STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made by and among MGN
Group LLC ("Seller") and First Mutual Bancshares Incorporated, a financial
holding company organized under the laws of the state of Washington
("Purchaser"). Seller is currently the owner of 1,019,256 shares of common
stock, par value $1.00 per share ("Stock"), of Purchaser and desires to sell the
Stock to Purchaser on the terms and conditions set forth in this Agreement.
Purchaser desires to purchase such Stock on the terms and conditions set forth
in this Agreement. Purchaser has signed a letter of intent dated May 30, 2002
("Letter of Intent") with Bear ▇▇▇▇▇▇▇ & Co. Inc. in connection with a proposed
issue of $9 million of Trust Preferred Securities (the "Trust Preferred
Financing"). In consideration of the mutual promises set forth herein as well
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree:
1. Purchase and Sale
(a) At the Closing as set forth below, Seller will sell and Purchaser
will purchase 1,019,256 shares of Stock from the Sellers for the price of $15.50
per share for an aggregate price of $15,798,468. Such purchase price shall be
paid for in full, by certified or bank cashier's check, at the Closing. At the
Closing Seller shall sell, convey, transfer and deliver to Purchaser all right,
title and interest in and to the Stock, free and clear of all liens, security
interests, claims, charges and encumbrances of any nature whatsoever, and
deliver to Purchaser certificates representing the Stock, duly executed in blank
or accompanied by duly executed instruments of transfer. In the event there is
any change in the Stock through the declaration of a stock dividend or other
extraordinary non-cash dividend, through a stock split, through a
recapitalization or through a combination or exchange of shares, the number of
shares and the purchase price for each share shall be appropriately adjusted.
Seller shall be entitled to receive and retain any cash dividends declared in
respect of the Stock prior to the Closing, whether or not such dividends are
paid prior to Closing, provided that either (x) the record date is on or before
June 12, 2002 or (y) Seller is the holder of record on the record date
established for the determination of holders of common stock entitled to receive
such dividend.
(b) Notwithstanding Section 1(a) above, in the event any Significant
Transaction (as defined at Section 3(a) below), is proposed or is contemplated
by Purchaser or any of its subsidiaries prior to the Closing, which would
involve the acquisition by any person (including without limitation by way of
tender offer) of a majority of the common shares of the Purchaser or a majority
of the assets of Purchaser or any of its subsidiaries, or any merger,
consolidation, or business combination with, or any recapitalization or
restructuring or any similar transaction involving the Purchaser or any of its
subsidiaries, upon notice to Purchaser by Seller, the obligation of the Seller
to sell it Stock pursuant to this Agreement shall be suspended for a period of
time (the "Suspension Period") ending on the date 10 business days following the
date of the consummation of such proposed transaction or its earlier termination
without consummation. Prior to the expiration of the Suspension Period, Seller
shall have the right to elect to participate in such transaction on the same
terms as the other holders of common shares. If Seller elects to participate in
such transaction, and such transaction closes, Seller's obligations hereunder
shall be terminated. Purchaser agrees to give prompt written notice to Seller of
any Significant Transaction that is proposed or contemplated at any time prior
to closing.
2. Closing
Subject to Section 1(b), the Closing will occur at the offices of
▇▇▇▇▇▇ Pepper & Shefelman, Seattle,Washington on a date five (5) business days
after Purchaser has given notice to Seller that it has completed the Trust
Preferred Financing, or at such other time as the Purchaser and Seller agree
upon prior to such date. In the event of the occurrence of a Suspension Period,
unless Seller's obligations hereunder are terminated in connection with the
Significant Transaction, the Closing shall occur on the date five business days
after the termination of such Suspension Period or after the completion of the
Trust Preferred Financing, whichever is later, or at such other time as the
Purchaser and Seller agree prior to such date. Purchaser agrees to utilize its
best efforts to close the Trust Preferred Financing as soon as possible and no
later than August 1, 2002 and agrees to accept the terms proposed by Bear
▇▇▇▇▇▇▇ for the Trust Preferred Financing in the Letter of Intent (a copy of
which has been provided to Seller) and agrees that the only contingency to the
close of the Trust Preferred Financing shall be the refusal of Bear ▇▇▇▇▇▇▇ to
close such Trust Preferred Financing.
3. Representations, Warranties and Agreements of Purchaser. Purchaser
represents to, warrants to and agrees with Seller:
a. Disclosure. Purchaser has filed all reports required to be filed by
Section 13 of the Securities Exchange Act of 1934, as amended and the
regulations promulgated thereunder (the "Exchange Act") during the preceding 12
months, and at the time of filing, such reports complied in all material
respects with the requirements of the Exchange Act. None of Purchaser or any of
its affiliates is currently engaged in any ongoing discussions or has any
current intent to engage in any discussions with any person for the purposes of
any acquisition or purchase of a majority of the stock or assets of Purchaser or
any of its subsidiaries or, other than the Trust Preferred Financing, any public
offering, private placement or other material purchase or sale of any equity
securities of the Purchaser or any of its subsidiaries (including without
limitation by way of tender offer), or any merger, consolidation, or business
combination with, or any recapitalization or restructuring or any similar
transaction involving the Purchaser or any of its subsidiaries (each of the
foregoing being referred to as a "Significant Transaction"), and neither the
Purchaser nor any of its affiliates has retained, is currently engaged in any
ongoing discussions to retain or has any current intent to engage in any
discussions to retain any investment banker or financial advisor in connection
with any Significant Transaction.
b. Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the state
of Washington.
c. Authorization. Purchaser has all the requisite right, power and
authority to execute, deliver and perform this Agreement, purchase the Stock and
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly authorized, executed and delivered by Purchaser and constitutes the
valid and binding obligation of Purchaser, fully enforceable in accordance with
its terms. Performance by the Purchaser in accordance with the terms of this
Agreement will not violate RCW23B.06.400. No vote of the stockholders of
Purchaser is required, under applicable laws, rules and regulations and
applicable listing requirements, in connection with Purchaser's purchase of the
Stock.
d. No Finder. Purchaser has not taken any action which would give to any
firm, corporation, agency or other person a right toa finder's fee or any type
of brokerage commission in relation to or in connection with the purchaser of
the Stock.
e. No Violations; Approvals. The execution, delivery and performance by
Purchaser of this Agreement and the compliance with the provisions hereof do not
violate, conflict with or constitute or result in a breach of or default under
(or an event which with notice or passage of time or both would constitute a
default) or give rise to any right of termination, cancellation or acceleration
under (i) the Articles of Incorporation or bylaws of the Purchaser, (ii)
applicable law, statute, rule or regulation, or any ruling, writ, injunction,
order, judgment or decree of any court, regulatory body, administrative agency
or other regulatory body applicable to the Purchaser or any of its properties or
assets or (iii) any contract or agreement affecting the Purchaser. No consent,
approval, authorization or other order of any third party, or any court,
regulatory body, administrative agency or other governmental or other regulatory
body is required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement, except for any
appropriate approvals from the Federal Reserve Board. Purchaser shall take such
action as may be necessary to obtain any such required approvals or
non-objections necessary and to provide appropriate notices regarding the
purchase of Stock prior to Closing.
4. Representations, Warranties and Agreements of Seller. Seller represents
to, warrants to and agrees with Purchaser:
a. Title to Shares. Seller is the record and beneficial owner of and has
legal and valid title to the Stock free and clear of all rights of repurchase,
rights of first refusal or any other rights of any third party, liens, pledges,
charges, claims and other encumbrances actual or, to its knowledge, alleged.
Delivery of the Stock to Purchaser at the Closing pursuant to Section 2 of this
Agreement will transfer to Purchaser legal and valid title to the Stock, free
and clear of any liens, pledges, charges, claims or other encumbrances.
b. Authorization. Subject to the approval of the Board of Managers of
Seller, and subject to any approval that may be required from the Federal
Reserve Board, Seller has all requisite right, power and authority to execute,
deliver and perform this Agreement, transfer and deliver the Stock and to
consummate the transactions contemplated hereby. Subject to the approval of
Seller's Board of Managers and any approval that may be required from the
Federal Reserve Board, this Agreement has been duly and validly authorized,
executed and delivered by Seller and constitutes the valid and binding
obligation of Seller, fully enforceable in accordance with its terms. Receipt of
the approval of the Board of Managersof Seller is a condition to Seller's
obligations hereunder, provided that Purchaser may terminate this Agreement if
such approval has not been obtained prior to June 10, 2002. Receipt of any
required approval from the Federal Reserve Board is also a condition to Seller's
obligation hereunder and Seller agrees to use its reasonable best efforts to
obtain any such approval.
c. No Finder. Seller has not taken any action which would give to any firm,
corporation, agency or other person a right to a finder's fee or any type of
brokerage commission in relation to or in connection with the purchase of the
Stock.
5. Expenses
Each party shall be responsible for its own costs and expenses in
connection with this transaction; provided, that the prevailing party in any
action or claim based upon the breach the representations and warranties or
brought to enforce the compliance with the agreements contained herein shall be
entitled to recover the amount of any liabilities or expenses, including any
legal or other fees or expenses reasonably incurred by such party, in connection
with any such action or claim.
6. Termination
(a) In addition to its rights under Section 1(b), Seller may, at its
sole discretion, terminate this Agreement only if the Closing has not occurred
by August 1, 2002. Either party may terminate this Agreement if the
representations and warranties made by the other party in this Agreement are
false and, if such falsity is susceptible of cure, such falsity has not been
cured within ten (10) days of notice by the terminating party to the other
party.
(b) The obligations of each party to proceed with Closing pursuant to
this Agreement is subject , in addition to other conditions that may be
specified herein, to the following conditions:
(i) The representations and warranties of the other party contained herein
shall be true and correct on and as of the date of Closing; and
(ii) There shall not be then pending any order or injunction preventing the
consummation of the transactions contemplated by this Agreement.
7. Notices
All notices, requests, demands or other communications which are
required to be or may be given under this Agreement shall be in writing and
shall be deemed to have been given when delivered in person or transmitted by
facsimile or certified mail, postage prepaid, return receipt requested, to the
party to whom the same is so given or made,
if to the Seller, to
MGN Group LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
if to the Purchaser, to
First Mutual Bancshares Incorporated
▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, President
or to such other addresses either party may designate by
giving notice in writing to the other party.
8. Public Announcements
The parties shall cooperate in connection with the issuance of a
mutually agreeable press release or other public announcement to be issued
promptly following execution of this Agreement. Other than the announcement
contemplated by the foregoing sentence and except as required by law, neither
party shall make any public announcement or disclosure in respect of this
Agreement or the transactions, without the prior written consent of the other.
Prior to making any announcement or disclosure that a party believes is required
by applicable law, the party making such announcement or disclosure shall
consult with the other party regarding the contents of the same.
9. Entire Agreement, Amendment
This Agreement constitutes the entire Agreement among the parties and
supersedes any prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof and may not be amended,
modified or terminated unless by a written instrument executed by the parties
sought to be bound.
10. Successors and Assigns
This Agreement shall inure to the benefit of the successors and assigns
of the Purchaser and Seller and be binding upon Purchaser and Seller, and their
respective successors and assigns.
11. Third Parties
Nothing in this Agreement, whether express or implied, is intended to
confer any right or remedies on any person other than the parties to this
Agreement, nor is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third party, nor shall any provision give any
third party any right of subrogation or action against any party to this
Agreement.
12. Jurisdiction, Venue and Governing Law
This Agreement shall be construed as to both validity and performance
and enforced in accordance with and governed by the internal laws of the State
of Washington. The parties agree that they shall not bring any action arising
out of this Agreement or the transactions contemplated hereby, in any state or
federal court other than any state or federal court of competent jurisdiction
sitting within King County, Washington.. In the event of any action arising out
of this Agreement or the transactions contemplated hereby, the parties agree to
the exclusive jurisdiction of any state or federal court of competent
jurisdiction sitting in King County, Washington. The parties hereby irrevocably
waive any objection, including, but not limited to, any objection to the laying
of venue or based on the grounds of forum non conveniens, which they may now or
hereafter have to the bringing of any such action in such jurisdiction.
13. Survival
The representations, warranties, covenants and agreements set for in
this Agreement will survive the Closing of the transaction contemplated in this
Agreement. The representations and warranties in this Agreement shall be deemed
made again on and as of the Closing.
14. Time is of the Essence
Time is of the essence in this Agreement.
15. Further Assurances
Seller will execute and deliver such further instruments of conveyance
and transfer and take such additional actions as Purchaser may reasonably
request to effect, consummate, confirm or evidence the transactions contemplated
in this Agreement.
16. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to constitute an original and shall become effective when
each of the parties hereto has signed and delivered to the other parties a copy
of this Agreement, whether or not all parties have signed the same copy.
EXECUTED THIS 31st day of May, 2002.
PURCHASER: FIRST MUTUAL BANCSHARES
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its President and CEO
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SELLER: MGN GROUP LLC
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Its Manager
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