereinafter referred to as the "Notice Date") specifying
(i) the total number of shares of Common Stock it will purchase pursuant to
such exercise and (ii) a period of time (that shall not be less than three
business days nor more than thirty business days) running from the Notice Date
(the "Closing Date") and a place at which the closing of such purchase shall
take place; provided, that, if prior notification to or approval of the Federal
Reserve Board or any other Governmental Authority is required in connection
with such purchase (each, a "Notification" or an "Approval," as the case may
be), (a) Grantee shall promptly file, or cause to be filed, the required notice
or application for approval ("Notice/Application"), (b) Grantee shall
expeditiously process, or cause to be expeditiously processed, the
Notice/Application and (c) for the purpose of determining the Closing Date
pursuant to clause (ii) of this sentence, the period of time that otherwise
would run from the Notice Date shall instead run from the later of (x) in
connection with any Notification, the date on which any required notification
periods have expired or been terminated and (y) in connection with any
Approval, the date on which such approval has been obtained and any requisite
waiting period or periods shall have expired. For purposes of Section 2(a),
any exercise of the option shall be deemed to occur on the Notice Date relating
thereto. On or prior to the Closing Date, Grantee shall have the right to
revoke
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its exercise of the Option in the event that the transaction
constituting a Purchase Event that gives rise to such right to exercise shall
not have been consummated.
(f) At the closing referred to in Section 2(e), Grantee shall pay to
Issuer the aggregate purchase price for the shares of Common Stock specified in
the Option Notice in immediately available funds by wire transfer to a bank
account designated by Issuer; provided, however, that failure or refusal of
Issuer to designate such a bank account shall not preclude Grantee from
exercising the option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f), Issuer shall deliver to Grantee a
certificate or certificates representing the number of shares of Common Stock
specified in the Option Notice and, if the option should be exercised in part
only, a new option evidencing the rights of Grantee thereof to purchase the
balance of the shares of Common Stock purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder shall
be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended, and to certain provisions of an agreement between Citizens
Banking Corporation and CB Financial Corporation ("Issuer") dated as
of the 27th day of January, 1997. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission (the "SEC"), or an opinion of counsel, in form and
substance satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery
of substitute certificates without such reference, if the shares have been sold
or transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii)
the legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice and the
tender of the applicable purchase price in immediately available funds on the
Closing Date, Grantee shall be deemed to be the holder of record of the number
of shares of Common Stock specified in the Option Notice, notwithstanding that
the stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then actually be delivered
to Grantee. Issuer
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shall pay all expenses and any and all United States
federal, state, foreign and local taxes and other charges that may be payable
in connection with the preparation, issue and delivery of stock certificates
under this Section 2 in the name of Grantee.
SECTION 3. Agreements of Issuer. Issuer agrees: (i) that it shall at all
times until the termination of this Agreement have reserved for issuance upon
the exercise of the option that number of authorized and reserved shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, all of which shares will, upon
issuance pursuant hereto, be duly authorized, validly issued, fully paid,
nonassessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights; (ii) that it
will not, by amendment of its articles of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of
any of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to time
be required (including (x) complying with all premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended ("BHC Act"), or the Change in Bank Control Act
of 1978, as amended, or any state banking law, prior approval of or notice to
the Federal Reserve Board or to any other Governmental Authority is necessary
before the Option may be exercised, cooperating with Grantee in preparing such
applications or notices and providing such information to each such
Governmental Authority as it may require) in order to permit Grantee to
exercise the option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) to take all action provided herein to protect
the rights of Grantee against dilution.
SECTION 4. Exchange of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any agreements and related options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.
SECTION 5. Adjustment Upon Changes in Capitalization. The number of
shares of Common Stock purchasable upon the exercise of the option shall be
subject to adjustment from time to time as follows:
(a) In the event of any change in the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares
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or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the option),
the number of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of Common Stock
previously issued pursuant to the exercise of the Option (as adjusted on
account of any of the foregoing changes in the Common Stock), it equals 19.9%
of the number of shares of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
SECTION 6. Registration Rights.
(a) At any time after the occurrence of a Purchase Event, Issuer shall, at
the request of Grantee (whether on its own behalf or on behalf of any
subsequent holder of the Option (or part thereof) or any of the shares of
Common Stock issued pursuant hereto), promptly prepare, file and keep current a
shelf registration statement under the Securities Act covering any shares
issued and issuable pursuant to the Option and shall use its best efforts to
cause such registration statement to become effective, and to remain current
and effective for a period not in excess of 180 days from the day such
registration statement first becomes effective, in order to permit the sale or
other disposition of any shares of Common Stock issued upon total or partial
exercise of the Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee; provided, however, that Issuer may postpone
filing a registration statement relating to a registration request by Grantee
under this Section 6 for a period of time (not in excess of 30 days) if in its
judgment such filing would require the disclosure of material information that
Issuer has a bona fide business purpose for preserving as confidential.
Grantee shall have the right to demand two such registrations. The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
option Shares as provided above, Issuer is in the process of registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing underwriters,
or, if none, the sole underwriter or underwriters, of such offering the
offering or inclusion of the Option Shares would interfere materially with the
successful marketing of the shares of Common Stock offered by Issuer, the
number of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of Grantee shall constitute at least 33 1/3% of the total
number of shares of Grantee and Issuer covered in such registration statement;
provided further, however, that if such reduction occurs, then Issuer shall
file a registration statement for the balance as promptly as practicable
thereafter as to which no reduction pursuant to this Section 6(a) shall be
permitted or occur and the Grantee shall thereafter be entitled to one
additional registration statement. Grantee shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to
be filed hereunder. In connection with any such registration, Issuer and
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Grantee shall provide each other with representations, warranties, indemnities
and other agreements customarily given in connection with such registrations.
If requested by Grantee in connection with such registration, Issuer and
Grantee shall become a party to any underwriting agreement relating to the sale
of such shares, but only to the extent of obligating themselves in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Notwithstanding the foregoing, if
Grantee revokes any exercise notice or fails to exercise any option with
respect to any exercise notice pursuant to Section 2(e), Issuer shall not be
obligated to continue any registration process with respect to the sale of
Option Shares issuable upon the exercise of such Option and Grantee shall not
be deemed to have demanded registration of Option Shares.
(b) In the event that Grantee requests Issuer to file a registration
statement following the failure to obtain any approval required to exercise the
Option as described in Section 9, the closing of the sale or other disposition
of the Common Stock or other securities pursuant to such registration statement
shall occur substantially simultaneously with the exercise of the Option.
SECTION 7. Repurchase of Option.
(a) Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, (i) at the request (the date of such request being
the "Option Repurchase Request Date") of Grantee, Issuer shall repurchase the
Option from Grantee at a price (the "Option Repurchase Price") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised and (ii) at the request (the date of such request being the
"Option Share Repurchase Request Date") of the owner of Option Shares from time
to time (the "Owner"), Issuer shall repurchase such number of the Option Shares
from the Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the market/offer price multiplied by the number of
Option Shares so designated. The term "market/offer price" shall mean the
highest of (i) the price per share of Common Stock at which a tender offer or
exchange offer therefor has been made after the date hereof and on or prior to
the Option Repurchase Request Date or the Option Share Repurchase Request Date,
as the case may be, (ii) the price per share of Common Stock paid or to be paid
by any third party pursuant to an agreement with Issuer (whether by way of a
merger, consolidation or otherwise), (iii) the highest last sale price for
shares of Common Stock within the 360-day period ending on the Option
Repurchase Request Date or the Option Share Repurchase Request Date, as the
case may be, listed on either the OTC Bulletin Board, The Nasdaq Stock Market
or such other principal market or exchange on which the Common Stock is traded
(as reported by The Wall Street Journal, or, if not reported thereby, another
authoritative source), (iv) in the event of a sale of all or substantially all
of Issuer's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined by a
nationally-recognized independent investment banking firm selected by Grantee
or the Owner, as the case may be, divided by the number of shares of Common
Stock of Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be the
value determined by a nationally-recognized independent investment banking firm
selected by Grantee or the Owner, as the case may be, whose determination shall
be conclusive and binding on all parties.
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(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to Grantee the Option Repurchase Price or to
the Owner the Option Share Repurchase Price or the portion thereof that Issuer
is not then prohibited from so delivering under applicable law and regulation
or as a consequence of administrative policy.
(c) Issuer hereby undertakes to use its best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from repurchasing any Option and/or any Option Shares in full, Issuer shall
promptly so notify Grantee and/or the Owner and thereafter deliver or cause to
be delivered, from time to time, to Grantee and/or the Owner, as appropriate,
the portion of the Option Repurchase Price and the Option Share Repurchase
Price, respectively, that it is no longer prohibited from delivering, within
five business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to Section 7(b) is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
Grantee and/or the Owner, as appropriate, the Option Repurchase Price or the
Option Share Repurchase Price, respectively, in full, Grantee or the Owner, as
appropriate, may revoke its notice of repurchase of the Option or the Option
Shares either in whole or in part whereupon, in the case of a revocation in
part, Issuer shall promptly (i) deliver to Grantee and/or the Owner, as
appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering after taking
into account any such revocation and (ii) deliver, as appropriate, either (A)
to Grantee, a new Agreement evidencing the right of Grantee to purchase that
number of shares of Common Stock equal to the number of shares of Common Stock
purchasable immediately prior to the delivery of the notice of repurchase less
the number of shares of Common Stock covered by the portion of the Option
repurchased or (B) to the Owner, a certificate for the number of Option Shares
covered by the revocation.
(d) Issuer shall not enter into any agreement with any party (other than
Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole
discretion, to require such other party to perform such obligations.
SECTION 8. Substitution of Option.
(a) In the event that prior to an Exercise Termination Event, Issuer shall
enter into an agreement (i) to consolidate or merge with any person, other than
Grantee or a Grantee Subsidiary, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to
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permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its or any Material Subsidiary's assets to any
person, other than Grantee or a Grantee Subsidiary, then, and in each such case,
the agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Grantee, of either (x) the Acquiring
Corporation (as defined below) or (y) any person that controls the Acquiring
Corporation (the Acquiring Corporation and any such controlling person being
hereinafter referred to as the "Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such number of shares
of the Substitute Common Stock (as is hereinafter defined) as is equal to the
market/offer price (as defined in Section 7) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined). The exercise price
of the Substitute Option per share of the Substitute Common Stock (the
"Substitute Purchase Price") shall then be equal to the Option Price multiplied
by a fraction in which the numerator is the number of shares of the Issuer
Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares for which the Substitute Option is
exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, and provided further that the
terms of the Substitute Option shall include (by way of example and not
limitation) provisions for the repurchase of the Substitute Option and
Substitute Common Stock by the Substitute Option Issuer on the same terms and
conditions as provided in Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in
which Issuer is the continuing or surviving person, and
(iii) the transferee of all or any substantial part of the
Issuer's assets (or the assets of any of Issuer's Material
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the
Substitute Option.
(iii) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of
the shares of the Substitute Common Stock on the day
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preceding such consolidation, merger or sale; provided that
if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of
common stock issued by Issuer, the person merging into
Issuer or by any company which controls or is controlled by
such merging person, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding immediately prior to the
issuance of the Substitute Option. In the event that the Substitute Option
would be exercisable for more than 19.9% of the aggregate of the shares of
Substitute Common Stock but for this clause (e), the Substitute Option Issuer
shall make a cash payment to Grantee equal to the excess of (i) the value of
the Substitute Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving effect to the
limitation in the clause (e). This difference in value shall be determined by
a nationally recognized investment banking firm selected by Grantee and the
Substitute Option Issuer.
SECTION 9. Approvals. Notwithstanding Sections 2, 6 and 7, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Securities Exchange Act by reason of such exercise;
provided that in no event shall any closing date occur more than 18 months
after the related Notice Date, and, if the closing date shall not have occurred
within such period due to the failure to obtain any required approval by the
Federal Reserve Board or any other Governmental Authority despite the best
efforts of Issuer or the Substitute Option Issuer, as the case may be, to
obtain such approvals, the exercise of the Option shall be deemed to have been
rescinded as of the related Notice Date. In the event (a) Grantee receives
official notice that an approval of the Federal Reserve Board or any other
Governmental Authority required for the purchase and sale of the Option Shares
will not be issued or granted or (b) a closing date has not occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise the option in
connection with the resale of the Option Shares pursuant to a registration
statement as provided in Section 6. Nothing contained in this Agreement shall
restrict Grantee from specifying alternative means of exercising rights
pursuant to Sections 2, 6 or 7 hereof in the event that the exercising of any
such rights shall not have occurred due to the failure to obtain any required
approval referred to in this Section 9.
SECTION 10. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer
are necessary to authorize this Agreement or to consummate the transactions so
contemplated. This
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Agreement has been duly executed and delivered by, and constitutes a valid and
binding obligation of, Issuer, enforceable against Issuer in accordance with its
terms.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
SECTION 11. Assignment.
(a) Neither of the parties hereto may assign any of its rights or delegate
any of its obligations under this Agreement or the Option created hereunder to
any other person without the express written consent of the other party, except
that Grantee may assign this Agreement to a wholly owned subsidiary of Grantee
and Grantee may assign its rights hereunder in whole or in part after the
occurrence of a Preliminary Purchase Event; provided, however, that until the
date at which the Federal Reserve Board has approved an application by Grantee
under the BHC Act to acquire the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option, other than to a wholly
owned subsidiary of Grantee, except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the Federal Reserve Board. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising
under the Securities Act of 1933, as amended, and to certain
provisions of an agreement between Citizens Banking Corporation and CB
Financial Corporation, ("Issuer") dated as of the 27th day of January,
1997. A copy of such agreement is on file at the principal office of
Issuer and will be provided to any permitted assignee of the option
without change upon receipt by Issuer of a written request therefor.
It is understood and agreed that (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
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counsel, in form and substance satisfactory to Issuer, to the effect that such
legend is not required for purposes of the Securities Act; (ii) the reference
to the provisions of this Agreement in the above legend shall be removed by
delivery of substitute assignments without such reference if the Option has
been sold or transferred in compliance with the provisions of this Agreement
and under circumstances that do not require the retention of such reference;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
assignments shall bear any other legend as may be required by law.
SECTION 12. Consents. Each of Grantee and Issuer will use its reasonable
efforts to make all filings with, and to obtain consents of, all third parties
and Governmental Authorities necessary for the consummation of the transactions
contemplated by this Agreement, including, without limitation, making
application, if necessary, for listing of the shares of Common Stock issuable
hereunder on any exchange or quotation system and applying to the Federal
Reserve Board under the BHC Act and to state and foreign banking authorities
for approval to acquire the shares issuable hereunder.
SECTION 13. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties shall hereto be
enforceable by either party hereto through injunctive or other equitable
relief. Both parties further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such equitable
relief and that this provision is without prejudice to any other rights that
the parties hereto may have for any failure to perform this Agreement.
SECTION 14. Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that Grantee is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1 (as adjusted pursuant hereto), it is the
express intention of Issuer to allow Grantee to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
SECTION 15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Plan.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan.
SECTION 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement and shall be effective at the time
of execution.
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SECTION 18. Expenses. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
SECTION 19. Entire Agreement; No Third-Party Beneficiary. Except as
otherwise expressly provided herein or in the Plan, this Agreement contains the
entire agreement between the parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. Definitions. Capitalized terms used in this Agreement and not
defined herein but defined in the Plan shall have the meanings assigned thereto
in the Plan.
SECTION 21. Conflict With Plan. Nothing contained in this Agreement shall
be deemed to authorize Issuer or Grantee to breach any provision of the Plan.
SECTION 22. Majority in Interest. In the event that any selection or
determination is to be made by Grantee or the Owner hereunder and at the time
of such selection or determination there is more than one Grantee or Owner,
such selection shall be made by a majority in interest of such Grantees or
Owners.
SECTION 23. Further Assurances. In the event of any exercise of the
option by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
SECTION 24. Shareholder Rights. Except to the extent Grantee exercises
the Option, Grantee shall have no rights to vote or receive dividends or have
any other rights as a shareholder with respect to shares of Common Stock
covered hereby.
SECTION 25. Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by their officers thereunto duly authorized, all as of
the date first above written.
CB FINANCIAL CORPORATION
By: /s/ Brian D. Bell
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Name: Brian D. Bell
Title: Chairman and Chief Executive Officer
CITIZENS BANKING CORPORATION
By: /s/ Robert J. Vitito
------------------------------------------
Name: Robert J. Vitito
Title: President and Chief Executive Officer