<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MSB Financial Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
September 26, 1997
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of MSB Financial,
Inc. (the "Corporation"), we cordially invite you to attend the Annual Meeting
of Shareholders of the Corporation. The meeting will be held at 10:30 a.m.
local time, on October 28, 1997 at Schuler's Restaurant, located at 115 South
Eagle Street, Marshall, Michigan. This annual meeting will include
management's report to you on the Corporation's 1997 financial and operating
performance.
An important aspect of the annual meeting process is the annual
shareholder vote on corporate business items. I urge you to exercise your
rights as a shareholder to vote and participate in this process. In addition
to the election of two directors and the ratification of the appointment of
auditors, shareholders are being asked to consider and vote on a proposal to
ratify the adoption of the 1997 Stock Option and Incentive Plan. The Board has
carefully considered this proposal and believes that its approval will enhance
the ability of the Corporation to recruit and retain quality management.
Accordingly, your Board of Directors unanimously recommends that you vote For
the proposal.
We encourage you to attend the Meeting in person. Whether or not you
plan to attend, however, PLEASE READ THE ENCLOSED PROXY STATEMENT AND THEN
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING
POSTPAID RETURN ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE. This will save the
Corporation additional expense in soliciting proxies and will ensure that your
shares are represented at the Meeting.
Your Board of Directors and management are committed to the continued
success of MSB Financial, Inc., and the enhancement of your investment. As
President and Chief Executive Officer, I want to express my appreciation for
your confidence and support.
Very truly yours,
CHARLES B. COOK
President and Chief Executive Officer
<PAGE> 3
MSB FINANCIAL, INC.
107 North Park Street
Marshall, Michigan 49068
(616) 781-5103
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on October 28, 1997
Notice is hereby given that the Annual Meeting of Shareholders of MSB
Financial, Inc. (the "Corporation") will be held at Schuler's Restaurant,
located at 115 South Eagle Street, Marshall, Michigan, on October 28, 1997, at
10:30 a.m. local time.
A PROXY CARD AND A PROXY STATEMENT FOR THE MEETING ARE ENCLOSED.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Corporation;
2. The approval of the adoption of the 1997 Stock Option and
Incentive Plan;
3. The ratification of the appointment of Crowe, Chizek and
Company LLP as independent auditors for the Corporation for
the fiscal year ending June 30, 1998; and
such other matters as may properly come before the Meeting, or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposal at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Shareholders of record at the close of business on September 17,
1997, are the shareholders entitled to vote at the Meeting, and any
adjournments thereof. A complete list of shareholders entitled to vote at the
Meeting will be available for inspection by shareholders at the offices of the
Corporation during the ten days prior to the Meeting as well as at the Meeting.
You are requested to complete, sign and date the enclosed form of
Proxy which is solicited on behalf of the Board of Directors, and to mail it
promptly in the enclosed envelope. The Proxy will not be used if you attend
and vote at the Meeting in person.
By Order of the Board of Directors
Charles B. Cook
President and Chief Executive Officer
Marshall, Michigan
September 26, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE> 4
MSB FINANCIAL, INC.
107 North Park Street
Marshall, Michigan 49068
(616) 781-5103
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 28, 1997
--------------------
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of MSB Financial, Inc. (the "Corporation")
of proxies to be used at the Annual Meeting of Shareholders of the Corporation
(the "Meeting"), to be held at Schuler's Restaurant, located at 115 South Eagle
Street, Marshall, Michigan, on October 28, 1997, at 10:00 a.m. local time, and
all adjournments of the Meeting. The accompanying Notice of Meeting and this
Proxy Statement are first being mailed to shareholders on or about September
26, 1997. Certain of the information provided herein relates to Marshall
Savings Bank, F.S.B. (the "Bank"), a wholly-owned subsidiary of the
Corporation.
At the Meeting, shareholders of the Corporation are being asked to
consider and vote upon the election of two directors of the Corporation,
approval of the adoption of the Corporation's 1997 Stock Option and Incentive
Plan (the "1997 Stock Option Plan") and ratification of the appointment of
Crowe, Chizek and Company LLP as the Corporation's independent auditors for the
fiscal year ending June 30, 1998.
PROXIES AND PROXY SOLICITATION
If a shareholder properly executes the enclosed proxy distributed by
the Corporation, the proxies named will vote the shares represented by that
proxy at the Meeting. Where a shareholder specifies a choice, the proxy will
be voted in accordance with the shareholder's instructions. Where no specific
direction is given, the proxies will vote the shares "FOR" the election of
management's nominees for directors of the Corporation, "FOR" adoption of the
1997 Stock Option Plan and "FOR" the appointment of Crowe, Chizek and Company
LLP as auditors for the fiscal year ending June 30, 1998. As to any other
other matters presented at the Meeting, the shares for which proxies have been
received will be voted in accordance with the discretion of the proxies.
Any proxy given pursuant to this solicitation or otherwise may be
revoked by the shareholder giving it at any time before it is voted by
delivering to the Secretary of the Corporation at the above address, on or
before the taking of the vote at the Meeting, a written notice of revocation
bearing a later date than the proxy or a later dated proxy relating to the same
shares of common stock of the Corporation (the "Common Stock"), or by attending
the Meeting and voting in person. Attendance at the Meeting will not in itself
constitute the revocation of a proxy.
The cost of solicitation of proxies will be borne by the Corporation.
The Corporation will reimburse brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in sending proxy
materials to the beneficial owners of Common Stock. The Corporation has
retained Regan & Associates, Inc. to assist in the solicitation of proxies, for
a $2,250 fee plus reasonable out-of-pocket expenses not to exceed $1,250. In
addition to solicitation by mail, directors, officers and employees of the
Corporation and the Bank may solicit proxies personally or by facsimile,
telegraph or telephone, without additional compensation.
<PAGE> 5
VOTING RIGHTS; VOTE REQUIRED
Shareholders of record as of the close of business on September 17,
1997 (the "Voting Record Date") will be entitled to one vote on each matter
presented for a vote at the Meeting for each share of Common Stock then held.
Such vote may be exercised in person or by a properly executed proxy as
discussed above. Directors shall be elected by a plurality of the shares
present in person or represented by proxy at the Meeting and entitled to vote
on the election of directors. Adoption of the 1997 Stock Option Plan and of
the appointment of Crowe, Chizek and Company LLP as auditors for the year
ending June 30, 1998 requires the affirmative vote of the majority of shares
present in person or represented by proxy at the Meeting and entitled to vote
on the matter.
With regard to the election of directors, votes may be cast in favor
of or withheld from each nominee; votes that are withheld will be excluded
entirely from the vote and will have no effect. Abstentions may be specified on
all proposals except the election of directors and will be counted as present
for purposes of the item on which the abstention is noted. Abstentions on the
proposal to adopt the 1997 Stock Option Plan or to ratify Crowe, Chizek and
Company LLP as the Corporation's auditors will have the effect of a negative
vote since that proposal requires the affirmative vote of a majority of the
shares present in person or by proxy and entitled to vote at the Meeting. A
broker non-vote (i.e., proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owners or other
persons as to certain proposals on which such beneficial owners or persons are
entitled to vote their shares but with respect to which the brokers or nominees
have no discretionary power to vote without such instructions) will have no
effect on the outcome of the election of directors, the adoption of the 1997
Stock Option Plan or ratification of auditors. Brokers who do not receive
instructions are entitled to vote on the election of directors, adoption of the
1997 Stock Option Plan and the ratification of the Corporation's auditors.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the Voting Record Date, the Corporation had 1,233,622 shares of
Common Stock issued and outstanding. The following table sets forth, as of the
Voting Record Date, information regarding share ownership of: (i) those persons
or entities known by management to beneficially own more than five percent of
the Corporation's Common Stock and (ii) all directors and executive officers as
a group. See "Proposal I - Election of Directors" for information regarding
share ownership of the Corporation's Directors and Chief Executive Officer.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
BENEFICIAL OWNERS OWNED (1) CLASS
- ------------------------------------------------------ ------------ -------
<S> <C> <C>
MSB Financial, Inc. Employee Stock Ownership Plan 115,522 9.36%
107 North Park Street
Marshall, Michigan 49068(2)
Directors and executive officers of the Corporation 296,278 23.41%
and the Bank as a group (7 persons)(3)
- ------------------------------------------------------
</TABLE>
(1) Adjusted to reflect the two for one stock split paid in the form of a
100% stock dividend by the Corporation on August 7, 1997.
(2) Represents shares held by the MSB Financial, Inc. Employee Stock
Ownership Plan (the "ESOP"), 38,920 shares of which have been
allocated to accounts of participants. First Bankers Trust Company,
N.A., Quincy, Illinois, as the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been
allocated to the accounts of participants. Pursuant to the terms of the
ESOP, participants in the ESOP have the right to direct the voting of
shares allocated to participant accounts.
(3) Includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, held in a
fiduciary capacity, held by certain of the group members' families, or
held by trusts of which the group member is a trustee or substantial
beneficiary, with respect to which shares the group member may be deemed
to have sole or shared voting and/or investment powers. This amount
also includes options to purchase 31,768 shares of Common Stock granted
to directors and executive officers which are either currently
exercisable or excisable within 60 days of the Voting Record Date.
2
<PAGE> 6
PROPOSAL I -- ELECTION OF DIRECTORS
The Corporation's Board of Directors is composed of seven members.
Approximately one-third of the directors are elected annually to serve for a
three-year term or until their respective successors are elected and qualified.
The following table sets forth certain information, as the Voting
Record Date, regarding the composition of the Corporation's Board of Directors,
including each director's term of office. The Board of Directors acting as the
nominating committee has recommended and approved the nominees identified in
the following table. It is intended that the proxies solicited on behalf of
the Board of Directors (other than proxies in which the vote is withheld as to
a nominee) will be voted at the Meeting "For" the election of the nominees
identified below. If a nominee is unable to serve, the shares represented by
all valid proxies will be voted for the election of such substitute nominee as
the Board of Directors may recommend. At this time, the Board of Directors
knows of no reason why a nominee might be unable to serve if elected. Except
as disclosed herein, there are no arrangements or understandings between any
nominee and any other person pursuant to which the nominee was selected.
<TABLE>
<CAPTION>
TERM SHARES PERCENT
POSITION(S) HELD DIRECTOR TO BENEFICIALLY OF
NAME AGE(1) IN THE CORPORATION SINCE(2) EXPIRE OWNED(3) CLASS
- --------------------- ----- ------------------------------ --------- ------- ------------- -----------
NOMINEES
<S> <C> <C> <C> <C> <C> <C>
Richard L. Dobbins 52 Director 1979 2000 52,864 4.28%
Martin L. Mitchell 46 Director 1986 2000 46,606 3.77%
DIRECTORS CONTINUING IN OFFICE
Charles B. Cook 49 President and Chief Executive 1974 1999 79,406 6.36%
Officer
Karl F. Loomis 49 Director 1995 1999 11,776 .95%
J. Thomas Schaeffer 52 Director 1989 1999 45,826 3.71%
Aart VanElst 93 Chairman of the Board 1967 1998 11,376 .92%
John W. Yakimow 57 Director 1980 1998 48,424(4) 3.92%
</TABLE>
- ---------------------------
(1) At June 30, 1997.
(2) Includes service as a director of the Bank.
(3) The nature of beneficial ownership for shares reported in this column is
sole voting and investment power, except as otherwise noted in
these footnotes. All amounts reported under this column have been
adjusted for the two for one stock split paid in the form of a 100%
stock dividend by the Corporation on August 7, 1997. Included in the
shares beneficially owned by the named individuals are options to
purchase shares of Common Stock as follows: Mr. Dobbins - 2,888 shares;
Mr. Mitchell - 2,888 shares; Mr. Cook - 14,440 shares; Mr. Loomis -
2,888 shares; Mr. Schaeffer - 2,888 shares; Mr. VanElst - 2,888 shares;
and Mr. Yakimow - 2,888 shares of Common Stock granted under the 1995
Stock Option and Incentive Plan (the "1995 Stock Option Plan").
(4) Includes 2,304 shares as to which Mr. Yakimow has reported shared
ownership.
The business experience of each director of the Corporation for at
least the past five years is set forth below.
RICHARD L. DOBBINS. Mr. Dobbins is a partner in the law firm of
Dobbins, Beardslee & Grinage, P.C., with offices in Marshall and Concord,
Michigan. Mr. Dobbins' law firm may act as counsel to the Bank.
MARTIN L. MITCHELL. Mr. Mitchell is the Vice President of Program,
Starr Commonwealth, a human services organization located in Albion, Michigan.
Mr. Mitchell joined Starr in 1970.
CHARLES B. COOK. Mr. Cook is President and Chief Executive Officer of
the Corporation and the Bank. He has served in such capacities with the
Corporation since its incorporation in September 1994. Mr. Cook has been
employed by the Bank since 1973 and was named Chief Executive Officer of the
Bank in 1974. In 1980 he was named President of the Bank.
3
<PAGE> 7
DR. KARL F. LOOMIS. Dr. Loomis has been a laboratory director and
pathologist since 1983 at Regional Medical Laboratories, Inc., a laboratory
testing facility located in Battle Creek, Michigan. Dr. Loomis has served as
President and Chief Executive Officer of Regional Medical Laboratories, Inc.
since 1987.
J. THOMAS SCHAEFFER. Mr. Schaeffer is a partner in the law firm of
Schaeffer, Meyer & MacKenzie located in Marshall, Michigan. Mr. Schaeffer's
law firm acts as general counsel to the Bank.
AART VANELST. Mr. VanElst has been Chairman of the Board of Directors
of the Corporation since April 1995. Mr. VanElst is a retired oil jobber,
having owned several retail service stations and a fuel oil delivery business
in the Marshall area. Mr. VanElst retired in 1979.
JOHN W. YAKIMOW. Mr. Yakimow is the General Manager of Corporate
Research and Development at Eaton Corporation located in Marshall, Michigan.
Mr. Yakimow has been employed by Eaton since 1971.
MEETINGS AND COMMITTEES OF THE BOARDS OF DIRECTORS
Meetings and Committees of the Corporation. Meetings of the
Corporation's Board of Directors are generally held on a monthly basis. For
the fiscal year ended June 30, 1997, the Board of Directors met 13 times.
During fiscal 1997, no incumbent director of the Corporation attended fewer
than 75% of the aggregate of the total number of Board meetings and the total
number of meetings held by the committees of the Board of Directors on which
they served.
The Board of Directors of the Corporation has standing Executive,
Audit, Compensation and Nominating Committees.
The Corporation's Executive Committee generally acts in lieu of the
full Board of Directors between board meetings. This committee is responsible
for formulating and implementing policy decisions, subject to review by the
entire Board of Directors. The Executive Committee is composed of President
Cook and Directors VanElst and Dobbins. The Executive Committee did not meet
during fiscal 1997.
The Corporation's Audit Committee is responsible for the review of the
Corporation's annual audit report prepared by the Corporation's independent
auditors. The review includes a detailed discussion with the independent
auditors and recommendation to the full Board concerning any action to be taken
regarding the audit. All non-employee directors of the Corporation serve on
this Committee. In fiscal 1997, this committee did not meet at the Corporation
level; however, the subsidiary Bank's audit committee, which serves the same
function and has the identical makeup, met once during fiscal 1997.
The Compensation Committee is currently composed of Directors Loomis,
Mitchell and Yakimow. This Committee is responsible for administering the 1995
Stock Option Plan and the Recognition and Retention Plan (the "RRP"). This
Committee met twice during fiscal 1997.
The entire Board of Directors acts as a nominating committee for
selecting nominees for election as directors. Nominations of persons for
election to the Board of Directors may be made only by or at the direction of
the Board of Directors or by any shareholder entitled to vote for the election
of directors who complies with the notice procedures set forth in the Bylaws of
the Corporation. Pursuant to the Corporation's Bylaws, nominations by
shareholders must be delivered in writing to the Secretary of the Corporation
at least 30 days prior to the date of the annual meeting.
Meetings of the Bank. The Bank's Board of Directors meets at least
monthly and held 13 meetings during fiscal 1997. During fiscal 1997, no
incumbent director of the Bank attended fewer than 75% of the aggregate of the
total number of Board meetings and the total number of meetings held by the
committees of the Board of Directors on which he served.
DIRECTOR COMPENSATION
Non-employee directors of the Corporation and the Bank receive
compensation for their service as directors. The Corporation paid its
non-employee directors a $300 monthly retainer, plus additional fees of $200
for each regular
4
<PAGE> 8
and special board meeting attended during fiscal 1997. During the same period,
the Bank's non-employee directors received a $300 monthly retainer, plus
additional fees of $450 (except for the Chairman of the Board who received
$500) and $250 for each regular and special board meeting attended,
respectively. Each non-employee Bank board member was also paid an additional
$75 for each committee meeting attended, except for attendance at Nominating
Committee meetings for which no fees are paid.
The Corporation has entered into Deferred Fee Agreements ("DFA") with
certain of its non-employee directors. Under the DFAs, each non-employee
director may make an annual election to defer receipt of all or a portion of
his monthly director fees into a deferral account established by the
Corporation on its books. The deferred amounts allocated to the deferral
account will be credited with interest at the rate equal to the rate on high
grade long-term bonds. The DFAs are unfunded, non-qualified agreements which
provide for distribution of the amount deferred upon retirement, disability or
a change in control of the Corporation (as those terms are defined in the DFA)
to participants or their designated beneficiaries. In addition, each
participant is entitled to a death benefit payment of approximately $31,000,
payable monthly over 15 years to designated beneficiaries. Life insurance on
the plan participants has been purchased by the Corporation to fund the
benefits that will be payable under these plans.
Non-employee directors also received compensation during fiscal 1997
ranging from $250 to $1,250 for attendance at educational and training seminars
in connection with their service as members of the Bank's Board of Directors.
The Bank pays the premiums on a $15,000 face value life insurance
policy on behalf of each of the non-employee directors, with the exception of
Chairman VanElst who is ineligible under the policy due to his age.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid or granted to the Corporation's Chief Executive Officer. No other officer
made in excess of $100,000 during fiscal 1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
-------------------------------------------------------
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
($) ($) ($)(3) AWARD ($)(4) (#)(5) ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles B. Cook, President, 1997 $105,375(1) $20,000 --- --- --- $21,112(6)
Chief Executive Officer and 1996 99,425(1) 20,000 --- $115,520 36,100 35,444
Director 1995 93,425(2) 22,500 --- --- --- 21,645
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes $3,375 and $1,425 paid to President Cook for appraisal
services rendered to the Bank on construction loans during
fiscal 1997 and 1996, respectively.
(2) Includes $10,325 and $600 paid to President Cook in fiscal 1995 as a
director of the Bank and for appraisal services rendered to the
Bank on construction loans, respectively.
(3) Mr. Cook did not receive any additional benefits or perquisites which
exceeded, in the aggregate, the lesser of 10% of his salary and
bonus, or $50,000.
(4) Represents the dollar value of 7,220 shares of restricted Common Stock
granted to Mr. Cook (based on the $16.00 closing price per share
of the Common Stock on October 24, 1995, the date of grant). The shares
of restricted stock vest in five equal annual installments (the first
installment having vested on October 24, 1996), provided the individual
maintains "Continuous Service" (as defined in the RRP) with the
Corporation and/or the Bank. All dividends paid on the restricted
shares of Common Stock are held in a restricted interest-bearing account
until such shares are no longer subject to restriction. Based on the
$23.75 average of the bid and asked closing prices per share of the
Common Stock on June 30, 1997, the 7,220 restricted shares held by Mr.
Cook had an aggregate market value of $171,475.
(5) On October 24, 1995, Mr. Cook received an option to purchase 18,050
shares of Common Stock at an exercise price of $15.625 per
share, the "Market Value" (as defined in the 1995 Stock Option Plan) of
the Common Stock on the date of the grant. These options vest equally
over a five year period with the first installment having vested on
October 24, 1996. The number of shares subject to the option and the
exercise price thereunder have been adjusted in the table to reflect the
two for one stock split paid in the form of a 100% stock dividend on
August 7, 1997.
(6) Represents the Bank's payment of medical and life insurance premiums
of approximately $5,872, as well as the Bank's contributions to
its 401(k) Plan of $3,660 and to the ESOP of $11,580 on behalf of Mr.
Cook.
5
<PAGE> 9
The following table sets forth certain information concerning the
aggregate number and value of stock options held by Mr. Cook at June 30, 1997.
No stock appreciation rights have been granted by the Corporation to date.
<TABLE>
<CAPTION>
AGGREGATE OPTIONS EXERCISED IN LAST FISCAL YEAR AND FY-END OPTION VALUES
- ----------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END (#) FY-END ($)(1)
ACQUIRED --------------------------------------------------------------
ON VALUE
EXERCISE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles B. Cook --- --- 7,220(2) 28,880(2) $29,331 $117,325
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the aggregate market value of the stock options as of June
30, 1997. The market value per share of the stock options is
the difference between the market price per share of the Common Stock
($23.75 per share based upon the average of the closing bid and asked
prices per share of the Common Stock as reported on the Nasdaq SmallCap
Market on June 30, 1997) less the exercise price ($15.625 per share) of
the stock options.
(2) Adjusted to reflect the two for one stock split paid in the form of a
100% stock dividend by the Corporation on August 7, 1997.
EMPLOYMENT AGREEMENT
The Bank has an employment agreement with President Cook. The
agreement provides for an annual base salary in an amount not less than the Mr.
Cook's current salary and an initial term of three years. The agreement also
provides for annual extensions of one year, in addition to the then-remaining
term thereunder, on each anniversary of the effective date of the agreement
(i.e., each February 6), subject to a formal performance evaluation performed
by disinterested members of the Bank's Board of Directors. The agreement
terminates upon the employee's death, for cause, in certain events specified by
OTS regulations, or by Mr. Cook upon 90 days notice to the Bank. For the year
ended June 30, 1997, the disinterested members of Bank's Board of Directors
authorized the extension of President Cook's employment agreement for an
additional year.
The employment agreement provides for payment to Mr. Cook of the
greater of his salary for the remainder of the term of the agreement, or 299%
of his base compensation, in the event there is a "change in control" of the
Bank where employment terminates involuntarily in connection with such change
in control or within twelve months thereafter. This termination payment is
subject to reduction by the amount of all other compensation to the employee
deemed for purposes of the Internal Revenue Code of 1986, as amended (the
"Code") to be contingent on a "change in control," and may not exceed three
times the employee's average annual compensation over the most recent five year
period or be non-deductible by the Bank for federal income tax purposes. For
the purposes of the employment agreement, a "change in control" is defined as
any event which would require the filing of an application for acquisition of
control or notice of change in control pursuant to 12 C.F.R. Section 574.3 or
4. Such events are generally triggered prior to the acquisition of control of
10% of the Corporation's common stock. The agreement guarantees participation
in an equitable manner in employee benefits applicable to executive personnel.
Based on his current salary, if Mr. Cook was terminated as of June 30,
1997, under circumstances entitling him to severance pay as described above, he
would have been entitled to receive a lump sum cash payment of approximately
$305,000.
CERTAIN TRANSACTIONS
The Corporation has followed a policy of granting consumer loans and
loans secured by the borrower's personal residence to officers, directors and
employees. Loans to all officers and directors must be approved by two-thirds
of the disinterested directors and loans to employees must be approved by the
Bank's loan committee. All loans to executive officers and directors were made
in the ordinary course of business and on the same terms and conditions
6
<PAGE> 10
as those of comparable transactions prevailing at the time, in accordance with
the Corporation's underwriting guidelines, and do not involve more than the
normal risk of collectibility or present other unfavorable features.
J. Thomas Schaeffer, a director of the Corporation and the Bank, is a
partner in the law firm of Schaeffer, Meyer & MacKenzie, which firm acts as
general counsel to the Bank. The legal fees received by the law firm for
professional services rendered to the Bank during the fiscal year ended June
30, 1997 did not exceed 5% of the firm's gross revenues.
Richard L. Dobbins, a director of the Corporation and the Bank, is a
partner in the law firm of Dobbins, Beardslee & Grinage, P.C. Such firm acts
as counsel to the Bank. The legal fees received by the law firm from
professional services rendered to the Bank during the fiscal year ended June
30, 1997 did not exceed 5% of the firm's gross revenues.
PROPOSAL II--APPROVAL OF THE MSB FINANCIAL, INC. 1997
STOCK OPTION AND INCENTIVE PLAN
The Corporation's Board of Directors has adopted the 1997 Stock Option
Plan, subject to approval by the shareholders at the Meeting. The 1997 Stock
Option Plan is comparable in structure and purpose to plans adopted by the
shareholders of a large number of public companies and is similar to the
Corporation's 1995 Stock Option Plan, approved by the stockholders of the
Corporation in 1995. To date, awards covering a total of 101,250 shares of the
144,402 shares of Common Stock (adjusted for the August 1997 stock split)
reserved for issuance under the 1995 Stock Option Plan have been granted;
however, none of the remaining options available under the 1995 Stock Option
Plan are available to be awarded to the Corporation's Chief Executive Officer
or Directors. Accordingly, in order to continue to promote the long-term
interests of the Corporation and its stockholders by providing a flexible and
comprehensive means for attracting and retaining directors, advisory directors,
officers and employees of the Corporation and its corporate affiliates, the
Board of Directors approved the 1997 Stock Option Plan, and recommends adoption
of the plan by the shareholders.
Pursuant to the 1997 Stock Option Plan, 61,680 shares or approximately
4.99% of the Corporation's Common Stock outstanding as of the date hereof will
be reserved for issuance thereunder from the Corporation's authorized but
unissued shares of Common Stock. Management currently intends, to the extent
practicable and feasible, to fund the 1997 Stock Option Plan from issued shares
reacquired by the Corporation in the open market. To the extent the Corporation
utilizes authorized but unissued Common Stock to fund the 1997 Stock Option
Plan, the exercise of stock options will have the effect of diluting the
holdings of persons who own Common Stock. Upon ratification of the 1997 Stock
Option Plan by shareholders, options to purchase an aggregate of 42,000 shares
of Common Stock will be awarded thereunder, which will leave available 19,680
shares for future awards under the 1997 Stock Option Plan. See "- Awards Under
the 1997 Stock Option and Incentive Plan."
Since the awards granted pursuant to the 1997 Stock Option Plan will
be granted only to persons affiliated with the Corporation, the adoption of the
1997 Stock Option Plan could make it more difficult for a third party to
acquire control of the Corporation and therefore could discourage offers for
the Corporation's stock that may be viewed by the Corporation's shareholders to
be in their best interest. In addition, certain provisions included in the
Corporation's Certificate of Incorporation and Bylaws may discourage potential
takeover attempts, particularly those that have not been negotiated directly
with the Board of Directors of the Corporation. Included among these
provisions are provisions (i) limiting the voting power of shares held by
persons owning 10% or more of the Common Stock, (ii) requiring a supermajority
vote of shareholders for approval of certain business combinations, (iii)
establishing a staggered Board of Directors, (iv) permitting special meetings
of shareholders to be called only by the Board of Directors and (v) authorizing
a class of preferred stock with terms to be established by the Board of
Directors. These provisions could prevent the sale or merger of the
Corporation even where a majority of the shareholders approve of such
transaction. In addition, federal regulations prohibit the beneficial
ownership of more than 10% of the stock of a converted savings institution or
its holding company without prior approval of the Office of Thrift Supervision
(the "OTS"). Federal law and regulations also require OTS approval prior to
the acquisition of
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<PAGE> 11
"control" (as defined in the regulations) of an insured institution, including
a holding company thereof. These regulations could have the effect of
discouraging takeover attempts of the Corporation.
THE PRINCIPAL FEATURES OF THE 1997 STOCK OPTION PLAN ARE SUMMARIZED
BELOW. THIS SUMMARY IS NECESSARILY INCOMPLETE AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE FULL TEXT OF THE 1997 STOCK OPTION PLAN WHICH IS ATTACHED
HERETO AT APPENDIX A AND INCORPORATED HEREIN BY REFERENCE.
GENERAL
The 1997 Stock Option Plan provides for awards in the form of stock
options and stock appreciation rights ("SARs"). Each award shall be on such
terms and conditions, consistent with the 1997 Stock Option Plan, as the
committee administering the 1997 Stock Option Plan may determine.
Shares of Common Stock subject to an award under the 1997 Stock Option
Plan may be either authorized but unissued shares or reacquired shares held by
the Corporation in its treasury. Any shares subject to an award which expires
or is terminated unexercised will again be available for issuance under the
1997 Stock Option Plan or any other plan of the Corporation or its
subsidiaries.
ADMINISTRATION
The 1997 Stock Option Plan is administered by the Corporation's
Compensation Committee, which consists of three members of the Board of
Directors of the Corporation, each of whom, as required by the 1997 Stock
Option Plan, is (i) an outside director as defined under Section 162(m) of the
Code and (ii) a Non-Employee Director as defined in the rules under Section
16(b) of the Securities Exchange Act of 1934. In granting awards under the
1997 Stock Option Plan, the Compensation Committee considers, among other
things, position and years of service, value of the participant's services to
the Corporation and its affiliates and the responsibilities of such individuals
as employees, directors and officers of a public Corporation.
ELIGIBILITY
Any director, advisory director, officer or employee of the
Corporation or its corporate affiliates is eligible to participate in the 1997
Stock Option Plan, which currently includes approximately 25 persons.
AWARD DESCRIPTIONS
The 1997 Stock Option Plan authorizes the Compensation Committee to
grant the following awards:
Stock Options. The Stock Option Committee may grant either "Incentive
Stock Options" as defined under Section 422 of the Code or stock options not
intended to qualify as such ("Non-Qualified Stock Options"). Incentive Stock
Options may be granted only to employees of the Corporation and its corporate
affiliates.
The term of a Non-Qualified Stock Option granted under the 1997 Stock
Option Plan may not exceed 15 years from the date of grant. The term of an
Incentive Stock Option may not exceed ten years, and the term of an Incentive
Stock Option granted to any individual owning stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Corporation and its corporate affiliates a (a "Ten Percent Holder") may not
exceed five years.
The exercise price of each stock option is determined by the
Compensation Committee, provided that (i) the exercise price for the purchase
of shares subject to a stock option, whether an Incentive Stock Option or a
Non-Qualified Stock Option, may not be less than 100% of the market value of
the shares covered by the option on the date of grant and (ii) the exercise
price of an Incentive Stock Option granted to a Ten Percent Holder may not be
less than 110% of the market value of the shares covered by the option on the
date of grant. The exercise price may be paid in cash, shares of Common Stock
or a combination of both.
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<PAGE> 12
Stock Appreciation Rights. The Compensation Committee is authorized
to award SARs, each of which, upon exercise thereof, will entitle the holder
thereof to receive a number of shares of the Common Stock or cash or a
combination thereof, as the Compensation Committee shall determine, the
aggregate value of which shall equal (as nearly as possible) the amount by
which the market value per share of the Common Stock on the date of exercise
exceeds the exercise price of the SAR, multiplied by the number of shares
underlying the SAR. A SAR may be related to an option or granted independently
of an option.
The Compensation Committee will determine the exercise price and term
of each SAR, provided that (i) the term of a SAR may not exceed 15 years and
(ii) an option related to a SAR which is an Incentive Stock Option must satisfy
all requirements pertaining to Incentive Stock Options (e.g., exercise price,
term). SARs are generally exercisable to the same extent and in the same
manner as stock options, as described above.
TERMINATION OF SERVICE
Set forth below is a summary of the effects of termination of service
to the Corporation or an affiliate thereof of a participant to whom an award
has been granted under the 1997 Stock Option Plan.
Unless the Compensation Committee provides otherwise:
(i) if a participant to whom an option or SAR (an "Award") was
granted shall cease to maintain continuous service with the
Corporation or any affiliate thereof for any reason, excluding death,
disability and termination of employment by the Corporation or any
affiliate thereof for cause, such participant may, but only within the
three month period immediately following such cessation of continuous
service (but in no event after the expiration date of such Award),
exercise such Award (but only to the extent that such participant was
entitled to exercise such Award at the date of such cessation of
continuous service). If the continuous service of a participant to whom
an Award was granted is terminated for cause, all rights under such
Award shall expire immediately upon giving the participant notice of
such termination.
(ii) if a participant to whom an Award was granted shall
cease to maintain continuous service due to disability, all
Awards granted to such participant and not fully exercisable shall
become exercisable in full upon the happening of such event and shall
remain so exercisable for a period of three months immediately following
such cessation of continuous service (but in no event after the
expiration date of such Award).
(iii) in the event of the death of a participant while in the
continuous service of the Corporation or an affiliate thereof,
or within the three month periods referred to in paragraphs (i) and (ii)
above, the person to whom such Award is transferred may (but only to the
extent that the participant was entitled to exercise such Award
immediately prior to such participant's death), exercise such Award with
a period of one year following the death of such participant (but in no
event after the expiration date of such Award).
TRANSFERABILITY OF AWARDS
An Incentive Stock Option awarded under the 1997 Stock Option Plan may
be transferred only upon the death of the participant to whom it has been
granted, by will or the laws of inheritance. Unless otherwise provided by the
Compensation Committee, an award other than an Incentive Stock Option may be
transferred during the lifetime of the participant to whom it was awarded
pursuant to a qualified domestic relations order or by gift to any member of
the participant's immediate family or to a trust for the benefit of any member
of the participant's immediate family.
EFFECT OF MERGER AND OTHER ADJUSTMENTS
In the event of a merger or other business combination of the
Corporation in which the Corporation is not the surviving entity, any
participant to whom an Award has been granted will, with limited exception,
have the right after consummation of such transaction and during the remaining
term of the Award to receive upon exercise of such Award an amount equal to the
excess of the fair market value on the date of exercise of the securities or
other
9
<PAGE> 13
consideration receivable in the merger in respect of a share of Common Stock
over the exercise price of the Award, multiplied by the number of shares of
Common Stock with respect to which the Award is exercised.
Upon a change in control of the Corporation, unless otherwise provided
by the Compensation Committee in the applicable award agreement, any
restrictions or vesting period with respect to any outstanding Awards will
immediately lapse and all such Awards will become fully vested.
Shares as to which Awards may be granted under the 1997 Stock Option
Plan, and shares then subject to Awards, will be adjusted by the Compensation
Committee in the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split or other change in the corporate
structure of the Corporation.
AMENDMENT AND TERMINATION
The Board of Directors of the Corporation may at any time amend,
suspend or terminate the 1997 Stock Option Plan or any portion thereof, except
that any such action will be subject to the approval of the Corporation's
shareholders if, when and to the extent such shareholder approval is necessary
or required for purposes of any applicable federal or state law or regulation
or the rules of any stock exchange or automated quotation system on which the
Common Stock may then be listed or quoted, or if the Board of Directors of the
Corporation, in its discretion, determines to seek such shareholder approval.
The 1997 Stock Option Plan shall continue in effect for a term of 15
years (unless terminated by the Board of Directors of the Corporation as
permitted under the 1997 Stock Option Plan), after which no further awards may
be granted under the 1997 Stock Option Plan.
FEDERAL INCOME TAX CONSEQUENCES
Under present federal income tax laws, awards under the 1997 Stock
Option Plan will have the following consequences:
(i) The grant of an award, by itself, will generally neither
result in the recognition of taxable income to the participant
nor entitle the Corporation to a deduction at the time of such grant.
However, the grant of an award of cash or property other than a stock
option or SAR (except as provided below) will generally result in the
recognition of ordinary income by the participant and entitle the
Corporation to a corresponding deduction at the time of grant.
(ii) In order to qualify as an Incentive Stock Option, a stock
option awarded under the 1997 Stock Option Plan must meet the
conditions contained in Section 422 of the Code, including the
requirement that the shares acquired upon the exercise of the stock
option be held for one year after the date of exercise and two years
after the grant of the option. The exercise of an Incentive Stock
Option will generally not, by itself, result in the recognition of
taxable income to the participant nor entitle the Corporation to a
deduction at the time of such exercise. However, the difference
between the exercise price and the fair market value of the option
shares on the date of exercise is an item of tax preference which may,
in certain situations, trigger the alternative minimum tax. The
alternative minimum tax is incurred only when it exceeds the regular
income tax. If the shares acquired upon exercise of an Incentive
Stock Option are not held for at least one year after transfer of such
shares to the participant or two years after the grant of the
Incentive Stock Option, whichever is later, the participant will
recognize ordinary income or loss upon disposition of the shares in an
amount equal to the difference between the exercise price and the fair
market value on the date of exercise of the Option. In such an event,
the Corporation will generally be entitled to a corresponding
deduction, provided the Corporation meets its federal withholding tax
obligations. The participant will also recognize capital gain or loss
in an amount of the difference, if any, between the sale price and the
fair market value of the shares on the date of exercise of the
Incentive Stock Option; such capital gain or loss will be
characterized as long-term if the shares were held for more than one
year after the date of exercise of the Incentive Stock Option. The
Corporation will not be entitled to a corresponding deduction for such
capital gain or loss. If the shares are held by the participant for
one year after the Incentive Stock Option is exercised and two years
after the
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<PAGE> 14
Incentive Stock Option was granted, the participant will recognize a
long-term capital gain or loss upon disposition of the shares and the
Corporation will not be entitled to a corresponding deduction.
Long-term capital gains for shares held between one year and 18 months
are currently taxed at a maximum rate of 28%. Shares held for longer
than 18 months are currently taxed at a maximum rate of 20%.
(iii) The exercise of a Non-Qualified Stock Option will
result in the recognition of ordinary income by the participant
on the date of exercise in an amount equal to the difference between
the exercise price and the fair market value on the date of exercise
of the shares acquired pursuant to the stock option. The Corporation
will be allowed a deduction at the time and in the amount of any
ordinary income recognized by the participant upon the exercise of a
Non-Qualified Stock Option, provided the Corporation meets its federal
tax withholding obligations. Upon sale of the shares acquired upon
exercise of Non-Qualified Stock Option, any appreciation or
depreciation in the value of such shares from the time of exercise
will result in the recognition of a capital gain or loss by the
participant. Such gain or loss will be long-term capital gain or loss
if the participant held the shares for more than one year following
exercise of the Non-Qualified Stock Option.
(iv) The exercise of a SAR will result in the recognition of
ordinary income by the participant on the date of exercise in an
amount of cash, and/or the fair market value on that date of the
shares, acquired pursuant to the exercise. The Corporation will be
entitled to a corresponding deduction.
AWARDS UNDER THE 1997 STOCK OPTION AND INCENTIVE PLAN
The following table presents information as of September 17, 1997,
with respect to the number of awards of options which are intended to be
granted under the 1997 Stock Option Plan, subject to shareholder adoption of
the 1997 Stock Option Plan, to (i) the Corporation's Chief Executive Officer
(the sole executive officer of the Corporation and Bank), (ii) each nominee for
election as a director of the Corporation, (iii) all current directors of the
Corporation who are not executive officers, as a group and (iv) all
non-executive officers and employees of the Corporation and the Bank, as a
group. On September 10, 1997, the average of the closing bid and asked prices
for the Common Stock as quoted on The Nasdaq SmallCap Market was $15.00 per
share.
<TABLE>
<CAPTION>
1997 STOCK OPTION AND INCENTIVE PLAN
- --------------------------------------------------------------------------------------------------------
DOLLAR VALUE NUMBER OF
NAME AND POSITION ($)(1) UNITS(2)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charles B. Cook, President and Chief Executive Officer................... $ --- 6,000
Richard L. Dobbins, director nominee..................................... --- 6,000
Martin L. Mitchell, director nominee..................................... --- 6,000
All current directors of the Corporation and the Bank who are
not executive officers as a group (6 persons)........................... --- 36,000
All non-executive officers and employees of the Corporation and the
Bank as a group.......................................................... --- ---
- --------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------
(1) Any value realized will be the difference between the exercise price and
the market value upon exercise. Since the options have not been granted,
there is no current value.
(2) Each unit represents an option to purchase one share of Common Stock.
The proposed awards will vest immediately upon the effective date of
the grant.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE 1997 STOCK OPTION PLAN.
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<PAGE> 15
PROPOSAL III - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has renewed the Corporation's arrangement for
Crowe, Chizek and Company LLP to be its independent auditors for the fiscal
year ending June 30, 1998, subject to the ratification of the appointment by
the Corporation's shareholders. A representative of Crowe, Chizek and Company
LLP is expected to attend the Meeting to respond to appropriate questions and
will have an opportunity to make a statement if he or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND COMPANY LLP AS THE
CORPORATION'S AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1998.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation's proxy
materials for next year's Annual Meeting of Shareholders, any shareholder
proposal to take action at such meeting must be received at the Corporation's
executive office, 107 North Park Street, Marshall, Michigan 49068, no later
than May 29, 1998. Any such proposal shall be subject to the requirements of
the proxy rules adopted under the Securities Exchange Act of 1934, as amended.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
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<PAGE> 16
APPENDIX A
MSB FINANCIAL, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors, officers and employees
of the Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" -- means any "parent corporation" or "subsidiary corporation"
of the Corporation as such terms are defined in Section 425(e) and (f),
respectively, of the Code.
"Award" -- means the grant by the Committee under this Plan of an
Incentive Stock Option, a Non-Qualified Stock Option, a Stock Appreciation
Right, or any combination thereof, as provided in the Plan.
"Award Agreement" -- means the agreement evidencing the grant of an Award
made under the Plan.
"Cause" -- means termination of service by reason of personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties or gross negligence.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof.
"Continuous Service" -- means the absence of any interruption or
termination of service as a director, advisory director, officer or employee of
the Corporation or an Affiliate, except that when used with respect to a person
granted an Incentive Stock Option means the absence of any interruption or
termination of service as an officer or employee of the Corporation or an
Affiliate. Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Corporation
or in the case of transfers between payroll locations of the Corporation or
between the Corporation, its parent, its subsidiaries or its successor.
"Corporation" -- means MSB Financial, Inc., a Delaware corporation, and
any successor thereto.
"ERISA" -- means the Employee Retirement Income Security Act of 1974, as
amended.
"Incentive Stock Option" -- means an option to purchase Shares granted by
the Committee which is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. Unless otherwise set forth in the Award Agreement,
any Option which does not qualify as an Incentive Stock Option for any reason
shall be deemed a Non-Qualified Stock Option.
"Market Value" -- means the average of the closing of the bid and asked
prices with respect to a Share on the date in question on the Nasdaq Stock
Market, or any similar system then in use, or, if the Shares are not then
traded on the Nasdaq Stock Market or any similar system, the closing sales
price on such date (or, if there is no reported sale on such date, on the last
preceding date on which any reported sale occurred) of a Share on the Composite
Tape for New York Stock Exchange-Listed Stocks, or, if on such date the Shares
are not quoted on the Composite Tape, on the New York Stock Exchange, or if the
Shares are not listed or admitted to trading on such Exchange, on the principal
United States securities exchange registered under the Securities Exchange Act
of 1934 (the "Exchange Act") on which the Shares are listed or admitted to
trading, or, if the Shares are not listed or admitted to trading on any such
exchange, the fair market value on such date of a Share as the Committee shall
determine.
<PAGE> 17
"Non-Qualified Stock Option" -- means an option to purchase Shares granted
by the Committee which does not qualify, for any reason, as an Incentive Stock
Option under Section 422 of the Code.
"Option" -- means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" -- means any director, advisory director, officer or
employee of the Corporation or any Affiliate who is selected by the Committee
to receive an Award.
"Plan" -- means this 1997 Stock Option and Incentive Plan of the
Corporation.
"Related" -- means (i) in the case of a Stock Appreciation Right, a Stock
Appreciation Right which is granted in connection with, and to the extent
exercisable, in whole or in part, in lieu of, an Option or another Stock
Appreciation Right and (ii) in the case of an Option, an Option with respect to
which and to the extent a Stock Appreciation Right is exercisable, in whole or
in part, in lieu thereof.
"Shares" -- means the shares of common stock of the Corporation.
"Stock Appreciation Right" -- means a stock appreciation right with
respect to Shares granted by the Committee pursuant to the Plan.
"Ten Percent Holder" -- means any individual who owns stock possessing
more than ten percent of the total combined voting power of all classes of
stock of the Corporation and any Affiliate.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members of the Board of Directors of the Corporation,
each of whom (i) shall be an outside director as defined under Section 162(m)
of the Code and the regulations thereunder and (ii) shall be a Non-Employee
Director as defined under Rule 16(b) of the Securities Exchange Act of 1934 or
any similar or successor provision. The members of the Committee shall be
appointed by the Board of Directors of the Corporation. Except as limited by
the express provisions of the Plan or by resolutions adopted by the Board of
Directors of the Corporation, the Committee shall have sole and complete
authority and discretion to (i) select Participants and grant Awards; (ii)
determine the number of Shares to be subject to types of Awards generally, as
well as to individual Awards granted under the Plan; (iii) determine the terms
and conditions upon which Awards shall be granted under the Plan; (iv)
prescribe the form and terms of instruments evidencing such grants; and (v)
establish from time to time regulations for the administration of the Plan,
interpret the Plan, and make all determinations deemed necessary or advisable
for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting,
shall be acts of the Committee.
4. Shares Subject to Plan.
(a) Subject to adjustment by the operation of Section 7, the maximum
number of Shares with respect to which Awards may be made under the Plan is
61,680 Shares. The Shares with respect to which Awards may be made under the
Plan may be either authorized and unissued shares or previously issued shares
reacquired and held as treasury shares. Shares which are subject to Related
Stock Appreciation Rights and Related Options shall be counted only once in
determining whether the maximum number of Shares with respect to which Awards
may be granted under the Plan has been exceeded. An Award shall not be
considered to have been made under the Plan with respect to any Option or Stock
Appreciation Right which terminates, and new Awards may be granted under the
Plan with respect to the number of Shares as to which such termination has
occurred.
(b) During any calendar year, no Participant may be granted Awards under
the Plan with respect to more than 25,000 Shares, subject to adjustment as
provided in Section 7.
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<PAGE> 18
5. Awards.
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine, including the granting of Options in tandem with
other Awards under the Plan:
(i) Exercise Price. The exercise price per Share for an
Option shall be determined by the Committee; provided that, such
exercise price thereof shall not be less than 100% of the Market
Value of a Share on the date of grant of such Option; and provided
further that, in the case of an Incentive Stock Option granted to a
Ten Percent Holder, the exercise price thereof shall not be less
than 110% of the Market Value of a Share on the date of grant of
such Option.
(ii) Option Term. The term of each Option shall be fixed by
the Committee, but shall be not greater than 15 years; provided
that, in the case of an Incentive Stock Option, the term of such
Option shall not exceed ten years; and provided further that, in
the case of an Incentive Stock Option granted to a Ten Percent
Holder, the term of such option shall not exceed five years.
(iii) Time and Method of Exercise. Except as provided in
Section 6, no Option granted hereunder may be exercised unless at
the time the Participant exercises such Option, such Participant
has maintained Continuous Service since the date of grant of such
Option. To exercise an Option under the Plan, the Participant to
whom such Option was granted shall give written notice to the
Corporation, in form satisfactory to the Committee, by specifying
the number of Shares with respect to which such Participant elects
to exercise such Option, together with full payment of the exercise
price. The date of exercise shall be the date on which such notice
is received by the Corporation. Payment shall be made either (i)
in cash (including check, bank draft or money order) or (ii) by
delivering (A) Shares already owned by the Participant and having a
fair market value equal to the applicable exercise price, such fair
market value to be determined in such appropriate manner as may be
provided by the Committee or as may be required in order to comply
with or to conform to requirements of any applicable laws or
regulations, or (B) a combination of cash and such Shares.
(iv) Option Agreements. At the time of an Award of an Option,
the Participant shall enter into an Award Agreement with the
Corporation in a form specified by the Committee, agreeing to the
terms and conditions of the Award and such other matters as the
Committee shall in its sole discretion determine.
(v) Limitations on Value of Exercisable Incentive Stock
Options. The aggregate Market Value of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by
a Participant in any calendar year shall not exceed $100,000.
(vi) Eligible Recipients of Incentive Stock Options.
Incentive Stock Options may be granted by the Committee only to
officers or employees of the Corporation or its Affiliates.
(b) Stock Appreciation Rights. The Committee is hereby authorized to
grant Stock Appreciation Rights to Participants with the following terms and
conditions and with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:
(i) General. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation
Right was granted to receive a number of Shares or cash or
combination thereof, as the Committee in its discretion shall
determine, the aggregate value of which (i.e., the sum of the
amount of cash and/or Market Value of such Shares on the date of
exercise) shall equal (as nearly as possible, it being understood
that the Corporation shall not issue any fractional shares) the
amount by which the Market Value per Share on the date of such
exercise
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<PAGE> 19
shall exceed the exercise price of such Stock Appreciation Right,
multiplied by the number of Shares with respect to which such Stock
Appreciation Right shall have been exercised.
(ii) Related Options. A Stock Appreciation Right may be
Related to an Option or may be granted independently of any Option
as the Committee shall from time to time in each case determine.
In the case of a Related Option, such Related Option shall cease to
be exercisable to the extent of the Shares with respect to which
the Related Stock Appreciation Right was exercised. Upon the
exercise or termination of a Related Option, any Related Stock
Appreciation Right shall terminate to the extent of the Shares with
respect to which the Related Option was exercised or terminated.
If the Related Option is an Incentive Stock Option, the Related
Option shall satisfy all restrictions and the limitations imposed
on Incentive Stock Options under paragraph (a) of this Section 5
(including, without limitation, restrictions on exercise price and
term).
(iii) Exercise Price and Term. The exercise price and term of
each Stock Appreciation Right shall be fixed by the Committee;
provided that, the term of a Stock Appreciation Right shall not
exceed 15 years.
(iv) Stock Appreciation Right Agreements. At the time of an
Award of a Stock Appreciation Right, the Participant shall enter
into an Award Agreement with the Corporation in a form specified by
the Committee, agreeing to the terms and conditions of the Award
and such other matters as the Committee shall in its sole
discretion determine.
(v) Time and Method of Exercise. Except as provided in
Section 6, no Stock Appreciation Right may be exercised unless at
the time the Participant exercises such Stock Appreciation Right,
such Participant has maintained Continuous Service since the date
of grant of such Stock Appreciation Right. To exercise a Stock
Appreciation Right under the Plan, the Participant to whom such
Stock Appreciation Right was granted shall give written notice to
the Corporation, in form satisfactory to the Committee, by
specifying the number of Shares with respect to which such
Participant elects to exercise such Stock Appreciation Right,
together with full payment of the exercise price, if any and to the
extent required. The date of exercise shall be the date on which
such notice is received by the Corporation. Payment, if any is
required, shall be made either (i) in cash (including check, bank
draft or money order) or (ii) by delivering (A) Shares already
owned by the Participant and having a fair market value equal to
the applicable exercise price, such fair market value to be
determined in such appropriate manner as may be provided by the
Committee or as may be required in order to comply with or to
conform to requirements of any applicable laws or regulations, or
(B) a combination of cash and such Shares.
6. Termination of Service.
(a) If a Participant to whom an Option or Stock Appreciation Right was
granted shall cease to maintain Continuous Service for any reason (excluding
death, disability and termination of employment by the Corporation or any
Affiliate for Cause), such Participant may, but only within the period of three
months immediately succeeding such cessation of Continuous Service and in no
event after the expiration date of such Option or Stock Appreciation Right,
exercise such Option or Stock Appreciation Right to the extent that such
Participant was entitled to exercise such Option or Stock Appreciation Right at
the date of such cessation of Continuous Service. If the Continuous Service of
a Participant to whom an Option or Stock Appreciation Right was granted by the
Corporation is terminated for Cause, all rights under any Option or Stock
Appreciation Right of such Participant shall expire immediately upon the giving
to the Participant of notice of such termination.
(b) If a Participant to whom an Option or Stock Appreciation Right was
granted shall cease to maintain Continuous Service due to disability, all
Options and Stock Appreciation Rights granted to such Participant and not fully
exercisable shall become exercisable in full upon the happening of such event
and shall remain so exercisable for a period of three months immediately
succeeding such cessation of Continuous Service (but in no event after the
expiration date of such Option or Stock Appreciation Right).
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(c) In the event of the death of a Participant while in the Continuous
Service of the Corporation or an Affiliate or within the three month periods
referred to in paragraphs (a) and (b) of this Section 6, the person to whom any
Option or Stock Appreciation Right held by the Participant at the time of his
or her death is transferred by will or the laws of descent and distribution or
in the case of an Award other than an Incentive Stock Option, pursuant to a
qualified domestic relations order, as defined in the Code or Title I of ERISA
or the rules thereunder, or as otherwise permitted to be transferred under
Section 10 of the Plan may, but only within the period of one year immediately
succeeding the date of death of such Participant, and in no event after the
expiration date of such Option or Stock Appreciation Right, exercise such
Option or Stock Appreciation Right to the extent that such Participant was
entitled to exercise such Option or Stock Appreciation Right immediately prior
to his death. Following the death of any Participant to whom an Option was
granted under the Plan, irrespective of whether any Related Stock Appreciation
Right shall have previously been granted to the Participant or whether the
person entitled to exercise such Related Stock Appreciation Right desires to do
so, the Committee may, as an alternative means of settlement of such Option,
elect to pay to the person to whom such Option is transferred as permitted by
Section 10 of this Plan, the amount by which the Market Value per Share on the
date of exercise of such Option shall exceed the exercise price of such Option,
multiplied by the number of Shares with respect to which such Option is
properly exercised. Any such settlement of an Option shall be considered an
exercise of such Option for all purposes of the Plan.
(d) Notwithstanding the provisions of subparagraphs (a) through (c) above,
the Committee may, in its sole discretion, establish different terms and
conditions pertaining to the effect of termination to the extent permitted by
applicable federal and state law.
7. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by
reason of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares and exercise price of the Award, if any, as to which Awards
may be granted under the Plan and the number and class of shares and exercise
price of the Award, if any, with respect to which Awards have been granted
under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any Award which is adjusted as a result of
this Section 7 shall be subject to the same restrictions as the original Award.
8. Effect of Merger. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation or
combination in which the Corporation is the continuing entity and which does
not result in the outstanding Shares being converted into or exchanged for
different securities, cash or other property, or any combination thereof)
pursuant to a plan or agreement the terms of which are binding upon all
stockholders of the Corporation (except to the extent that dissenting
stockholders may be entitled, under statutory provisions or provisions
contained in the certificate of incorporation, to receive the appraised or fair
value of their holdings), any Participant to whom an Option or Right has been
granted shall have the right (subject to the provisions of the Plan and any
limitation or vesting period applicable to such Option or Stock Appreciation
Right), thereafter and during the term of each such Option or Stock
Appreciation Right, to receive upon exercise of any such Option or Stock
Appreciation Right an amount equal to the excess of the fair market value on
the date of such exercise of the securities, cash or other property, or
combination thereof, receivable upon such merger, consolidation or combination
in respect of a Share over the Exercise Price of such Option or Stock
Appreciation Right, multiplied by the number of Shares with respect to which
such Option or Stock Appreciation Right shall have been exercised. Such amount
may be payable fully in cash, fully in one or more of the kind or kinds of
property payable in such merger, consolidation or combination, or partly in
cash and partly in one or more of such kind or kinds of property, all in the
discretion of the Committee.
9. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 9 shall be deemed a "change
of control": (i) any third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Corporation with respect to which 25% or more of the
total number of votes for the election of the Board of Directors of the
Corporation may be cast, (ii) as a result of, or in connection with, any cash
tender offer, merger or other business combination, sale of assets or contested
election, or combination of the foregoing, the persons who were directors of
the Corporation shall cease to constitute a majority of the Board of Directors
of the Corporation, or
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<PAGE> 21
(iii) the stockholders of the Corporation shall approve an agreement
providing either for a transaction in which the Corporation will cease to be an
independent publicly-owned corporation or for a sale or other disposition of
all or substantially all the assets of the Corporation. Upon a change in
control, unless the Committee shall have otherwise provided in the applicable
Award Agreement, any restrictions or vesting period with respect to any
outstanding Awards shall lapse and all such Awards shall become fully vested in
the Participant to whom such Awards were awarded for a period of 60 days
following the date of such change in control, after which such Awards shall
revert to being exercisable in accordance with their terms; provided, however,
that no Award which has previously been exercised or otherwise terminated shall
become exercisable.
10. Assignments and Transfers. No Award granted under the Plan shall be
transferable otherwise than by will or the laws of descent and distribution,
except that an Award other than an Incentive Stock Option may be transferred
pursuant to a qualified domestic relations order or by gift to any member of
the Participant's immediate family or to a trust for the benefit of one or more
of such immediate family members. During the lifetime of an Award recipient,
an Award shall be exercisable only by the Award recipient unless it has been
transferred as permitted hereby, in which case it shall be exercisable only by
such transferee. For the purpose of this Section 10 a Participant's "immediate
family" shall mean the Participant's spouse, children and grandchildren.
11. Employee Rights Under the Plan. No person shall have a right to be
selected as a Participant nor, having been so selected, to be selected again as
a Participant, and no officer, employee or other person shall have any claim or
right to be granted an Award under the Plan or under any other incentive or
similar plan of the Corporation or any Affiliate. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee any right to
be retained in the employ of or serve as a director or advisory director of the
Corporation or any Affiliate.
12. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933, as amended (the "Securities Act"), or
any other federal, state or local securities legislation. It may be provided
that any representation requirement shall become inoperative upon a
registration of the Shares or other action eliminating the necessity of such
representation under such Securities Act or other securities legislation. The
Corporation shall not be required to deliver any Shares under the Plan prior to
(i) the admission of such Shares to listing on any stock exchange on which
Shares may then be listed, and (ii) the completion of such registration or
other qualification of such Shares under any state or federal law, rule or
regulation, as the Committee shall determine to be necessary or advisable.
13. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a Stock Appreciation
Right under the Plan any taxes required by law to be withheld with respect to
such cash payments. Where a Participant or other person is entitled to receive
Shares pursuant to the exercise of an Option or Stock Appreciation Right
pursuant to the Plan, the Corporation shall have the right to require the
Participant or such other person to pay the Corporation the amount of any taxes
which the Corporation is required to withhold with respect to such Shares, or,
in lieu thereof, to retain, or sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
A-6
<PAGE> 22
14. Amendment or Termination.
(a) The Board of Directors of the Corporation may amend, alter, suspend,
discontinue, or terminate the Plan at any time, except that any such action
will be subject to the approval of the Corporation's shareholders if, when and
to the extent such shareholder approval is necessary or required for purposes
of any applicable federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed
or quoted, or if the Board of Directors of the Corporation, in its discretion,
determines to seek such shareholder approval.
(b) Except as otherwise provided herein, the Committee may waive any
conditions or rights of the Corporation or modify or amend the terms of any
outstanding Award. No modification, amendment, alteration, suspension,
discontinuation or termination of an outstanding Award which impairs the rights
or benefits of any Participant or holder thereof may be made without the
consent of the Participant or holder thereof.
15. Effective Date and Term of Plan. The plan shall become effective upon
its adoption by the Board of Directors of the Corporation and the approval of
the Plan by the shareholders of the Corporation. It shall continue in effect
for a term of 15 years unless sooner terminated under Section 14 hereof.
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<PAGE> 23
REVOCABLE PROXY
MSB FINANCIAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
October 28, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of MSB Financial,
Inc. (the "Corporation"), and its survivor, with full power of substitution, to
act as attorneys and proxies for the undersigned to vote all shares of common
stock of the Corporation which the undersigned is entitled to vote at the
Annual Meeting of Shareholders (the "Meeting"), to be held on Tuesday, October
28, 1997 at Schuler's Restaurant, located at 115 South Eagle Street, Marshall,
Michigan, at 10:30 A.M. local time, and at any and all adjournments thereof, as
follows:
FOR WITHHOLD EXCEPT
--- -------- ------
I. Election of RICHARD L. DOBBINS and
MARTIN L. MITCHELL as directors for a term / / / / / /
to expire in the year 2000.
INSTRUCTIONS: TO VOTE FOR ALL NOMINEES MARK THE BOX "FOR" WITH
AN "X". TO WITHHOLD YOUR VOTE FOR AN INDIVIDUAL NOMINEE MARK THE
BOX EXCEPT WITH AN "X" AND WRITE THE NAME OF THE NOMINEE ON THE LINE
PROVIDED BELOW FOR WHOM YOU WISH YOUR VOTE WITHHOLD. TO WITHHOLD
YOUR VOTE AS TO ALL NOMINEES MARK THE BOX "WITHHOLD" WITH AN "X".
--------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
II. Approval of the adoption of the
1997 Stock Option and Incentive Plan. / / / / / /
III. Ratification of the appointment
of Crowe, Chizek and Company LLP, as / / / / / /
independent auditors for the Corporation
for the fiscal year ending June 30, 1998.
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" the listed proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
<PAGE> 24
This proxy may be revoked at any time before it is voted by delivering to
the Secretary of the Corporation, on or before the taking of the vote at the
Meeting, a written notice of revocation bearing a later date than the proxy or
a later dated proxy relating to the same shares of Corporation common stock, or
by attending the Meeting and voting in person. Attendance at the Meeting will
not in itself constitute the revocation of a proxy. If this proxy is properly
revoked as described above, then the power of such attorneys and proxies shall
be deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the Corporation, prior to the
execution of this Proxy, of Notice of Annual Meeting, a Proxy Statement dated
September 26, 1997 and the Corporation's Annual Report to Shareholders for the
fiscal year ended June 30, 1997.
Dated: ________________________
__________________________ ___________________________
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
__________________________ ___________________________
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ABOVE ON
THIS CARD. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
YOUR FULL TITLE. IF SHARES ARE HELD JOINTLY,
EACH HOLDER SHOULD SIGN.
_______________________________________________________
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
_______________________________________________________
