EXHIBIT 10.1
STOCK OPTION AGREEMENT
THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THIS STOCK OPTION AGREEMENT ("AGREEMENT"), is made and entered into as
of the 31st day of August, 2004 by and between Heartland Bancshares, Inc.
("HEARTLAND"), an Indiana corporation, and Blue River Bancshares, Inc. ("BLUE
RIVER"), an Indiana corporation,
W I T N E S S E T H:
WHEREAS, Heartland and Blue River have entered into an Agreement of
Affiliation and Merger ("MERGER AGREEMENT") dated of even date herewith
contemporaneously with the execution of this Agreement. The Merger Agreement
provides for, among other items, the merger of Heartland and Blue River (the
"MERGER") and the conversion of each issued and outstanding share of common
stock of Heartland at the Effective Time (as defined in the Merger Agreement)
into the right to receive 2.54 shares of common stock of Blue River, as may be
adjusted under the Agreement, from Blue River; and
WHEREAS, Heartland has paid to Blue River the sum of One Hundred and
No/100 Dollars ($100.00) in consideration for the grant of the Option (as
hereinafter defined) by Blue River to Heartland, which has been granted to
further induce Heartland to enter into the Merger Agreement; and
WHEREAS, Heartland has advised Blue River that the grant by Blue River
of the Option pursuant to this Agreement is a condition to Heartland agreeing to
the terms of the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the cash
payment referenced therein, the receipt of which is hereby acknowledged, the
mutual covenants and obligations set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Grant of Option.
(a) Blue River hereby grants to Heartland an irrevocable
option (the "OPTION") to purchase up to six hundred seventy-seven
thousand eight hundred twenty-three (677,823) shares ("OPTION SHARES")
of common stock of Blue River (the "COMMON STOCK") at a price per
Option Share of Five and 62/100 Dollars (the "PURCHASE PRICE") on the
terms and conditions set forth in this Agreement; provided that, in no
event shall the
number of shares for which this Option is exercisable, together with
the number of shares beneficially owned by Heartland other than shares
held by Heartland or a subsidiary in a fiduciary capacity for a
customer as to which it has no equity interest ("FIDUCIARY SHARES"),
exceed 19.9% of Blue River's issued and outstanding shares of Common
Stock without giving effect to any shares subject or issued pursuant to
the Option.
(b) The number of shares of Common Stock subject to the Option
shall be increased or decreased, as appropriate, in the event that any
additional shares of Common Stock are issued or otherwise become
outstanding (other than pursuant to this Agreement or pursuant to an
event described in Section 8(a) of this Agreement) or existing shares
are redeemed, retired or otherwise become no longer outstanding after
the date of this Agreement so that, after any such issuance, redemption
or retirement, together with the number of shares previously issued
pursuant to this Agreement or otherwise beneficially owned by Heartland
or a subsidiary other than Fiduciary Shares, the number of shares of
Common Stock subject to the Option equals 19.9% of the number of shares
of Common Stock then issued and outstanding without giving effect to
any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be considered
to authorize Blue River to issue shares in breach of any provision of
the Merger Agreement.
2. Exercise of Option.
(a) The holder or holders of the Option (the "HOLDER") may
exercise the Option, in whole or part, if and when at any time both an
Initial Triggering Event (as defined below) and a Subsequent Triggering
Event (as defined below) shall have occurred prior to the occurrence of
an Exercise Termination Event (as defined below), provided that the
Holder shall have sent notice of such exercise (as required by Section
2 (f)) within six (6) months following such Subsequent Triggering Event
(or such later date as provided in Section 10).
(b) Each of the following shall be an "EXERCISE TERMINATION
EVENT" (i) consummation of the Merger at the Effective Time of the
Merger Agreement; (ii) termination of the Merger Agreement in
accordance with the provisions thereof if such termination occurs
before the occurrence of an Initial Triggering Event; and (iii) the
passage of twelve (12) months (or such longer period as is provided in
Section 10) after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event.
Notwithstanding anything to the contrary in this Agreement: (i) the
Option may not be exercised at any time when Heartland shall be in
material breach of any of its covenants or agreements contained in the
Merger Agreement such that Blue River shall then be entitled to
terminate the Merger Agreement as a result of such material breach; and
(ii) this Agreement shall automatically terminate upon the proper
termination of the Merger Agreement (x) by Blue River as a result of
the material breach by Heartland of its covenants or agreements
contained in the Merger Agreement, or (y) by Blue River or Heartland if
the approval by any federal or state governmental authority or
regulatory or administrative agency or commission (each a "GOVERNMENTAL
ENTITY") necessary to consummate the Merger shall have been denied by
final nonappealable action of such agency or authority.
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(c) The term "INITIAL TRIGGERING EVENT" shall mean any of the
following events or transactions occurring on or after the date of this
Agreement:
(i) Blue River or Shelby County Bank ("BLUE RIVER
SUBSIDIARY"), without having received Heartland's prior
written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as defined below) with
any person (for purposes of this Agreement, the term "person"
has the meaning given that term in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and the rules and regulations
thereunder) other than Heartland or any of its subsidiaries (a
"HEARTLAND SUBSIDIARY");
(ii) the board of directors of Blue River shall have
recommended that the shareholders of Blue River approve or
accept any Acquisition Transaction other than the Merger;
(iii) any person other than Heartland or any
Heartland Subsidiary shall have acquired beneficial ownership
or the right to acquire beneficial ownership of ten percent
(10%) or more of the outstanding shares of Common Stock (for
purposes of this Agreement, the term "BENEFICIAL OWNERSHIP"
has the meaning given that term in Section 13(d) of the
Exchange Act and the rules and regulations thereunder);
(iv) the shareholders of Blue River shall have voted
and failed to approve the Merger and the Merger Agreement at a
meeting that was held for that purpose or any adjournment or
postponement thereof, or such meeting shall not have been held
in violation of the Merger Agreement or shall have been
canceled prior to termination of the Merger Agreement if at
such meeting, or prior to such meeting (or if such meeting
shall not have been held or shall have been canceled, prior to
such termination), it shall have been publicly announced or
the shareholders of Blue River shall have been advised that
any person (other than Heartland or any Heartland Subsidiary)
shall have made a proposal to engage in an Acquisition
Transaction;
(v) the board of directors of Blue River shall have
failed to solicit proxies, consents or votes in favor of the
Merger Agreement and the Company Merger, or the board of
directors of Blue River shall not have recommended, or shall
have withdrawn or modified (or publicly announced its
intention to withdraw or modify) in any manner adverse in any
respect to Heartland its recommendation, that the shareholders
of Blue River approve the transactions contemplated by the
Merger Agreement at any meeting that was held for that
purpose, in anticipation of engaging in an Acquisition
Transaction (other than with Heartland or any Heartland
Subsidiary), or following a proposal to Blue River to engage
in an Acquisition Transaction, or Blue River or Blue River
Subsidiary shall have authorized, recommended or proposed (or
publicly announced or advised its shareholders of its
intention to authorize, recommend or propose) an agreement to
engage in an Acquisition Transaction with any person other
than Heartland or any Heartland Subsidiary;
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(vi) any person other than Heartland or any Heartland
Subsidiary shall have filed with the Securities and Exchange
Commission ("SEC") a registration statement or tender offer
materials with respect to a potential exchange or tender offer
that would constitute an Acquisition Transaction (or filed a
preliminary proxy statement with the SEC with respect to a
potential vote by its shareholders to approve the issuance of
shares to be offered in such an exchange or tender offer);
(vii) Blue River shall have willfully and materially
breached any covenant or obligation contained in the Merger
Agreement in anticipation of engaging in an Acquisition
Transaction (other than with Heartland or any Heartland
Subsidiary), and following such breach Heartland would be
entitled to terminate the Merger Agreement; or
(viii) any person other than Heartland or any
Heartland Subsidiary shall have filed an application or notice
with the applicable Governmental Entity under the Bank Holding
Company Act of 1956, the Federal Deposit Insurance Act, or
other applicable state or federal banking laws or regulations,
which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
For purposes of this Agreement, "ACQUISITION TRANSACTION" means: (a) a
merger, consolidation, share exchange or any similar transaction, involving Blue
River or Blue River Subsidiary other than the Merger; (b) a purchase, lease or
other acquisition of all or a substantial part of the assets or deposits of Blue
River or Blue River Subsidiary; (c) a purchase or other acquisition (including
by way of merger, consolidation, share exchange or otherwise) of securities
representing ten percent (10%) or more of the voting power of Blue River or Blue
River Subsidiary; or (d) any substantially similar transaction. In this
Agreement, the phrase "in anticipation of engaging in an Acquisition
Transaction" shall include, without limitation, any action taken by Blue River's
officers or board of directors after any written or oral, authorized or
unauthorized, proposal or expression of interest has been communicated to any
member of Blue River's management or board of directors concerning an
Acquisition Transaction that in any way would involve Blue River and such
proposal or expression of interest has not been withdrawn at the time of the
action.
(d) The term "SUBSEQUENT TRIGGERING EVENT" shall mean either
of the following events or transactions occurring after the date of
this Agreement:
(i) the acquisition by any person (other than
Heartland or any Heartland Subsidiary) of beneficial ownership
of twenty percent (20%) or more of the then outstanding Common
Stock; or
(ii) the consummation of the Acquisition Transaction
that constituted an Initial Triggering Event as described in
clause (i) of Section 2(c), except that the percentage
referred to for purposes of defining "Acquisition Transaction"
in clause (c) of that definition shall be twenty percent
(20%).
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(e) Blue River shall notify Heartland promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent Triggering
Event (collectively, "TRIGGERING EVENTS"). The giving of such notice by
Blue River shall not be a condition to the right of Holder to exercise
the Option.
(f) If Holder is entitled and wishes to exercise the Option
(or any portion thereof), it shall send to Blue River a written notice
(the date of such notice is referred to as the "NOTICE DATE")
specifying: (i) the total number of shares it will purchase pursuant to
such exercise; and (ii) a place and date not earlier than three
business days nor later than forty-five (45) business days from the
Notice Date for the closing of such purchase (the "CLOSING DATE");
provided, that if prior notification to or approval of any Governmental
Entity is required in connection with such purchase, Holder shall
promptly file the required notice or application for approval, shall
notify Blue River of such filing, and shall expeditiously process the
same and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be considered to occur on
the Notice Date relating thereto.
(g) At the closing referred to in Section 2(f), Holder shall
(i) pay to Blue River the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account
designated by Blue River and (ii) present and surrender this Agreement
to Blue River at its principal executive offices. Failure or refusal of
Blue River to designate such a bank account or accept surrender of this
Agreement shall not preclude Holder from exercising the Option.
(h) At the closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(g), Blue River
shall deliver to Holder a certificate or certificates representing the
number of shares of Common Stock purchased by Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of
Holder to purchase the balance of the shares subject to this Option.
(i) Certificates for Common Stock delivered at a closing under
this Agreement may be endorsed with a restrictive legend that shall
read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement, dated as of August 31, 2004, between the
registered holder hereof and Blue River Bancshares, Inc., 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 Blue River and will be
provided to the holder hereof without charge upon receipt by Blue River 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 "SECURITIES ACT"),
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if Holder shall have delivered to
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Blue River a copy of a letter from the staff of the SEC, or an opinion of
counsel, in form and substance reasonably satisfactory to Blue River, 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 certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference in the opinion of counsel to Holder; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(j) Upon the giving by Holder to Blue River of the written
notice of exercise of the Option provided for under Section 2(f) and
the tender of the applicable purchase price in immediately available
funds, Holder shall be considered, subject to the receipt of any
necessary regulatory approvals, to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding
that the stock transfer books of Blue River shall then be closed or
that certificates representing such shares of Common Stock shall not
then be actually delivered to Holder. Blue River 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,
issuance and delivery of stock certificates under this Section 2 in the
name of Holder or its assignee, transferee or designee.
(k) Notwithstanding any other provision of this Agreement to
the contrary, in no event shall Heartland (together with any other
Holders of the Option) purchase under the terms of this Agreement that
number of shares of Common Stock that have a "Spread Value" (as defined
below) in excess of the Base Surrender Price (as defined in Section 9).
For purposes of this Agreement, "SPREAD VALUE" means the difference
between (i) the product of (A) the sum of the total number of shares of
Common Stock that Heartland (together with any other Holders of the
Option) (1) intends to purchase upon exercise of the Option on the date
of exercise and (2) previously purchased pursuant to the prior exercise
of the Option, and (B) the average of the closing bid and asked prices
of Blue River Common Stock as quoted on Nasdaq at the close of trading
on the last trading day immediately preceding the date of exercise, and
(ii) the product of (A) the total number of shares of Common Stock
Heartland (together with any other Holders of the Option) (1) intends
to purchase upon exercise of the Option on the date of exercise and (2)
previously purchased pursuant to the prior exercise of the Option, and
(B) the applicable Option Price of such shares of Common Stock. If the
Spread Value exceeds the Base Surrender Price, the number of shares of
Common Stock that Heartland (together with any other Holders of the
Option) is entitled to purchase on the date of exercise shall be
reduced to the greatest number of shares permissible such that the
Spread Value equals or is less than the Base Surrender Price.
3. Covenants of Blue River. Blue River agrees: (i) that it shall at all
times maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option may be
exercised without additional authorization of Common Stock after giving
effect to all other options, warrants, convertible securities and other
rights to purchase Common Stock; (ii) that it will not, by amendment to
its Articles of Incorporation or through reorganization, consolidation,
merger, dissolution or
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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 under this Agreement by Blue
River; (iii) promptly to take all action as may from time to time be
required (including (x) complying with all applicable premerger
notification, reporting and waiting period requirements and (y) if,
under the applicable federal or state regulatory requirements or any
state or federal banking law, prior approval of or notice to any
Governmental Entity is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices
and providing such information to each such Governmental Entity as it
may require) to permit Holder to exercise the Option and Blue River
duly and effectively to issue shares of Common Stock pursuant to this
Agreement; and (iv) promptly to take all action provided in this
Agreement to protect the rights of Holder against dilution.
4. Exchange of Option. This Agreement (and the Option granted by this
Agreement) are exchangeable, without expense, at the option of Holder,
upon presentation and surrender of this Agreement at the principal
office of Blue River, for other Agreements providing for Options of
different denominations entitling Holder to purchase, on the same terms
and subject to the same conditions as are set forth in this Agreement,
in the aggregate the same number of shares of Common Stock subject to
this Option. The terms "Agreement" and "Option" as used in this
Agreement include any stock option agreements and related options for
which this Agreement (and the Option granted by this Agreement) may be
exchanged. Upon receipt by Blue River 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, Blue River 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 Blue River, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. Representations and Warranties of Blue River. Blue River hereby
represents and warrants to Heartland as follows:
(a) This Agreement and the consummation by Blue River of the
transactions contemplated hereby have been duly authorized and approved
by all necessary corporate action on the part of Blue River, have been
duly executed and delivered by an authorized officer of Blue River and
constitute a valid and binding obligation of Blue River.
(b) Blue River is an Indiana corporation duly organized and
validly existing under the laws of the State of Indiana and has all
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
(c) Blue River has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue the Option
Shares pursuant hereto. Blue River has taken all necessary corporate
action to authorize, reserve and permit it to issue, and at all times
from the date of this Agreement through the termination of this
Agreement in
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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 under this Agreement, and all such shares, upon
issuance pursuant to this Agreement, will be duly authorized, validly
issued, fully paid, and nonassessable, and will be delivered free and
clear of all claims, liens, encumbrances and security interests and not
subject to any preemptive rights.
(d) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will violate
or result in any violation of or be in conflict with, result in
acceleration or termination of or constitute a default under any term
or provision of the Articles of Incorporation or By-Laws of Blue River
or of any agreement, note, bond, indenture, instrument, obligation,
judgment, decree, order, binding upon or applicable to Blue River or
any Subsidiary or any of their respective properties or assets.
(e) Upon any exercise of the Option, whether in whole or in
part, Heartland shall, with respect to the Option Shares, (i) be
entitled to vote on all matters to come before the shareholders of Blue
River at any meeting thereof, and (ii) be entitled to the same
preferences, limitations and relative voting and other rights
(including dividend and distribution rights) as possessed by all other
holders of Blue River Common Stock.
(f) The representations and warranties of Blue River contained
herein are true, accurate and complete on and as of the date hereof in
all material respects, and shall survive the execution of this
Agreement.
6. Representations and Warranties of Heartland. Heartland hereby
represents and warrants to Blue River as follows:
(a) This Agreement and the consummation by Heartland of the
transactions contemplated hereby have been duly authorized and approved
by all necessary corporate action on the part of Heartland, have been
duly executed and delivered by an authorized officer of Heartland and
constitute a valid and binding obligation of Heartland. Heartland is a
corporation duly organized and validly existing under the laws of the
State of Indiana and has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
(b) Heartland is purchasing the Option, and will purchase any
shares of common stock of Blue River issued to Heartland upon exercise
of the Option, not with a view to the public distribution thereof and
will not sell, assign or transfer the Option or any such shares of
common stock issued to Heartland upon exercise of the Option except in
compliance with all applicable laws and regulations and a legend to
such effect shall be noted on the certificate or certificates
representing the Option Shares issued upon exercise of the Option and
stock transfer restrictions may be given with respect thereto to any
transfer agent.
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(c) The representations and warranties of Heartland contained
herein are true, accurate and complete on and as of the date hereof and
shall survive the execution of this Agreement.
7. Registration Rights. Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event, Blue River
shall, at the request of Heartland delivered within twelve (12) months
(or such later period as provided in Section 10) of such Subsequent
Triggering Event (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or owner of 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/or issuable pursuant to
this Option and shall use its reasonable efforts to cause such
registration statement to become effective and remain current to permit
the sale or other disposition of any shares of Common Stock issued upon
total or partial exercise of this Option ("OPTION SHARES") in
accordance with any plan of disposition requested by Heartland. Blue
River will use its reasonable efforts to cause such registration
statement promptly to become effective and then to remain effective for
such period not in excess of one hundred eighty (180) days from the day
such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other
dispositions. Heartland shall have the right to demand two such
registrations. Blue River shall bear the costs of the first of the two
such registrations (including, without limitation, Blue River's
attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Heartland's counsel related thereto). Notwithstanding
the above, if, at the time of any request by Heartland for registration
of Option Shares as provided above, Blue River is in the process of
registration with respect to an underwritten public offering by Blue
River of shares of Common Stock, and if in the good faith judgment of
the managing underwriter or managing underwriters (or, if none, the
sole underwriter or underwriters) of such offering, the offer and sale
of the Option Shares would interfere with the successful marketing of
the shares of Common Stock offered by Blue River, the number of Option
Shares otherwise to be covered in the registration statement
contemplated by this Section 7 may be reduced; provided, that, after
any such required reduction, the number of Option Shares included in
such offering for the account of Holder shall constitute at least
twenty-five percent (25%) of the total number of shares to be sold by
Holder and Blue River in the aggregate; provided further, that if such
reduction occurs, then Blue River shall file a registration statement
(which shall not count as one of Holder's two demand registrations) for
the balance of the Option Shares subject to the registration demand as
promptly as practical as to which no reduction pursuant to this Section
7 shall be permitted or occur and, if such required reduction occurs in
connection with the Holder's first demand registration, the twelve (12)
month period referred to in the first sentence of this Section shall be
increased to twenty-four (24) months for the Holder's second demand
registration. Each such Holder shall provide all information reasonably
requested by Blue River for inclusion in any registration statement to
be filed to register Option Shares. If requested by any such Holder in
connection with such registration, Blue River shall become a party to
any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in
such underwriting
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agreements for an issuer. Upon receiving any request under this Section
7 from any Holder, Blue River agrees to send a copy thereof to any
other person known to Blue River to be entitled to registration rights
under this Section 7, in each case by promptly mailing the same,
postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary in this
Agreement, in no event shall the number of registrations that Blue
River is obligated to effect be increased by reason of the fact that
there shall be more than one Holder as a result of any assignment or
division of this Agreement.
8. Adjustment Upon Changes in Capitalization.
(a) In the event of any change in, or distributions in respect
of, the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges
of shares, or the like (including any stock dividend split-up or
subdivision announced prior to the date hereof but not yet effective),
the type and number of shares of Common Stock purchasable upon exercise
hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock
are to be issued or otherwise become outstanding as a result of any
such change (other than pursuant to an exercise of the Option), the
number of Option Shares that remain subject to the Option shall be
increased so that, after such issuance and together with Option Shares
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. Nothing contained in this Section 8 or elsewhere in this
Agreement shall be deemed to authorize Blue River to breach any
provision of the Merger Agreement.
(b) Whenever the number of Option Shares purchasable upon
exercise hereof is adjusted as provided in this Section 8, the Purchase
Price shall be adjusted by multiplying the Purchase Price by a
fraction, the numerator of which shall be equal to the number of Option
Shares purchasable prior to the adjustment and the denominator of which
shall be equal to the number of shares purchasable after the
adjustment.
9. Right of Repurchase; Cash Surrender Right.
(a) At any time after the occurrence of a Repurchase Event
(defined below): (i) at the request of Holder, delivered prior to an
Exercise Termination Event (or such later period as provided in Section
10), Blue River (or any successor to Blue River) shall repurchase the
Option from Holder at a price (the "OPTION REPURCHASE PRICE") equal to
the amount by which (x) the Market/Offer Price (as defined below)
exceeds (y) the Option Price, multiplied by the number of shares for
which this Option may then be exercised; and (ii) at the request of the
owner of Option Shares from time to time (the "OWNER"), delivered prior
to an Exercise Termination Event (or such later period as provided in
Section 10), Blue River (or any successor to Blue River) shall
repurchase such number of the Option Shares from Owner as Owner shall
designate at a price (the "OPTION SHARE REPURCHASE PRICE") equal to the
Market/Offer Price multiplied by the number of Option Shares so
designated. The term "MARKET/OFFER PRICE" shall mean the highest of:
(i) the price per share of Common Stock at which a tender or exchange
offer
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therefor has been made after the date hereof; (ii) the price per share
of Common Stock to be paid by any third party pursuant to an agreement
entered into with Blue River after the date hereof; (iii) the highest
average of the average closing bid and asked prices for shares of
Common Stock reported on Nasdaq for a five (5) consecutive trading day
period within the ninety (90) calendar days immediately preceding the
date Holder gives notice of the required repurchase of this Option or
Owner gives notice of the required repurchase of Option Shares, as the
case may be; or (iv) in the event of a sale of all or any substantial
part of the assets or deposits of Blue River or Blue River Subsidiary,
the sum of the net price paid in such sale for such assets or deposits
and the current market value of the remaining assets of Blue River as
determined by a nationally recognized investment banking firm selected
by Holder or Owner, as the case may be, and reasonably acceptable to
Blue River, divided by the number of shares of Common Stock of Blue
River outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by an investment banking firm selected by Holder or Owner,
as the case may be, and reasonably acceptable to Blue River.
(b) Holder or Owner, as the case may be, may exercise its
right to require Blue River to repurchase the Option and any Option
Shares pursuant to this Section 9 by surrendering for such purpose to
Blue River, 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 Holder or Owner, as the case may be,
elects to require Blue River to repurchase this Option and/or the
Option Shares in accordance with the provisions of this Section 9. As
promptly as practicable, and in any event within five business days
after the surrender of the Option and/or certificates representing
Option Shares and the receipt of such notice or notices relating
thereto, Blue River shall deliver or cause to be delivered in
immediately available funds to Holder the Option Repurchase Price
and/or to Owner the Option Share Repurchase Price therefor or the
portion thereof that Blue River is not then prohibited under applicable
law and regulation from so delivering.
(c) To the extent that Blue River is prohibited under
applicable law or regulation from repurchasing the Option and/or the
Option Shares in full, Blue River shall immediately so notify Holder
and/or Owner and thereafter deliver or cause to be delivered in
immediately available funds, from time to time, to Holder and/or 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 Blue River is no longer so prohibited; provided, that if Blue
River at any time after delivery of a notice of repurchase pursuant to
Section 9(b) is prohibited under applicable law or regulation from
delivering to Holder and/or Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price, respectively,
in full (and Blue River hereby undertakes to use its reasonable efforts
to obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish such
repurchase), Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Blue River shall promptly:
(i) deliver to Holder and/or Owner, as appropriate, that portion of the
Option Repurchase
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Price or the Option Share Repurchase Price that Blue River is not
prohibited from delivering; and (ii) deliver, as appropriate, either
(A) to Holder, a new Agreement evidencing the right of Holder to
purchase that number of shares of Common Stock obtained by multiplying
the number of shares of Common Stock for which the surrendered
Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion of the Option Repurchase Price
previously delivered to Holder and the denominator of which is the
Option Repurchase Price, and/or (B) to Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the
notice by Blue River described in the first sentence of this Section
9(c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, Holder shall
nonetheless have the right to exercise the Option until the expiration
of such thirty (30) day period.
(d) For purposes of this Section 9, a "REPURCHASE EVENT" shall
be considered to have occurred upon the occurrence of any of the
following events or transactions after the date of this Agreement and
prior to the occurrence of an Exercise Termination Event (or such later
date as provided in Section 10):
(i) the acquisition by any person (other than
Heartland or any Heartland Subsidiary) of beneficial ownership
of fifty percent (50%) or more of the then outstanding Common
Stock; or
(ii) the consummation of any Acquisition Transaction
described in clause (i) of Section 2(c), except that the
percentage referred to for purposes of defining "ACQUISITION
TRANSACTION" in clause (c) of that definition shall be fifty
percent (50%).
(e) Heartland may, at any time following a Repurchase Event
that occurs prior to the occurrence of an Exercise Termination Event
(or such later period as provided in Section 10), relinquish the Option
(together with any Option Shares issued to and then owned by Heartland)
to Blue River in exchange for a cash fee equal to the Surrender Price;
provided, that Heartland may not exercise its rights pursuant to this
Section 9(e) if Blue River has repurchased the Option (or any portion
thereof) or any Option Shares pursuant to Section 9(a). The "Surrender
Price" shall be equal to $1,000,000 (the "BASE SURRENDER PRICE") (i)
plus, if applicable, Heartland's purchase price with respect to any
Option Shares and (ii) minus, if applicable, the excess of (A) the net
cash amounts, if any, received by Heartland pursuant to the sale of
Option Shares (or any other securities into which such Option Shares
were converted or exchanged) to any party, over (B) the Option Price.
(f) Heartland may exercise its right to relinquish the Option
and any Option Shares pursuant to Section 9(e) by surrendering to Blue
River, at its principal office, a copy of this Agreement together with
certificates for Option Shares, if any, accompanied by a written notice
stating (i) that Heartland elects to relinquish the Option and Option
Shares, if any, in accordance with the provisions of Section 9(e) and
(ii) the Surrender
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Price. The Surrender Price shall be payable in immediately available
funds on or before the second business day following receipt of such
notice by Blue River.
(g) To the extent that Blue River is prohibited under
applicable law or regulation from paying the Surrender Price to
Heartland in full, Blue River shall immediately so notify Heartland and
thereafter deliver or cause to be delivered, from time to time, to
Heartland, the portion of the Surrender Price that it is no longer
prohibited from paying, within five business days after the date on
which Blue River is no longer so prohibited; provided, that if Blue
River at any time after delivery of a notice of surrender pursuant to
Section 9(f) is prohibited under applicable law or regulation from
paying to Heartland the Surrender Price in full: (i) Blue River shall
(A) use its reasonable efforts to obtain all required regulatory and
legal approvals and to file any required notices as promptly as
practicable in order to make such payments, (B) within five (5) days of
the submission or receipt of any documents relating to any such
regulatory and legal approvals, provide Heartland with copies of the
same, and (C) keep Heartland advised of both the status of any such
request for regulatory and legal approvals, as well as any discussions
with any relevant regulatory or other third party reasonably related to
the same; and (ii) Heartland may revoke such notice of surrender by
delivery of a notice of revocation to Blue River and, upon delivery of
such notice of revocation, the date of any Exercise Termination Event
shall be extended to a date six (6) months from the date on which the
Exercise Termination Event would have occurred if not for the
provisions of this Section 9(g) (during which period Heartland may
exercise any of its rights under this Agreement, including any and all
rights pursuant to this Section 9).
10. Extension of Certain Time Periods. The time periods for the
exercise of certain rights under Sections 2, 7, 9, and 11 shall be
extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder or
Owner, as the case may be, is using reasonable efforts to obtain such
regulatory approvals) and for the expiration of all statutory waiting
periods; (ii) to the extent necessary to avoid liability under Section
16(b) of the Exchange Act by reason of such exercise; and (iii) in the
event that an Initial Triggering Event may occur pursuant to Section
2(c)(vii) of this Agreement, after the passage of a period of time or
cure period under the Merger Agreement, for a period of time equal to
any notice or cure periods provided to Blue River in connection with
any breach that would permit Heartland to terminate the Merger
Agreement.
11. Assignment. Neither party to this Agreement may assign any of its
rights or obligations under this Agreement or the Option created under
this Agreement to any other person without the express written consent
of the other party, except that if a Subsequent Triggering Event shall
have occurred prior to an Exercise Termination Event, Heartland,
subject to the express provisions of this Agreement, may assign in
whole or in part its rights and obligations under this Agreement;
provided, that until the date thirty (30) days following the date on
which the last of all applicable Governmental Entities has approved an
application by Heartland to acquire the shares of Common Stock subject
to the Option, Heartland may not assign its rights under the Option
except in: (i) a widely dispersed public distribution; (ii) a private
placement in which no one party acquires the right to purchase in
excess of two percent (2%) of the voting shares of Blue River; (iii) an
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assignment to a single party (such as a broker or investment banker)
for the purpose of conducting a widely dispersed public distribution on
Heartland's behalf; or (iv) any other manner approved by all applicable
Governmental Entities.
12. Cooperation. Heartland and Blue River each will use its reasonable
efforts to make all filings with, and to obtain consents of, all third
parties and Governmental Entities necessary to the consummation of the
transactions contemplated by this Agreement.
13. Injunction; Specific Performance. Each of the parties hereto hereby
acknowledges that the other party will suffer irreparable damage and
injury and will not have an adequate remedy at law in the event of any
breach of any of its obligations under this Agreement. Accordingly, in
the event of such a breach or of a threatened or attempted breach, in
addition to all other remedies to which each party hereto is entitled
to at law, each party shall be entitled to a temporary and permanent
injunction (without the necessity of showing any actual damage) or a
decree of specific performance of the provisions hereof, and no bond or
other security shall be required in that connection. The remedies
described in this Section 13 shall not be exhaustive and shall be in
addition to all other remedies that either party may have at law, in
equity or otherwise.
14. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
(b) This Agreement may be modified, amended or supplemented
only by a written agreement executed by the parties hereto.
(c) All notices, requests and other communications hereunder
shall be in writing and shall be delivered by hand, by certified United
States mail (return receipt requested, first-class postage pre-paid) or
by overnight express receipted delivery service (i) to Blue River
Bancshares, Inc., at 00 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxx
00000, attention: Xxxxxxx Xxxxxxx, III, and (ii) to Heartland
Bancshares, Inc., at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000,
attention: Xxxxx Xxxxxxx.
(d) In case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein. All provisions
of this Agreement are severable from one another, and the
unenforceability or invalidity of any provision of this Agreement shall
not affect the validity or enforceability of the remaining provisions
of this Agreement. Should any court or government agency or authority
interpreting this Agreement deem any provision to be unreasonably broad
or unenforceable, the parties intend for such court, agency or
authority, to the greatest extent possible, to reduce the breadth,
scope or amount of the provision to the maximum legally allowable
parameters or amount rather than deeming such provision completely
unenforceable or invalid. If for
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any reason such court, agency or authority determines that Holder is
not permitted to acquire, or Blue River is not permitted to repurchase
pursuant to Section 9, the full number of shares of Common Stock
provided in Section 1 (as such number may be adjusted pursuant to this
Agreement), it is the express intention of Blue River to allow Holder
to acquire or to require Blue River to repurchase such lesser number of
shares as may be permissible, without any amendment or modification of
this Agreement.
(e) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
(f) The headings in this Agreement have been inserted solely
for convenience and ease of reference and shall not be considered in
the interpretation or construction of this Agreement.
(g) This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana without giving effect
to the choice of law principles thereof.
(h) This Agreement supersedes all other prior understandings,
commitments, representations, negotiations or agreements, whether oral
or written, between the parties hereto relating to the matters
contemplated by this Agreement and constitutes the entire agreement
between the parties hereto relating to the subject matter hereof.
(i) No waiver by any party hereto of any right or provision of
this Agreement shall be effective unless the same shall be in writing
and signed by the waiving party. The failure in one or more instances
of any party to enforce any term or provision of this Agreement or to
exercise any right or remedy shall not prohibit any subsequent
enforcement or exercise thereof or constitute a waiver of any such
term, provision, right or remedy. The waiver by any party hereto of a
breach of or noncompliance with any term, covenant, restriction or
provision of this Agreement shall not operate or be construed as a
continuing waiver or as a waiver of any other or subsequent breach or
noncompliance hereunder.
(j) This Agreement is the product of negotiation by both
parties hereto and shall be deemed to have been drafted by both parties
hereto. This Agreement shall be construed in accordance with the fair
meaning of its provisions and its language shall not be strictly
construed against, nor shall ambiguities be resolved against, either
party.
(k) For purposes of this Agreement, the term "ENTITY" shall
mean any individual, person, proprietorship, partnership, limited
liability company, corporation, organization, firm, business, joint
venture, association, trade group, trust or other entity whatsoever.
(l) Except as otherwise expressly provided by this Agreement,
each party shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated under
this Agreement, including fees and expenses of its own financial
consultants, investment bankers, accountants, and counsel.
* * * * * *
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IN WITNESS WHEREOF, the undersigned have executed, entered into and
delivered this Agreement as of the day and year first above written.
BLUE RIVER BANCSHARES, INC.
By: /s/ Xxxxxxx Xxxxxxx, III
-----------------------------------
Xxxxxxx Xxxxxxx, III,
Chairman and Chief Executive
Officer
ATTEST:
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx, Secretary
HEARTLAND BANCSHARES, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx, President
ATTEST:
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx, Secretary
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