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EXHIBIT 10
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT (this "Warrant Purchase Agreement") is
made as of March 24, 1999, between INDEPENDENT BANK CORPORATION, a Michigan
corporation ("IBC"), and MUTUAL SAVINGS BANK, f.s.b., a federally chartered
stock savings bank ("MSB").
RECITALS:
A. Concurrently herewith, IBC and MSB have entered into a certain
Agreement and Plan of Reorganization, dated as of the date hereof (the
"Agreement"), which provides for the consolidation of MSB into a wholly owned
subsidiary of IBC (the "Consolidation") pursuant to a Consolidation Agreement
containing certain additional terms and conditions relating to the Consolidation
(the "Consolidation Agreement"). (The Agreement and the Consolidation Agreement
are sometimes hereinafter collectively referred to as the "Merger Documents.")
All capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to them in the Merger Documents.
B. As a condition to IBC's entering into the Agreement, and in
consideration therefor, MSB has agreed to issue to IBC a warrant or warrants
entitling IBC to purchase up to a total of 853,792 shares of MSB Common Stock,
on the terms and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
SECTION 1. ISSUANCE, DELIVERY, AND EXERCISE OF THE WARRANT.
Concurrently with the execution of the Agreement and this Warrant Purchase
Agreement, MSB shall execute a warrant in favor of IBC in the form attached as
Attachment A hereto (the "Warrant") to purchase up to a total of 853,792 shares
of MSB Common Stock at a purchase price equal to $9.8125 per share (the
"Exercise Price"), subject to adjustments as provided in the Warrant. (The
holder of the Warrant from time to time is hereinafter referred to as the
"Holder.") The Warrant shall be exercisable in accordance with the terms and
conditions set forth therein.
SECTION 2. REGISTRATION RIGHTS. If, at any time after the Warrant
becomes exercisable in accordance with its terms, MSB shall receive a written
request therefor from the Holder, MSB shall prepare and file a registration
statement under the Securities Act of 1933, as amended, or under the applicable
federal laws and Office of Thrift Supervision regulations (the "Applicable
Securities Laws") covering such number of shares of MSB Common Stock as the
Holder shall specify in the request and shall use its best efforts to cause such
registration statement to become effective; provided, however, that the Holder
shall only have the right to request one such registration. Without the written
consent of the Holder, neither MSB nor any other holder of securities of MSB may
include any other securities in such registration.
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SECTION 3. "PIGGYBACK" RIGHTS. If, at any time after the Warrant
becomes exercisable in accordance with its terms, MSB shall determine to proceed
with the preparation and filing of a registration statement under the Applicable
Securities Laws in connection with the proposed offer and sale for money of any
of its securities (other than in connection with a dividend reinvestment,
employee stock purchase, stock option, or similar plan or a registration
statement on Form S-4) by it or any of its security holders, MSB shall give
written notice thereof to the Holder. Upon the written request of the Holder
given within ten days after receipt of any such notice from MSB, MSB shall,
except as herein provided, cause all shares of MSB Common Stock which the Holder
shall request be included in such registration statement to be so included;
provided, however, that nothing herein shall prevent MSB from abandoning or
delaying any registration at any time; and provided, further, that if MSB
decides not to proceed with a registration after the registration statement has
been filed with the United States Securities and Exchange Commission or the
Office of Thrift Supervision, as required by applicable law (the "Securities
Regulator") and MSB's decision not to proceed is primarily based upon the
anticipated public offering price of the securities to be sold by MSB, MSB shall
promptly complete the registration for the benefit of the Holder if the Holder
agrees to bear all additional and incremental expenses incurred by MSB as the
result of such registration after MSB has decided not to proceed. If any
registration pursuant to this Section shall be underwritten in whole or in part,
the Holder may require that any shares of MSB Common Stock requested for
inclusion pursuant to this Section be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. In the event that the shares of MSB Common Stock requested for
inclusion pursuant to this Section would constitute more than 25 percent of the
total number of shares to be included in a proposed underwritten public
offering, and if in the good faith judgment of the managing underwriter of such
public offering the inclusion of all of such shares would interfere with the
successful marketing of the shares being offered by MSB, the number of shares
otherwise to be included in the underwritten public offering hereunder may be
reduced; provided, however, that after any such required reduction, the shares
of MSB Common Stock to be included in such offering for the account of the
Holder shall constitute at least 25 percent of the total number of shares to be
included in such offering.
SECTION 4. OBLIGATIONS OF MSB IN CONNECTION WITH A
REGISTRATION. If and whenever MSB is required by the provisions of Sections 2 or
3 hereof to effect the registration of any shares of MSB Common Stock under the
Applicable Securities Laws, MSB shall:
(a) prepare and file with the Securities Regulator a
registration statement with respect to such securities and use its best
efforts to cause such registration statement to become and remain
effective for such period as may be reasonably necessary to effect the
sale of such securities, not to exceed nine months;
(b) prepare and file with the Securities Regulator such
amendments to such registration statement and supplements to the
prospectus contained therein as may be necessary to keep such
registration statement effective for such period as may be reasonably
necessary to effect the sale of such securities, not to exceed nine
months;
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(c) furnish to the Holder and to the underwriters of the
securities being registered such reasonable number of copies of the
registration statement, amendments thereto, preliminary prospectus,
final prospectus, and such other documents as the Holder or such
underwriters may reasonably request in order to facilitate the public
offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as the Holder or such underwriters
may reasonably request; provided that MSB shall not be required by
virtue hereof to submit to the general jurisdiction of any state;
(e) notify the Holder, promptly after MSB shall receive notice
thereof, of the time when such registration statement or any
post-effective amendment thereof has become effective or a supplement
to any prospectus forming a part of such registration statement has
been filed;
(f) notify the Holder promptly of any request by the
Securities Regulator for the amending or supplementing of such
registration statement or prospectus or for additional information;
(g) prepare and file with the Securities Regulator, promptly
upon the request of the Holder, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel
for the Holder (and concurred in by counsel for MSB), is required under
the Applicable Securities Laws or the rules and regulations promulgated
thereunder in connection with the distribution of the shares of MSB
Common Stock by the Holder;
(h) prepare and promptly file with the Securities Regulator
such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or omissions
if, at the time when a prospectus is required to be delivered under the
Applicable Securities Laws, any event shall have occurred as the result
of which such prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(i) advise the Holder, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the
Securities Regulator suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for that
purpose and promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be
issued; and
(j) at the request of the Holder, furnish on the date or dates
provided for in the underwriting agreement: (i) an opinion or opinions
of the counsel representing MSB for the purposes of such registration,
addressed to the underwriters and to the Holder, covering such matters
as such underwriters and the Holder may reasonably request and as are
customarily
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covered by issuer's counsel at that time; and (ii) a letter or letters
from the independent certified public accountants of MSB, addressed to
the underwriters and to the Holder, covering such matters as such
underwriters or the Holder may reasonably request, in which letters
such accountants shall state (without limiting the generality of the
foregoing) that they are independent certified public accountants
within the meaning of the Applicable Securities Laws and that, in the
opinion of such accountants, the financial statements and other
financial data of MSB included in the registration statement or any
amendment or supplement thereto comply in all material respects with
the applicable accounting requirements of the Applicable Securities
Laws.
SECTION 5. EXPENSES OF REGISTRATION. With respect to a registration
requested pursuant to Section 2 hereof and with respect to each inclusion of
shares of MSB Common Stock in a registration statement pursuant to Section 3
hereof, MSB shall bear the following fees, costs, and expenses: all
registration, stock exchange listing, and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for MSB, fees and disbursements of
counsel for the underwriter or underwriters of such securities (if MSB and/or
the Holder are required to bear such fees and disbursements), and all legal fees
and disbursements and other expenses of complying with state securities or blue
sky laws of any jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of counsel and accountants for
the Holder, underwriting discounts and commissions and transfer taxes relating
to the MSB Common Stock being sold for the Holder, and any other expenses
incurred by the Holder not expressly included above shall be borne by the
Holder.
SECTION 6. INDEMNIFICATION.
(a) MSB shall indemnify and hold harmless the Holder, any
underwriter (as defined in the Applicable Securities Laws) for the
Holder, and each person, if any, who controls the Holder or such
underwriter within the meaning of the Applicable Securities Laws, from
and against any and all loss, damage, liability, cost, and expense to
which the Holder or any such underwriter or controlling person may
become subject under the Applicable Securities Laws or otherwise,
insofar as such losses, damages, liabilities, costs, or expenses are
caused by any untrue statement or alleged untrue statement of any
material fact contained in any registration statement filed pursuant to
Section 4 hereof, any prospectus or preliminary prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they are made, not
misleading; provided, however, that MSB will not be liable in any such
case to the extent that any such loss, damage, liability, cost, or
expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity
with information furnished by the Holder, such underwriter, or such
controlling persons in writing specifically for use in the preparation
thereof.
(b) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) of this Section 6 of notice of the
commencement of any action involving the
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subject matter of the foregoing indemnity provisions, such indemnified
party shall, if a claim thereof is to be made against MSB pursuant to
the provision of such paragraph (a), promptly notify MSB of the
commencement thereof; but the omission to so notify MSB will not
relieve it from any liability which it may have to any indemnified
party otherwise hereunder. In case such action is brought against any
indemnified party and such indemnified party notifies MSB of the
commencement thereof, MSB shall have the right to participate in and,
to the extent that it may wish to do so, to assume the defense
thereof, with counsel satisfactory to such indemnified party;
provided, however, if the defendants in any action include both the
indemnified party and MSB and there is a conflict of interest which
would prevent counsel for MSB from also representing the indemnified
party, the indemnified party or parties shall have the right to select
one separate counsel to participate in the defense of such action on
behalf of such indemnified party or parties. After notice from MSB to
such indemnified party of its election so to assume the defense of any
such action, the indemnified party shall have the right to participate
in such action and to retain its own counsel, but MSB shall not be
required to indemnify and hold harmless the indemnified party pursuant
to the provisions of such paragraph (a) for any legal fees or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof, other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed
separate counsel in accordance with the provisions of the preceding
sentence of this paragraph (b), (ii) MSB shall not have employed
counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the
commencement of the action, or (iii) MSB has authorized the employment
of counsel for the indemnified party at the expense of MSB.
(c) If recovery is not available under the foregoing
indemnification provisions, for any reason other than as specified
therein, the parties entitled to indemnification by the terms thereof
shall be entitled to contribution to liabilities and expenses, except
to the extent that contribution is not permitted under Section 11(f) of
the Securities Act of 1933, as amended. In determining the amount of
contribution to which the respective parties are entitled, there shall
be considered the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and any
other equitable considerations appropriate under the circumstances.
SECTION 7. REPURCHASE RIGHTS.
(a) Immediately prior to the occurrence of a Repurchase Event
(as defined below), (i) following a request of the Holder, delivered
prior to an Exercise Termination Event, MSB (or any successor thereto)
shall repurchase the Warrant from the Holder at a price (the "Warrant
Repurchase Price") equal to the amount by which (A) the Market/Offer
Price (as defined below) exceeds (B) the Exercise Price, multiplied by
the number of shares for which the Warrant may then be exercised, and
(ii) at the request of the owner of shares of MSB Common Stock
purchased pursuant to an exercise of the Warrant ("Warrant Stock") from
time to time (the "Owner"), delivered within 90 days of such occurrence
, MSB shall repurchase such number of shares of the Warrant Stock from
the Owner as the Owner shall
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designate at a price (the "Warrant Stock Repurchase Price") equal to
the Market/Offer Price multiplied by the number of shares of Warrant
Stock so designated.
(b) For purposes of paragraph (a) of this Section 7, the
"Market/Offer Price" shall mean the highest of (i) the price per share
at which a tender offer or exchange offer for shares of MSB Common
Stock has been made, (ii) the price per share of MSB Common Stock to be
paid by any third party pursuant to an agreement with MSB, and (iii)
the highest closing price for shares of MSB Common Stock within the
4-month period immediately preceding the date the Holder gives notice
of the required repurchase of the Warrant or the Owner gives notice of
the required repurchase of Warrant Stock, as appropriate. In the event
that an exchange offer is made or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for MSB Common Stock shall be determined by a nationally
recognized investment banking firm mutually acceptable to the parties
hereto.
(c) The Holder and the Owner may exercise their respective
rights to require MSB to repurchase the Warrant or the Warrant Stock
pursuant to this Section 7 by surrendering for such purpose to MSB, at
its principal office, the Warrant or certificates for shares of Warrant
Stock, as the case may be, free and clear of any liens, claims,
encumbrances, or rights of third parties of any kind, accompanied by a
written notice or notices stating that the Holder or the Owner, as the
case may be, requests MSB to repurchase such Warrant or Warrant Stock
in accordance with the provisions of this Section 7. Subject to the
last proviso of Subsection 7(d) below, as promptly as practicable, and
in any event within five business days after the surrender of the
Warrant or certificates representing shares of Warrant Stock and the
receipt of such notice or notices relating thereto, MSB shall deliver
or cause to be delivered to the Holder or Owner the Warrant Repurchase
Price or the Warrant Stock Repurchase Price therefor, as applicable, or
the portion thereof which MSB is not then prohibited under applicable
law and regulation from so delivering.
(d) To the extent that MSB is prohibited under applicable law
or regulation, or as a result of administrative or judicial action,
from repurchasing the Warrant and/or the Warrant Stock in full at any
time that it may be required to do so hereunder, MSB shall immediately
so notify the Holder and/or the Owner and thereafter deliver or cause
to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Warrant Repurchase Price and the
Warrant Stock Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on
which MSB is no longer so prohibited. Upon receipt of such notice from
MSB and for a period of 15 days thereafter, the Holder and/or Owner may
revoke its notice of repurchase of the Warrant and/or Warrant Stock by
written notice to MSB at its principal office stating that the Holder
and/or the Owner elects to revoke its election to exercise its right to
require MSB to repurchase the Warrant and/or Warrant Stock, whereupon
MSB will promptly deliver to the Holder and/or Owner the Warrant and/or
certificates representing shares of Warrant Stock surrendered to MSB
for purposes of such repurchase. Whether or not such election is
revoked, MSB hereby agrees to use its best efforts to obtain all
required legal and regulatory
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approvals necessary to permit MSB to repurchase the Warrant and/or the
Warrant Stock to the full extent and as promptly as practicable.
(e) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred upon (i) the consummation of any merger,
consolidation or similar transaction involving MSB or any purchase,
lease or other acquisition of all or a substantial portion of the
assets of MSB, other than any such transaction which would not
constitute an Acquisition Transaction pursuant to the provisions of
Section 1(c) of the Warrant, or (ii) upon the acquisition by any person
of beneficial ownership of 50% or more of the then outstanding shares
of MSB Common Stock.
SECTION 8. ASSUMPTION OF OBLIGATIONS UNDER THIS AGREEMENT.
MSB will not enter into any transaction described in paragraph 5(a) of the
Warrant unless the "Acquiring Corporation" (as that term is defined in the
Warrant) assumes in writing all the obligations of MSB hereunder. Neither of the
parties hereto may assign any of its rights or obligations under this Agreement
or the Warrant created hereunder to any other person, without the express
written consent of the other party, except that in the event a Triggering Event
shall have occurred prior to an Exercise Termination Event, the Holder, subject
to the express provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 90 days following such Triggering Event; provided,
however, that until the date 15 days following the date on which the Office of
Thrift Supervision approves an application by the Holder pursuant to applicable
laws and regulations to acquire the shares of MSB Common Stock subject to the
Warrant, IBC may not assign its rights under the Warrant 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 MSB,
(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 the Holder's
behalf, or (iv) any other manner approved by the Office of Thrift Supervision.
SECTION 9. REMEDIES. Without limiting the foregoing or any remedies
available to the Holder, MSB specifically acknowledges that neither IBC nor any
successor holder of the Warrant would have an adequate remedy at law for any
breach of this Warrant Purchase Agreement and MSB hereby agrees that IBC and any
successor holder of the Warrant shall be entitled to specific performance of the
obligations of MSB hereunder and injunctive relief against actual or threatened
violations of the provisions hereof.
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SECTION 10. TERMINATION. This Warrant Purchase Agreement will
terminate upon a termination of the Warrant in accordance with Section 9
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant
Purchase Agreement as of the day and year first above written.
INDEPENDENT BANK CORPORATION
By: /s/ Xxxxxxx Van Loan
----------------------------
Xxxxxxx Van Loan
Its: Chief Executive Officer
MUTUAL SAVINGS BANK, F.S.B.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
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THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT BEING SO REGISTERED OR QUALIFIED UNLESS AN EXEMPTION OR
EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS ARE AVAILABLE.
WARRANT
TO PURCHASE 853,792 COMMON SHARES
OF
MUTUAL SAVINGS BANK, F.S.B.
This is to certify that, for value received, INDEPENDENT BANK
CORPORATION, a Michigan corporation ("IBC"), is entitled to purchase from MUTUAL
SAVINGS BANK, f.s.b., a federally chartered stock savings bank ("MSB"), at any
time within ninety days after the first occurrence of a Triggering Event and
prior to the occurrence of an Exercise Termination Event, an aggregate of up to
853,792 common shares, $0.01 par value per share, of MSB ("MSB Common Stock"),
at a price of $9.8125 per share (the "Exercise Price"), subject to the terms and
conditions of this Warrant and a certain Warrant Purchase Agreement, of even
date herewith, between IBC and MSB (the "Warrant Purchase Agreement"). The
number of shares of MSB Common Stock which may be received upon the exercise of
this Warrant and the Exercise Price are subject to adjustment from time to time
as hereinafter set forth. The terms and conditions set forth in this Warrant and
the Warrant Purchase Agreement shall be binding upon the respective successors
and assigns of both of the parties hereto. This Warrant is issued in connection
with a certain Agreement and Plan of Reorganization, dated as of the date
hereof, between IBC and MSB (the "Merger Agreement"), which provides for the
consolidation of MSB into a wholly owned subsidiary of IBC (the
"Consolidation"), and a certain Consolidation Agreement among IBC, its
subsidiary and MSB, which provides certain additional terms and conditions
relating to the Merger (the "Consolidation Agreement"). The Merger Agreement and
the Consolidation Agreement are sometimes hereinafter collectively referred to
as the "Merger Documents." All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Merger Documents.
The term "Holder" shall mean and refer to IBC or any successor holder of this
Warrant.
SECTION 1. EXERCISE OF THE WARRANT.
(a) The Holder will not exercise this Warrant unless it has
obtained all required approvals, if any, of appropriate regulatory
authorities having jurisdiction, including the Office of Thrift
Supervision, pursuant to all applicable laws and regulations. Further,
subject to the terms and conditions set forth in this Warrant and in
the Warrant Purchase Agreement and the provisions of applicable law,
the Holder will not exercise this Warrant without the
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written consent of MSB except within ninety days after the occurrence
of any of the following events (a "Triggering Event") and prior to the
occurrence of an Exercise Termination Event:
(i) any material, willful, and intentional breach of
the Merger Documents by MSB that would permit IBC to terminate
the Merger Documents (A) occurring after the receipt by MSB of
a proposal to engage in an Acquisition Transaction, (B)
occurring after the announcement by any other Person of an
intention to engage in an Acquisition Transaction, or (c) in
anticipation and for the purpose of engaging in an Acquisition
Transaction;
(ii) (A) a proposal to engage in an Acquisition
Transaction is submitted to and approved by the shareholders
of MSB at any time prior to December 31, 2000, or (B) a Tender
Offer is commenced and the transactions contemplated in the
Tender Offer are completed in such a manner that the Person
making the Tender Offer acquires beneficial ownership of more
than 20 percent of the capital stock or any other class of
voting securities of MSB, and the Consolidation is not
consummated prior to December 31, 2000;
(iii) (A) a proposal to engage in an Acquisition
Transaction is received by MSB or a Tender Offer is made
directly to the shareholders of MSB or the intention of making
an Acquisition Transaction or Tender Offer is announced at any
time prior to the holding of the MSB Shareholders' Meeting;
and (B) the Board of Directors of MSB (1) fails to recommend
to the shareholders of MSB that they vote their shares of MSB
Common Stock in favor of the approval of the Consolidation,
(2) withdraws such recommendation previously made, (3) fails
to solicit proxies of shareholders of MSB to approve the
Consolidation, or (4) fails to hold the MSB Shareholders'
Meeting;
(b) Notwithstanding the foregoing, this Warrant shall not be
exercisable after the occurrence of an Exercise Termination Event which
for purposes hereof means (i) the Effective Time (as defined in the
Agreement) of the Consolidation, (ii) the failure of the shareholders
of IBC to approve the Consolidation; (iii) the failure of any
Regulatory Authority to provide any required Consent to the
Consolidation, which failure was not the result of the existence of the
Acquisition Proposal or a breach by MSB of any of its obligations under
any of the Merger Documents; or (iv) the Merger Documents are
terminated pursuant to Section 6.1 of the Merger Agreement, unless the
event giving rise to the right to terminate is a breach by MSB and is
preceded by a Triggering Event or the receipt by MSB of an Acquisition
Transaction proposal, or the announcement by another Person of a
proposal involving an Acquisition Transaction.
(c) An "Acquisition Transaction" shall mean a transaction
between MSB and any Person other than IBC or any Affiliate of IBC
involving (A) the sale or other disposition of more than 20% of the
shares of the capital stock or any other class of voting securities of
MSB, including, but not limited to, a Tender Offer, (B) the sale or
other disposition of 15%
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or more of the consolidated assets or deposits of MSB, or (c) a merger
or consolidation involving MSB other than a transaction pursuant to
which MSB will be the surviving corporation and the current
shareholders of MSB will be the owners of a majority of the stock of
the surviving corporation following the transaction. For purposes of
this Section 1, a Tender Offer which is contingent upon the expiration
of the Warrant is deemed to commence when it is announced.
(d) This Warrant shall be exercised by presentation and
surrender hereof to MSB at its principal office accompanied by (i) a
written notice of exercise for a specified number of shares of MSB
Common Stock, (ii) payment to MSB, for the account of MSB, of the
Exercise Price for the number of shares specified in such notice, and
(iii) a certificate of the Holder indicating the Triggering Event that
has occurred which entitles the Holder to exercise this Warrant. The
Exercise Price for the number of shares of MSB Common Stock specified
in the notice shall be payable in immediately available funds.
(e) Upon such presentation and surrender, MSB shall issue
promptly (and within three business days if requested by the Holder) to
the Holder, or any assignee, transferee, or designee permitted by
subparagraph (g) of this Section 1, the shares to which the Holder is
entitled hereunder and the Holder shall deliver to MSB a copy of this
Warrant and a letter agreeing that the Holder will not offer to sell or
otherwise dispose of such shares in violation of applicable law or the
provisions of this Warrant.
(f) Certificates for shares of MSB Common Stock may be
endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933
Act"), in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Holder shall have
delivered to MSB a copy of a letter from the staff of the SEC, or an
opinion of counsel, in form and substance reasonably satisfactory to
MSB, to the effect that such legend is not required for purposes of the
1933 Act; (ii) the reference to the provisions of this Warrant in the
above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in
compliance with the provisions of this Warrant 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.
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(g) If this Warrant should be exercised in part only, MSB
shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder. Upon receipt
by MSB of this Warrant, in proper form for exercise, the Holder shall
be deemed to be the holder of record of the shares of MSB Common Stock
issuable upon such exercise, notwithstanding that the stock transfer
books of MSB shall then be closed or that certificates representing
such shares of MSB Common shall not then be actually delivered to the
Holder. MSB shall pay all expenses, and any and all federal, state, and
local taxes and other charges that may be payable in connection with
the preparation, issue, and delivery of stock certificates under this
Section 1 in the name of the Holder or of any assignee, transferee, or
designee permitted by subparagraph (g) of this Section 1.
(h) Neither of the parties hereto may assign any of its rights
or obligations under this Warrant created hereunder to any other
person, without the express written consent of the other party, except
that in the event a Triggering Event shall have occurred prior to an
Exercise Termination Event, the Holder, subject to the express
provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 90 days following such Triggering Event;
provided, however, that until the date 15 days following the date on
which the Office of Thrift Supervision approves an application by the
Holder pursuant to applicable laws and regulations to acquire the
shares of MSB Common Stock subject to this Warrant, IBC may not assign
its rights under this Warrant 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 MSB,
(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 the Holder's behalf, or (iv) any other manner approved
by the Office of Thrift Supervision.
SECTION 2. CERTAIN COVENANTS AND REPRESENTATIONS OF MSB AND IBC.
(a) MSB shall at all times maintain sufficient authorized but
unissued shares of MSB Common Stock so that this Warrant may be
exercised without additional authorization of the holders of MSB Common
Stock, after giving effect to all other outstanding options, warrants,
convertible securities, and other rights to purchase MSB Common Stock.
(b) MSB represents and warrants to the Holder that the shares
of MSB Common Stock issued upon an exercise of this Warrant will be
duly authorized, fully paid, nonassessable, and subject to no
preemptive rights.
(c) MSB agrees (i) that it will not, by charter amendment or
through reorganization, consolidation, merger, dissolution or sale of
assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations, or
conditions to be observed or performed hereunder by MSB; (ii) promptly
to take all action as may from time to time be required, (including,
without limitation (A) complying with all pre-merger notification,
reporting, and waiting period requirements
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specified in 15 U.S.C. Section 18a and regulations promulgated
thereunder, and (B) in the event, under the Bank Holding Company Act of
1956, as amended (the "Bank Holding Company Act"), or the Change in
Bank Control Act of 1978, or other statute, the prior approval of the
Office of Thrift Supervision or other regulatory agency (collectively,
the "Agencies"), is necessary before the Warrant may be exercised or
transferred, cooperate fully with the Holder in preparing such
applications and providing such information to the Agencies as the
Agencies may require) in order to permit the Holder to exercise or
transfer this Warrant and MSB duly and effectively to issue shares
pursuant to the exercise hereof; and (iii) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
(d) IBC represents and warrants to MSB that the Warrant is not
being, and any shares of MSB Common Stock or other securities acquired
by IBC upon exercise of the Warrant will not be, acquired with a view
to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act of 1933, as amended.
SECTION 3. FRACTIONAL SHARES. MSB shall not be required to issue
fractional shares of MSB Common Stock upon an exercise of this Warrant but shall
pay for such fraction of a share in cash or by certified or official bank check
at the Exercise Price.
SECTION 4. EXCHANGE OR LOSS OF WARRANT. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof at the principal office of MSB for other Warrants of different
denominations entitling the Holder thereof to purchase in the aggregate the same
number of shares of MSB Common Stock purchasable hereunder. The term "Warrant"
as used herein includes any warrants for which this Warrant may be exchanged.
Upon receipt by MSB of evidence reasonably satisfactory to it of the loss,
theft, destruction, or mutilation of this Warrant, and (in the case of loss,
theft, or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, MSB will execute and
deliver a new Warrant of like tenor and date. Any such new Warrant executed and
delivered shall constitute an additional contractual obligation on the part of
MSB, whether or not the Warrant so lost, stolen, destroyed, or mutilated shall
at any time be enforceable by anyone.
SECTION 5. CERTAIN TRANSACTIONS.
(a) In the event that prior to an Exercise Termination Event,
MSB shall (i) consolidate with or merge into any Person, other than IBC
or one of its Affiliates, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) permit any Person,
other than IBC or one of its Affiliates, to merge into MSB, and MSB
shall be the continuing or surviving corporation, but, in connection
with such merger, (x) the shareholders of MSB immediately prior to such
merger own less than a majority of the surviving corporation's
outstanding voting securities, or (y) the then outstanding voting
shares of MSB Common Stock shall be changed into or exchanged for stock
or other securities of any other Person or cash or any other property,
or (iii) sell or otherwise transfer all or substantially all of its
assets to any Person, other than IBC or one of its Affiliates, then,
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and in any such case, the agreement governing such transaction shall
make proper provision so that this Warrant shall, upon the
consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, a warrant, at
the option of the Holder, of either (A) the Acquiring Corporation (as
hereinafter defined), (B) any company which controls the Acquiring
Corporation, or (c) in the case of a merger described in clause
(a)(ii) above, MSB, in which case such warrant shall be a newly issued
warrant (in any such case, the "Substitute Warrant").
(b) For purposes of this Section 5, the following terms
have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the
continuing or surviving corporation of a consolidation or
merger with MSB (if other than MSB), (B) the corporation
merging into MSB in a merger in which MSB is the continuing or
surviving person and in connection with which the then
outstanding shares of MSB Common Stock are changed into or
exchanged for stock or other securities of any other Person or
cash or any other property, or (c) the transferee of all or
substantially all of MSB's assets;
(ii) "Substitute Common" shall mean the common stock
issued by the issuer of the Substitute Warrant;
(iii) "Assigned Value" shall mean the Market/Offer
Price as determined pursuant to Subsection 7(b) of the Warrant
Purchase Agreement; provided, however, that in the event of a
sale of all or substantially all of MSB's assets, the Assigned
Value shall be the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of
MSB as determined by a recognized investment banking firm
selected by the Holder, divided by the number of shares of MSB
Common Stock outstanding at the time of such sale;
(iv) "Average Price" shall mean the average closing
price of a share of Substitute Common 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 Substitute Common on the day preceding such
consolidation, merger, or sale; provided that if MSB is the
issuer of the Substitute Warrant, the Average Price shall be
computed with respect to a share of the common stock issued by
the Person merging into MSB or by any company which controls
such Person, as the Holder may elect;
(v) A "Person" shall mean any individual, firm,
corporation or other entity and include as well any syndicate
or group deemed to be a "person" by Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended; and
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(vi) "Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended.
(c) The Substitute Warrant shall have the same terms as this
Warrant, provided that, if the terms of the Substitute Warrant cannot,
for legal reasons, be the same as this Warrant, such terms shall be as
similar as possible and in no event less advantageous to the Holder.
The issuer of the Substitute Warrant shall also enter into an agreement
with the then Holder of the Substitute Warrant in substantially the
same form as the Warrant Purchase Agreement, which shall be applicable
to the Substitute Warrant.
(d) The Substitute Warrant shall be exercisable for such
number of shares of Substitute Common as is equal to the Assigned Value
multiplied by the number of shares of MSB Common Stock for which this
Warrant is then exercisable, divided by the Average Price. The exercise
price of the Substitute Warrant per share of Substitute Common shall be
equal to the Exercise Price multiplied by a fraction in which the
numerator is the number of shares of MSB Common Stock for which this
Warrant is then exercisable and the denominator is the number of shares
of Substitute Common for which the Substitute Warrant is exercisable.
SECTION 6. RIGHTS OF THE HOLDER; REMEDIES.
(a) The Holder shall not, by virtue hereof and prior to the
exercise hereof, be entitled to any rights of a holder of MSB Common
Stock.
(b) Without limiting the foregoing or any remedies available
to the Holder, MSB specifically acknowledges that neither IBC nor any
successor Holder of this Warrant would have an adequate remedy at law
for any breach of this Warrant and MSB hereby agrees that IBC and any
successor Holder shall be entitled to specific performance of the
obligations of MSB hereunder and injunctive relief against actual or
threatened violations of the provisions hereof.
SECTION 7. ANTIDILUTION PROVISIONS. The number of shares of MSB
Common Stock purchasable upon the exercise hereof shall be subject to adjustment
from time to time as provided in this Section 7.
(a) In the event that MSB issues any additional shares of MSB
Common Stock at any time after the date hereof (including pursuant to
stock option plans), the number of shares of MSB Common Stock which can
be purchased pursuant to this Warrant shall be increased by an amount
equal to 19.9 percent of the additional shares so issued.
(b) (i) In the event that, after the date hereof, MSB pays or
makes a dividend or other distribution of any class of capital stock of
MSB in MSB Common Stock, the number of shares of MSB Common Stock
purchasable upon exercise hereof shall be increased by multiplying such
number of shares by a fraction of which the denominator shall be the
number of shares of MSB Common Stock outstanding at the close of
business on the day immediately preceding the date of such distribution
and the numerator shall be the
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sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such increase to
become effective immediately after the opening of business on the day
following such distribution.
(ii) In the event that, after the date hereof,
outstanding shares of MSB Common Stock are subdivided into a
greater number of shares of MSB Common Stock, the number of
shares of MSB Common Stock purchasable upon exercise hereof at
the opening of business on the day following the day upon
which such subdivision becomes effective shall be
proportionately increased, and, conversely, in the event that,
after the date hereof, outstanding shares of MSB Common Stock
are combined into a smaller number of shares of MSB Common
Stock, the number of shares of MSB Common Stock purchasable
upon exercise hereof at the opening of business on the day
following the day upon which such combination becomes
effective shall be proportionately decreased, such increase or
decrease, as the case may be, to become effective immediately
after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(iii) The reclassification (including any
reclassification upon a merger in which MSB is the continuing
corporation) of MSB Common Stock into securities including
other than MSB Common Stock shall be deemed to involve a
subdivision or combination, as the case may be, of the number
of shares of MSB Common Stock outstanding immediately prior to
such reclassification into the number of shares of MSB Common
Stock outstanding immediately thereafter and the effective
date of such reclassification shall be deemed to be the day
upon which such subdivision or combination becomes effective,
as the case may be, within the meaning of clause (ii) above.
(c) Whenever the number of shares of MSB Common Stock
purchasable upon exercise hereof is adjusted pursuant to paragraph (b)
above, the Exercise Price shall be adjusted by multiplying the Exercise
Price by a fraction the numerator of which is equal to the number of
shares of MSB Common Stock purchasable prior to the adjustment and the
denominator of which is equal to the number of shares of MSB Common
Stock purchasable after the adjustment.
(d) For the purpose of this Section 7, the term "MSB
Common Stock" shall include any shares of MSB of any class or series
which has no preference or priority in the payment of dividends or in
the distribution of assets upon any voluntary or involuntary
liquidation, dissolution, or winding up of MSB and which is not subject
to redemption by MSB.
SECTION 8. NOTICE.
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(a) Whenever the number of shares of MSB Common Stock for
which this Warrant is exercisable is adjusted as provided in Section 7
hereof, MSB shall promptly compute such adjustment and mail to the
Holder a certificate, signed by a principal financial officer of MSB,
setting forth the number of shares of MSB Common Stock for which this
Warrant is exercisable and the adjusted Exercise Price as a result of
such adjustment, a brief statement of the facts requiring such
adjustment, the computation thereof, and when such adjustment will
become effective.
(b) Upon the occurrence of a Triggering Event MSB shall (i)
promptly notify the Holder and/or the "Owner" (as that term is defined
in the Warrant Purchase Agreement) of such event, (ii) promptly compute
the "Warrant Repurchase Price" and the "Warrant Stock Repurchase Price"
(as such terms are defined in the Warrant Purchase Agreement), and
(iii) furnish to the Holder and/or the Owner a certificate, signed by
the chief financial officer of MSB setting forth the Warrant Repurchase
Price and/or the Warrant Stock Repurchase Price and the basis and
computation thereof.
(c) Upon the occurrence of an event which results in this
Warrant becoming convertible into, or exchangeable for, the Substitute
Warrant, as provided in Section 5 hereof, MSB and the Acquiring
Corporation shall promptly notify the Holder of such event; and, upon
receipt from the Holder of its choice as to the issuer of the
Substitute Warrant, the Acquiring Corporation shall promptly compute
the number of shares of Substitute Common for which the Substitute
Warrant is exercisable and furnish to the Holder a certificate, signed
by a principal financial officer of the Acquiring Corporation, setting
forth the number of shares of Substitute Common for which the
Substitute Warrant is exercisable, the Substitute Warrant exercise
price, a computation thereof, and when such adjustment will become
effective.
SECTION 9. TERMINATION. This Warrant and the rights conferred hereby
shall terminate upon the earliest of (i) six months after the occurrence of a
Triggering Event; (ii) the Effective Time of the Merger, (iii) the date of
termination of the Merger Documents unless (a) the event giving rise to the
right to terminate is preceded by a Triggering Event, or (b) the receipt by MSB,
or the announcement by another person, of a proposal involving an Acquisition
Transaction
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or Tender Offer, unless the Agreement is earlier terminated by MSB, pursuant to
its right to terminate the Agreement, under the conditions of Section 6.1 of the
Agreement; or (iv) December 31, 2000.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of
this 24th day of March, 1999.
ATTEST: MUTUAL SAVINGS BANK, F.S.B.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Title: Secretary Its: Chief Executive Officer
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