Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated to be
effective as of February 26, 2008, by and among MAINSOURCE FINANCIAL GROUP, INC.
("MainSource"), 1st INDEPENDENCE FINANCIAL GROUP, INC. ("1st Independence") and
1st INDEPENDENCE BANK, INC. ("1st Bank").
W I T N E S S E T H:
WHEREAS, MainSource is an Indiana corporation registered as a financial
holding company under the federal Bank Holding Company Act of 1956, as amended
(the "BHC Act"), with its principal office located in Greensburg, Decatur
County, Indiana; and
WHEREAS, 1st Independence is a Delaware corporation registered as a
bank holding company under the BHC Act, with its principal office located in
Louisville, Jefferson County, Kentucky; and
WHEREAS, 1st Bank is a Kentucky chartered commercial bank with its
principal office located in Louisville, Jefferson County, Kentucky, and is a
wholly-owned subsidiary of 1st Independence; and
WHEREAS, MainSource and 1st Independence seek to affiliate through a
corporate reorganization whereby 1st Independence will merge with and into
MainSource, as a result of which merger 1st Bank will become a wholly-owned
subsidiary of MainSource; and
WHEREAS, the Boards of Directors of each of the parties hereto have
determined that it is in the best interests of their respective corporations or
banks and their respective shareholders to consummate the merger provided for
herein and have approved this Agreement, authorized its execution and designated
this Agreement a plan of reorganization and a plan of merger; and
WHEREAS, the members of the Board of Directors of 1st Independence have
each agreed to execute and deliver to MainSource a voting agreement
substantially in the form attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby make this Agreement and prescribe the terms and
conditions of the merger of 1st Independence with and into MainSource, and the
mode of carrying such merger into effect as follows:
ARTICLE I
THE MERGER
1.01. The Merger.
(a) General Description. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Article X hereof), 1st
Independence shall merge with and into and under the Articles of Incorporation
of MainSource (the "Merger"). MainSource shall survive the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue its
corporate existence under the laws of the State of Indiana pursuant to the
provisions of and with the effect provided in the Indiana Business Corporation
Law, as amended ("IBCL").
(b) Name, Officers and Directors. The name of the Surviving
Corporation shall be "MainSource Financial Group, Inc." Its principal office
shall be located at 0000 Xxxxx Xxxxx Xxxx 0 Xxxxxx, Xxxxxxxxxx, Xxxxxxx Xxxxxx,
Xxxxxxx. The officers of MainSource serving at the Effective Time shall continue
to serve as the officers of the Surviving Corporation, until such time as their
successors shall have been duly elected and have qualified or until their
earlier resignation, death or removal from office. The directors of the
Surviving Corporation following the Effective Time shall be those individuals
serving as directors of MainSource at the Effective Time until such time as
their successors have been duly elected and have qualified or until their
earlier resignation, death, or removal as a director.
(c) Articles of Incorporation and By-Laws. The Articles of
Incorporation and By-Laws of MainSource in existence at the Effective Time shall
remain the Articles of Incorporation and By-Laws of the Surviving Corporation
following the Effective Time, until such Articles of Incorporation and By-Laws
shall be further amended as provided by applicable law.
(d) Effect of the Merger. At the Effective Time, the title to all
assets, real estate and other property owned by 1st Independence shall vest in
Surviving Corporation as set forth in Indiana Code Section 23-1-40-6, as
amended, without reversion or impairment. At the Effective Time, all liabilities
of 1st Independence shall be assumed by Surviving Corporation as set forth in
Indiana Code Section 23-1-40-6, as amended.
(e) Integration. At the Effective Time and subject to the terms and
conditions of this Agreement, the parties hereto currently intend to effectuate,
or cause to be effectuated, the Merger, pursuant to Articles of Merger,
substantially in the form attached hereto as Exhibit 1.01(e)(i), and a Plan of
Merger, substantially in the form attached hereto as Exhibit 1.01(e)(ii). The
parties agree to cooperate and to take all reasonable actions prior to or
following the Effective Time, including executing all requisite documentation,
as may be reasonably necessary to effect the Merger.
1.02. Reservation of Right to Revise Structure. At MainSource's
election, the Merger may alternatively be structured so that (a) 1st
Independence is merged with and into any other direct or indirect wholly-owned
subsidiary of MainSource or (b)any direct or indirect wholly-owned subsidiary
of MainSource is merged with and into 1st Independence; provided, however, that
no such change shall (x) alter or change the amount or kind of the Merger
Consideration (as hereinafter defined) or the treatment of the holders of common
stock, $0.10 par value, of 1st Independence ("1st Independence Common Stock") or
options for 1st Independence Common Stock ("1st Independence Stock Options"),
(y) prevent the parties from obtaining the opinion of Xxxxx XxXxxxx LLP referred
to in Sections 7.01 and 7.02 or otherwise cause the transaction to fail to
qualify for the tax treatment described in Section 1.03, or (z) materially
impede or delay consummation of the transactions contemplated by this Agreement.
In the event of such an election, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such election.
1.03. Tax Free Reorganization. MainSource, 1st Independence and 1st
Bank intend for the Merger to qualify as a reorganization within the meaning of
Section 368(a) and related sections of the Internal Revenue Code of 1986, as
amended (the "Code"), and agree to cooperate and to take such actions as may be
reasonably necessary to assure such result.
ARTICLE II
MANNER AND BASIS OF EXCHANGE OF STOCK
2.01. Consideration.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time, each share of 1st Independence Common Stock issued and
outstanding immediately prior to the Effective Time (other than (i) shares held
as treasury stock of 1st Independence, (ii) shares held directly or indirectly
by MainSource, except shares held in a fiduciary capacity or in satisfaction of
a debt previously contracted, if any, and (iii) Dissenting Shares (as defined
below)) shall become and be converted into the right to receive in accordance
with this Article:
(i) $5.475 (the "Cash Consideration"); and
(ii) 0.881036 shares of common stock (the "Exchange Ratio"),
without par value, of MainSource ("MainSource Common Stock")
(the "Stock Consideration").
The Cash Consideration and the Stock Consideration are sometimes
referred to herein collectively as the "Merger Consideration."
(b) Subject to any consents required by law and the provisions of
Section 5.15 hereof, at the Effective Time: (i) each outstanding 1st
Independence Stock Option without any action on the part of any holder thereof,
shall be converted into the right to receive from MainSource, at the Effective
Time, an amount in cash equal to the product of (A) the sum of (i) (x) the Cash
Consideration plus (y) the product of the Average Share Price of MainSource
Common Stock (as defined below) multiplied by the Exchange Ratio, less (ii) the
per share exercise price for each share of 1st Independence Common Stock subject
to such 1st Independence Stock Option, multiplied by (B) the number of shares of
1st Independence Common Stock subject to such 1st Independence Stock Option;
provided, however, that the payer shall withhold from such cash payment those
taxes required to be withheld by applicable law, if any, and (ii) each 1st
Independence Stock Option to which this paragraph applies (regardless of whether
such calculation results in a positive or negative number) will be cancelled and
shall cease to exist by virtue of such payment. No cash payment will be made to
any holder of a 1st Independence Stock Option if the calculation pursuant to
this Section 2.01(b) results in a negative number. The Average Share Price of
MainSource Common Stock shall be equal to the average per share closing prices
of a share of MainSource Common Stock as quoted on the Nasdaq Stock Market
during the ten trading days preceding the fifth (5th) calendar day preceding the
Effective Time.
(c) Each share of 1st Independence Common Stock that, immediately prior
to the Effective Time, is held as treasury stock of 1st Independence or held
directly or indirectly by MainSource (other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted) shall by virtue of
the Merger be canceled and retired and shall cease to exist, and no exchange or
payment shall be made therefor.
2.02. Adjustment to Purchase Price Based Upon 1st Independence's
Consolidated Shareholders' Equity.
(a) If as of the last day of the month preceding the month in which the
Effective Time occurs (the "Computation Date") the 1st Independence Consolidated
Tangible Shareholders' Equity, as determined in accordance with Section 2.02(b),
is less than $26,700,000, the Cash Consideration shall be reduced on a
dollar-for-dollar basis by an amount equal to the difference between $26,700,000
and the actual 1st Independence Consolidated Tangible Shareholders' Equity as of
the Computation Date determined in accordance with Section 2.02(b), divided by
the total number of shares of 1st Independence Common Stock outstanding on the
Closing Date. Similarly, if as of the Computation Date the 1st Independence
Consolidated Tangible Shareholders' Equity, as calculated in accordance with
Section 2.02(b) less (i) any extraordinary or non-recurring items of income,
(ii) gains whether realized or unrealized related to 1st Independent's
investment portfolio and (iii) the difference, if any, between the total
quarterly loan loss reserve provision expense set forth in the budget presented
to MainSource and the actual total quarterly loan loss reserve provision expense
taken by 1st Independence between the date of this Agreement and the Closing
Date, in each case pro rated as necessary, is greater than $27,200,000, the Cash
Consideration shall be increased on a dollar-for-dollar basis by an amount equal
to the difference between the actual 1st Independence Consolidated Tangible
Shareholders' Equity as of the Computation Date determined in accordance with
Section 2.02(b) and $27,200,000, divided by the total number of shares of 1st
Independence Common Stock outstanding on the Closing Date.
(b) The 1st Independence Consolidated Tangible Shareholders' Equity
(i.e., consolidated shareholders' equity less the amount of goodwill and core
deposit intangibles but excluding the impact of any changes in any unrealized
gains or losses on available for sale securities) shall be determined based upon
the balance sheet of 1st Independence as of the Computation Date, prepared in
accordance with generally accepted accounting principles consistently applied,
after adjustment for the following amounts (which amounts shall also be
calculated in accordance with generally accepted accounting principles
consistently applied and tax effecting those adjustments, using a 35% tax rate,
where appropriate):
(i) the accrual or payment of any payments or other financial
effect of any of the payments, actions or transactions contemplated by Sections
5.18 and 5.19; and
(ii) the accrual or payments of an amount to terminate 1st
Bank's data processing contracts with Computer Services, Inc. and Digital
Insights.
Notwithstanding the foregoing, 1st Independence Consolidated Tangible
Shareholders' Equity as of the Computation Date will not be increased due to
increases in 1st Independence's capital stock and surplus as a result of the
exercise of options under the 2004 Option Plan between the date of this
Agreement and the Effective Time.
2.03. Fractional Shares. Notwithstanding any other provision in this
Agreement, no fractional shares of MainSource Common Stock and no certificates
or scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, MainSource shall pay to each holder of 1st Independence Common
Stock who otherwise would be entitled to a fractional share of MainSource Common
Stock an amount in cash (without interest) determined by multiplying such
fraction by the Average Share Price of MainSource Common Stock.
2.04. Exchange Procedures.
(a) Distributions by MainSource of the Merger Consideration shall be
made in accordance with Section 2.01. At and after the Effective Time, each
certificate representing shares of 1st Independence Common Stock shall represent
only the right to receive the Merger Consideration in accordance with the terms
of this Agreement.
(b) At or prior to the Effective Time, MainSource shall (i) reserve a
sufficient number of shares of MainSource Common Stock to be issued as part of
the Merger Consideration, (ii) deposit with MainSource Bank an estimated amount
of cash to be issued as part of the Merger Consideration and (iii) mail to each
holder of 1st Independence Common Stock a letter of transmittal providing
instructions as to the transmittal to MainSource of certificates representing
shares of 1st Independence Common Stock and the issuance of cash and shares of
MainSource Common Stock in exchange therefore pursuant to the terms of this
Agreement.
(c) MainSource shall cause a certificate representing that number of
whole shares of MainSource Common Stock that each holder of 1st Independence
Common Stock has the right to receive pursuant to Section 2.01, and a check in
the amount of any cash that such holder has the right to receive pursuant to
Section 2.01, including any cash in lieu of fractional shares, or dividends or
distributions which such person shall be entitled to receive, to be delivered to
such shareholder upon delivery (if not previously delivered) to MainSource of
certificates representing such shares of 1st Independence Common Stock ("Old
Certificates") (or bond or other indemnity satisfactory to MainSource if any of
such certificates are lost, stolen or destroyed) owned by such shareholder
accompanied by a properly completed and executed letter of transmittal, as in
the form and substance reasonably satisfactory to MainSource. No interest will
be paid on any Merger Consideration that any such person shall be entitled to
receive pursuant to this Article II upon such delivery.
(d) No dividends or other distributions on MainSource Common Stock with
a record date occurring after the Effective Time shall be paid to the holder of
any unsurrendered Old Certificate representing shares of 1st Independence Common
Stock converted in the Merger into the right to receive shares of such
MainSource Common Stock until the holder thereof surrenders such Old
Certificates in accordance with this Section 2.04. After becoming so entitled in
accordance with this Section 2.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
MainSource Common Stock such holder had the right to receive upon surrender of
the Old Certificate.
(e) The stock transfer books of 1st Independence shall be closed
immediately upon the Effective Time and from and after the Effective Time there
shall be no transfers on the stock transfer records of 1st Independence of any
shares of 1st Independence Common Stock. If, after the Effective Time, Old
Certificates are presented to MainSource, they shall be canceled and exchanged
for the Merger Consideration deliverable in respect thereof pursuant to this
Agreement in accordance with the procedures set forth in this Section 2.04.
(f) MainSource shall be entitled to rely upon 1st Independence's stock
transfer books to establish the identity of those persons entitled to receive
the Merger Consideration, which books shall be conclusive with respect thereto.
In the event of a dispute with respect to ownership of stock represented by any
Old Certificate, MainSource shall be entitled to deposit any Merger
Consideration represented thereby in escrow with an independent third party and
thereafter be relieved with respect to any claims thereto.
(g) If any Old Certificate shall have been lost, stolen, or destroyed,
upon the making of an affidavit of that fact by the person claiming such Old
Certificate to be lost, stolen, or destroyed and, if required by MainSource, the
posting by such person of a bond or other indemnity satisfactory to MainSource
as MainSource may reasonably direct as indemnity against any claim that may be
made against it with respect to such Old Certificate, MainSource will issue in
exchange for such lost, stolen, or destroyed Old Certificate the Merger
Consideration deliverable in respect thereof pursuant to Section 2.01 hereof.
(h) Notwithstanding the foregoing, neither the Exchange Agent (as
defined in Section 2.06 below) nor any party hereto shall be liable to any
former holder of 1st Independence Common Stock for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(i) In the event that the Merger is not completed for any reason,
MainSource shall cause the Exchange Agent to promptly return any Old
Certificates and/or any indemnity instruments received from 1st Independence
shareholders to such shareholders.
2.05. Anti-Dilution Adjustments. Should MainSource change (or
establish a record date for changing) the number of shares of MainSource Common
Stock issued and outstanding prior to the Effective Time by way of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding MainSource Common Stock, and the record date therefor shall be
prior to the Effective Time, the Stock Consideration shall be adjusted so the
shareholders shall receive, in the aggregate, such number of shares of
MainSource Common Stock representing the same percentage of outstanding shares
of MainSource Common Stock at the Effective Time as would have been represented
by the number of shares of MainSource Common Stock the shareholders of 1st
Independence would have received if any of the foregoing actions had not
occurred.
2.06. Exchange Agent. 1st Independence and MainSource agree that
MainSource Bank or its designee shall be appointed to act as agent (the
"Exchange Agent") for purposes of distributing the Merger Consideration pursuant
to the terms and conditions of this Agreement.
2.07. Dissenting Shares. Shares of 1st Independence Common Stock which
are issued and outstanding immediately prior to the Effective Time and which are
held by persons who have properly exercised, and not withdrawn or waived,
appraisal rights with respect thereto (the "Dissenting Shares") in accordance
with the General Corporation Law of the State of Delaware (the "GCL"), will not
be converted into the right to receive the Merger Consideration, and holders of
such shares of 1st Independence Common Stock will be entitled, in lieu thereof,
to receive payment of the appraised value of such shares of 1st Independence
Common Stock in accordance with the provisions of the GCL unless and until such
holders fail to perfect or effectively withdraw or lose their rights to
appraisal and payment under the GCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of 1st Independence Common Stock will thereupon be treated as if they had
been converted at the Effective Time into the right to receive the Merger
Consideration, without any interest thereon. 1st Independence will give
MainSource prompt notice of any demands received by 1st Independence for
appraisal of shares of 1st Independence Common Stock. Prior to the Effective
Time, 1st Independence will not, except with the prior written consent of
MainSource, make any payment with respect to, or settle or offer to settle, any
such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
1st INDEPENDENCE AND 1st BANK
On or prior to the date hereof, 1st Independence has delivered to
MainSource a schedule (the "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in this
Article III or to one or more of its covenants contained in Article V.
For the purpose of this Agreement, and in relation to 1st Independence,
a "Material Adverse Effect" means any effect that (i) is material and adverse to
the financial position, results of operations or business of 1st Independence
and its subsidiaries taken as a whole, or (ii) would materially impair the
ability of 1st Independence to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the consummation of the
Merger and the other transactions contemplated by this Agreement; provided,
however, that Material Adverse Effect shall not be deemed to include the impact
of (a) changes in banking and similar laws of general applicability to banks or
their holding companies or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks or their holding
companies generally, (c) any modifications or changes to valuation policies and
practices in connection with the Merger or restructuring charges taken in
connection with the Merger, in each case in accordance with generally accepted
accounting principles, (d) effects of any action taken with the prior written
consent of MainSource, (e) changes in the general level of interest rates
(including the impact on 1st Independence's or 1st Bank's securities portfolios)
or conditions or circumstances relating to or that affect the United States
economy, financial or securities markets or the banking industry, generally, (f)
changes resulting from expenses (such as legal, accounting and investment
bankers' fees) incurred in connection with this Agreement or the transactions
contemplated herein, including without limitation those provided in Sections
5.18 and 5.19 of this Agreement and any benefit or retirement plan disclosed on
the 1st Independence Disclosure Schedule, (g) the impact of the announcement of
this Agreement and the transactions contemplated hereby, and compliance with
this Agreement on the business, financial condition or results of operations of
1st Independence and its subsidiaries, and (h) the occurrence of any military or
terrorist attack within the United States or any of its possessions or offices;
provided that in no event shall a change in the trading price of the 1st
Independence Common Stock, by itself, be considered to constitute a Material
Adverse Effect on 1st Independence and its subsidiaries taken as a whole (it
being understood that the foregoing proviso shall not prevent or otherwise
affect a determination that any effect underlying such decline has resulted in a
Material Adverse Effect).
For the purpose of this Agreement, and in relation to 1st Independence
and 1st Bank, "knowledge" means the actual knowledge of N. Xxxxxxx Xxxxx, R.
Xxxxxxx Xxxxxxxx, Xxxxx X. Beach, Xxxxx X. Xxxxxxxx, Xxxx Xxxxxx and Xxxxx X.
Xxxxxx.
Accordingly, 1st Independence and 1st Bank hereby represent and warrant
to MainSource as follows, except as set forth in its Disclosure Schedule:
3.01. Organization and Authority. (a) 1st Independence is a
corporation duly organized and validly existing under the laws of the state of
Delaware and is a registered bank holding company under the BHC Act. 1st
Independence has full power and authority (corporate and otherwise) to own and
lease its properties as presently owned and leased and to conduct its business
in the manner and by the means utilized as of the date hereof. 1st Bank is 1st
Independence's only direct or indirect subsidiary and except as set forth on the
Disclosure Schedule, 1st Independence owns no voting stock or equity securities
of any corporation, partnership, association or other entity.
(b) 1st Bank is a commercial bank chartered and existing under the law
of the state of Kentucky. 1st Bank has full power and authority (corporate and
otherwise) to own and lease its properties as presently owned and leased and to
conduct its business in the manner and by the means utilized as of the date
hereof. Except as set forth on the Disclosure Schedule, 1st Bank has no
subsidiaries and owns no voting stock or equity securities of any corporation,
partnership, association or other entity.
3.02. Authorization. (a) 1st Independence has the requisite corporate
power and authority to enter into this Agreement and to perform its obligations
hereunder, subject to the fulfillment of the conditions precedent set forth in
Sections 7.02(e) and (f) hereof. As of the date hereof, 1st Independence is not
aware of any reason why the approvals set forth in Section 7.02(e) will not be
received in a timely manner and without the imposition of a condition,
restriction or requirement of the type described in Section 7.02(e). This
Agreement and its execution and delivery by 1st Independence have been duly
authorized and approved by the Board of Directors of 1st Independence and,
assuming due execution and delivery by MainSource, constitutes a valid and
binding obligation of 1st Independence, subject to the fulfillment of the
conditions precedent set forth in Section 7.02 hereof, and is enforceable in
accordance with its terms, except to the extent limited by general principles of
equity and public policy and by bankruptcy, insolvency, fraudulent transfer,
reorganization, liquidation, moratorium, readjustment of debt or other laws of
general application relating to or affecting the enforcement of creditors'
rights.
(b) Neither the execution of this Agreement nor consummation of the
Merger contemplated hereby: (i) conflicts with or violates the Articles of
Incorporation or By-Laws of 1st Independence or the Articles of Incorporation or
Bylaws of 1st Bank; (ii) conflicts with or violates any local, state, federal or
foreign law, statute, ordinance, rule or regulation (provided that the approvals
of or filings with applicable government regulatory agencies or authorities
required for consummation of the Merger are obtained) or any court or
administrative judgment, order, injunction, writ or decree; (iii) conflicts
with, results in a breach of or constitutes a default under any note, bond,
indenture, mortgage, deed of trust, license, lease, contract, agreement,
arrangement, commitment or other instrument to which 1st Independence or 1st
Bank is a party or by which 1st Independence or 1st Bank is subject or bound;
(iv) results in the creation of or gives any person, corporation or entity the
right to create any lien, charge, claim, encumbrance or security interest, or
results in the creation of any other rights or claims of any other party (other
than MainSource) or any other adverse interest, upon any right, property or
asset of 1st Independence or 1st Bank which would be material to 1st
Independence; or (v) terminates or gives any person, corporation or entity the
right to terminate, accelerate, amend, modify or refuse to perform under any
note, bond, indenture, mortgage, agreement, contract, lease, license,
arrangement, deed of trust, commitment or other instrument to which 1st
Independence or 1st Bank is bound or with respect to which 1st Independence or
1st Bank is to perform any duties or obligations or receive any rights or
benefits, except, in the case of clauses (ii) through (v) which would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
(c) Other than in connection or in compliance with the provisions of
the applicable federal and state banking, securities, antitrust and corporation
statutes, all as amended, and the rules and regulations promulgated thereunder,
no notice to, filing with, exemption by or consent, authorization or approval of
any governmental agency or body is necessary for consummation of the Merger by
1st Independence.
3.03. Capitalization. (a) The authorized capital stock of 1st
Independence as of the date hereof consists, and at the Effective Time will
consist, of 5,000,000 shares of 1st Independence Common Stock, 1,995,774 shares
of which shares are issued and outstanding as of the date hereof. Additionally,
options to purchase 64,300 shares of 1st Independence Common Stock are
outstanding under the 2004 Omnibus Stock Option Plan of 1st Independence ("2004
Option Plan") and no options to purchase shares of 1st Independence Common Stock
are outstanding under the 1996 Stock Option Plan of 1st Independence ("1996
Option Plan"). 500,000 shares of preferred stock, $0.10 par value, are
authorized, none of which preferred shares are issued and outstanding. Such
issued and outstanding shares of 1st Independence Common Stock have been duly
and validly authorized by all necessary corporate action of 1st Independence,
are validly issued, fully paid and nonassessable and have not been issued in
violation of any pre-emptive rights of any present or former 1st Independence
shareholder. Except as set forth in the Disclosure Schedule, 1st Independence
has no capital stock authorized, issued or outstanding other than as described
in this Section 3.03(a) and has no intention or obligation to authorize or issue
any other capital stock or any additional shares of 1st Independence Common
Stock. Each share of 1st Independence Common Stock is entitled to one vote per
share. A description of the 1st Independence Common Stock is contained in the
Articles of Incorporation of 1st Independence, as set forth in the Disclosure
Schedule pursuant to Section 3.04 hereof.
(b) The authorized capital stock of 1st Bank as of the date hereof
consists, and at the Effective Time will consist, of 1,000 shares of common
stock, no par value per share, 1,000 of which shares are validly issued and
outstanding (such issued and outstanding shares are referred to herein as "1st
Bank Common Stock"). Such validly issued and outstanding shares of 1st Bank
Common Stock have been duly and validly authorized by all necessary corporate
action of 1st Bank, are validly issued, fully paid and nonassessable, and have
not been issued in violation of any pre-emptive rights of any present or former
1st Bank stockholder. All of the issued and outstanding shares of 1st Bank
Common Stock are owned by 1st Independence free and clear of all liens, pledges,
charges, claims, encumbrances, restrictions, security interests, options and
pre-emptive rights and of all other rights or claims of any other person,
corporation or entity with respect thereto. 1st Bank has no capital stock
authorized, issued or outstanding other than as described in this
Section 3.03(b)and has no intention or obligation to authorize or issue any
other capital stock or any additional shares of 1st Bank Common Stock.
(c) Except as set forth in the Disclosure Schedule, there are no
options, warrants, commitments, calls, puts, agreements, understandings,
arrangements or subscription rights relating to any shares of 1st Independence
Common Stock or 1st Bank Common Stock, or any securities convertible into or
representing the right to purchase or otherwise acquire any common stock or debt
securities of 1st Independence or 1st Bank, by which 1st Independence is or may
become bound. 1st Independence does not have any outstanding contractual or
other obligation to repurchase, redeem or otherwise acquire any of the issued
and outstanding shares of 1st Independence Common Stock. To the knowledge of 1st
Independence and 1st Bank, there are no voting trusts, voting arrangements,
buy-sell agreements or similar arrangements affecting the capital stock of
either of them.
(d) Except as set forth in the Disclosure Schedule, 1st Independence
has no knowledge of any person or entity which beneficially owns (as defined in
Rule 13d-3 under the 0000 Xxx) 5% or more of its outstanding shares of common
stock.
3.04. Organizational Documents. The Articles of Incorporation and
By-Laws of 1st Independence and the Articles of Incorporation and By-Laws of 1st
Bank, representing true, accurate and complete copies of such corporate
documents in effect as of the date of this Agreement, have been delivered to
MainSource and are included in the Disclosure Schedule.
3.05. Compliance with Law. (a) Neither 1st Independence nor 1st Bank
is currently in violation of, and since January 1, 2002, neither has been in
violation of, of any local, state, federal or foreign law, statute, regulation,
rule, ordinance, order, restriction or requirement, and neither is in violation
of any order, injunction, judgment, writ or decree of any court or government
agency or body, except where such violation would not have a Material Adverse
Effect. 1st Independence and 1st Bank possess and hold all licenses, franchises,
permits, certificates and other authorizations necessary for the continued
conduct of their business without interference or interruption, except where the
failure to possess and hold the same would not have a Material Adverse Effect,
and to the knowledge of 1st Independence, such licenses, franchises, permits,
certificates and authorizations are transferable (to the extent required) to
MainSource at the Effective Time without any restrictions or limitations thereon
or the need to obtain any consents of government agencies or other third parties
other than as set forth in this Agreement.
(b) Set forth on the Disclosure Schedule is a list of all agreements,
understandings and commitments with, and all orders and directives of, all
government regulatory agencies or authorities with respect to the financial
condition, results of operations, business, assets or capital of 1st
Independence or 1st Bank which presently are binding upon or require action by,
or at any time during the last five (5) years have been binding upon or have
required action by, 1st Independence or 1st Bank, and all documents relating
thereto have been made available to MainSource, including, without limitation,
all correspondence, written communications and written commitments related
thereto. There are no refunds or restitutions required to be paid as a result of
any criticism of any regulatory agency or body cited in any examination report
of 1st Independence or 1st Bank as a result of an examination by any regulatory
agency or body, or set forth in any accountant's or auditor's report to 1st
Independence or 1st Bank.
(c) Since the enactment of the Xxxxxxxx-Xxxxx Act, 1st Independence
has been and is in compliance in all material respects with the applicable
provisions of the Xxxxxxxx-Xxxxx Act. The Disclosure Schedule sets forth, as of
the date hereof, a schedule of all officers and directors of 1st Independence
who have outstanding loans from 1st Independence or 1st Bank, or any other
subsidiary of either, and there has been no default on, or forgiveness or waiver
of, in whole or in part, any such loan during the two (2) years immediately
preceding the date hereof.
(d) All of the existing offices and branches of 1st Bank have been
legally authorized and established in accordance with all applicable federal,
state and local laws, statutes, regulations, rules, ordinances, orders,
restrictions and requirements, except such as would not have a Material Adverse
Effect. 1st Bank has no approved but unopened offices or branches.
3.06. Accuracy of Statements Made and Materials Provided to
MainSource. No representation, warranty or other statement made, or any
information provided, by 1st Independence or 1st Bank in this Agreement or the
Disclosure Schedule (and any update thereto) and no written information which
has been or shall be supplied by 1st Independence or 1st Bank with respect to
its financial condition, results of operations, business, assets, capital or
directors and officers for inclusion in the proxy statement-prospectus relating
to the Merger, contains or shall contain (in the case of information relating to
the proxy statement-prospectus at the time it is first mailed to 1st
Independence's shareholders) any untrue statement of material fact or omits or
shall omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
false or misleading, except that no representation or warranty has been made by
1st Independence or 1st Bank with respect to statements made or incorporated by
reference in the Form S-4 or the proxy statement-prospectus therein based on
information supplied by MainSource specifically for inclusion or incorporation
by reference in the Form S-4 or the proxy statement-prospectus therein.
3.07. Litigation and Pending Proceedings. Except as set forth in the
Disclosure Schedule:
(a) Except for lawsuits involving collection of delinquent accounts,
there are no claims, actions, suits, proceedings, mediations, arbitrations or
investigations pending and served against 1st Independence or 1st Bank or, to
the knowledge of 1st Independence or 1st Bank, threatened in any court or before
any government agency or authority, arbitration panel or otherwise against 1st
Independence or 1st Bank. 1st Independence does not have knowledge of a basis
for any claim, action, suit, proceeding, litigation, arbitration or
investigation against 1st Independence or 1st Bank.
(b) Neither 1st Independence nor 1st Bank is: (i) subject to any
outstanding judgment, order, writ, injunction or decree of any court,
arbitration panel or governmental agency or authority; (ii) presently charged
with or, to the knowledge of 1st Independence or 1st Bank, under governmental
investigation with respect to, any actual or alleged violations of any law,
statute, rule, regulation or ordinance; or (iii) the subject of any pending or,
to the knowledge of 1st Independence or 1st Bank, threatened proceeding by any
government regulatory agency or authority having jurisdiction over their
respective business, assets, capital, properties or operations.
3.08. Financial Statements and Reports. (a) 1st Independence has
delivered to MainSource copies of the following financial statements and reports
of 1st Independence and 1st Bank, including the notes thereto (collectively, the
"1st Independence Financial Statements"):
(i) Consolidated Balance Sheets and the related Consolidated
Statements of Income and Consolidated Statements of Changes in Shareholders'
Equity of 1st Independence as of and for the fiscal years ended December 31,
2006 and 2005 and as of and for the nine months ended September 30, 2007;
(ii)Consolidated Statements of Cash Flows of 1st Independence
for the fiscal years ended December 31, 2006 and 2005 and for the nine months
ended September, 2007;
(iii)Call Reports ("Call Reports") for 1st Bank as of the close
of business on December 31, 2006 and 2005 and for the twelve months ended
December 31, 2007;
(b) The 1st Independence Financial Statements present fairly the
consolidated financial position of 1st Independence as of and at the dates shown
and the consolidated results of operations for the periods covered thereby and
are complete, correct, represent bona fide transactions, and have been prepared
from the books and records of 1st Independence and its subsidiaries. The 1st
Independence Financial Statements described in clauses (i) and (ii) above for
completed fiscal years are audited financial statements and have been prepared
in conformance with generally accepted accounting principles applied on a
consistent basis, except as may otherwise be indicated in any accountants' notes
or reports with respect to such financial statements.
(c) Since September 30, 2007 on a consolidated basis 1st Independence
and its subsidiaries have not incurred any material liability other than in the
ordinary course of business consistent with past practice.
3.09. Properties, Contracts, Employees and Other Agreements. (a) Set
forth in the Disclosure Schedule are true, accurate and complete copies of the
following:
(i) A brief description and the location of all real property
owned by 1st Independence or 1st Bank (other than Other Real Estate Owned
("OREO")), together with a legal description of such real property and, within
sixty (60) days of the date of this Agreement, 1st Independence will make
available to MainSource a title insurance policy insuring the same, a survey
drawing of any parcel of real property owned by 1st Independence or 1st Bank and
an appraisal of such property, the fees for which shall be paid by MainSource
prior to the Closing Date;
(ii) All conditional sales contracts or other title retention
agreements relating to 1st Independence or 1st Bank and agreements for the
purchase of federal funds;
(iii)All agreements, contracts, leases, licenses, lines of
credit, understandings, commitments or obligations of 1st Independence or 1st
Bank which individually or in the aggregate:
(A) involve payment or receipt by 1st Independence or 1st Bank (other
than as disbursements of loan proceeds to customers, loan payments by customers
or customer deposits and other customer loan and deposit transactions) of more
than $50,000;
(B) involve payments based on profits of 1st Independence or 1st Bank;
(C) relate to the purchase of goods, products, supplies or services in
excess of $25,000;
(D) were not made in the ordinary course of business and involve
payment or receipt by 1st Independence or 1st Bank of more than $25,000;
(E) may not be terminated without penalty at-will or upon notice of
ninety (90) days or less; or
(F) involve the employment of, or payment to, any present or former
directors, officers, employees or consultants relating to their services as such
with 1st Independence; and
(iv)The name and current annual salary of each director, officer
and employee of 1st Independence or 1st Bank whose current annual salary is in
excess of $50,000, and the profit sharing, bonus or other form of compensation
(other than salary) paid or payable by 1st Independence or 1st Bank to or for
the benefit of each such person for the fiscal year ended December 31, 2007, and
any employment, severance or deferred compensation agreement or arrangement with
respect to each such person.
(b) 1st Independence has, prior to the date of this Agreement, provided
or given access to MainSource to the files and documentation in its possession
relating to all borrowers of 1st Bank, or persons or entities that are or may
become obligated to 1st Bank under an existing letter of credit, line of credit,
loan transaction, loan agreement, promissory note or other commitment of 1st
Bank, in excess of $25,000 individually or in the aggregate with respect to such
borrower, whether in principal, interest or otherwise, and including all
guarantors of such indebtedness.
(c) Each of the agreements, contracts, commitments, leases, instruments
and documents set forth in the Disclosure Schedule relating to this Section 3.09
is valid and enforceable against 1st Independence or 1st Bank, as the case may
be, in accordance with its terms, except to the extent limited by general
principles of equity and public policy or by bankruptcy, insolvency, fraudulent
transfer, readjustment of debt or other laws of general application relative to
or affecting the enforcement of creditor's rights. 1st Independence and 1st Bank
is, and to its knowledge, all other parties thereto are, in material compliance
with the provisions thereof, and neither 1st Independence nor 1st Bank is, and
to its knowledge, no other party thereto is, in default in the performance,
observance or fulfillment of any material obligation, covenant or provision
contained therein. Except as set forth in the Disclosure Schedule, none of the
foregoing requires the consent of any party to its assignment in connection with
the Merger contemplated by this Agreement.
(d) Neither 1st Independence nor 1st Bank is in default under or in
breach of or, to the knowledge of 1st Independence or 1st Bank, alleged to be in
default under or in breach of, any material loan or credit agreement,
conditional sales contract or other title retention agreement, security
agreement, bond, indenture, mortgage, license, contract, lease, commitment or
any other instrument or obligation.
(e) The Disclosure Schedule sets forth a good faith estimate by 1st
Bank of the expected costs to terminate 1st Bank's data processing contracts
with Computer Services, Inc. and Digital Insights assuming such contracts are
terminated as of October 31, 2008.
3.10. Absence of Undisclosed Liabilities. Except as provided in the
1st Independence Financial Statements or in the Disclosure Schedule, except for
unfunded loan commitments and obligations on letters of credit to customers of
1st Bank made in the ordinary course of business, except for trade payables
incurred in the ordinary course of 1st Bank's business, and except for the
transactions contemplated by this Agreement and obligations for services
rendered pursuant thereto, or any other transactions which would not result in a
material liability, neither 1st Independence nor 1st Bank has, nor will have at
the Effective Time, any obligation, agreement, contract, commitment, liability,
lease or license which exceeds $50,000 individually, or any obligation,
agreement, contract, commitment, liability, lease or license made outside of the
ordinary course of business, nor does there exist any circumstances resulting
from transactions effected or events occurring on or prior to the date of this
Agreement or from any action omitted to be taken during such period which could
reasonably be expected to result in any such obligation, agreement, contract,
commitment, liability, lease or license. Neither 1st Independence nor 1st Bank
is delinquent in the payment of any amount due pursuant to any trade payable,
and each has properly accrued for such payables in accordance with generally
accepted accounting principles.
3.11. Title to Assets. Except as described in this Section 3.11 or
the Disclosure Schedule:
(a) 1st Independence or 1st Bank, as the case may be, has good and
marketable title in fee simple absolute to all real property (including, without
limitation, all real property used as bank premises and all other real estate
owned) which is reflected in the 1st Independence Financial Statements as of
September 30, 2007; good and marketable title to all personal property reflected
in the 1st Independence Financial Statements as of September 30, 2007, other
than personal property disposed of in the ordinary course of business since
September 30, 2007; good and marketable title to or right to use by valid and
enforceable lease or contract all other properties and assets (whether real or
personal, tangible or intangible) which 1st Independence or 1st Bank purports to
own or which 1st Independence or 1st Bank uses in its respective business and
which are in either case material to its respective business; good and
marketable title to, or right to use by terms of a valid and enforceable lease
or contract, all other property used in its respective business to the extent
material thereto; and good and marketable title to all material property and
assets acquired and not disposed of or leased since September 30, 2007. All of
such properties and assets are owned by 1st Independence or 1st Bank free and
clear of all land or conditional sales contracts, mortgages, liens, pledges,
restrictions, options, security, interests, charges, claims, rights of third
parties or encumbrances of any nature except: (i) as set forth in the Disclosure
Schedule; (ii) as specifically noted in reasonable detail in the 1st
Independence Financial Statements; (iii) statutory liens for taxes not yet
delinquent or being contested in good faith by appropriate proceedings;
(iv) pledges or liens required to be granted in connection with the acceptance
of government deposits or granted in connection with repurchase or reverse
repurchase agreements; and (v) easements, encumbrances and liens of record,
imperfections of title and other limitations which are not material in amounts
to 1st Independence on a consolidated basis and which do not detract from the
value or materially interfere with the present or contemplated use of any of the
properties subject thereto or otherwise materially impair the use thereof for
the purposes for which they are held or used. All real property owned or, to 1st
Independence's knowledge, leased by 1st Independence or 1st Bank is in
compliance in all material respects with all applicable zoning and land use
laws. All real property, machinery, equipment, furniture and fixtures owned or
leased by 1st Independence or 1st Bank that is material to their respective
businesses is structurally sound, in good operating condition (ordinary wear and
tear excepted) and has been and is being maintained and repaired in the ordinary
condition of business.
(b) With respect to all real property presently or formerly owned,
leased or used by 1st Independence or 1st Bank, 1st Independence and 1st Bank
and to 1st Independence's knowledge each of the prior owners, have conducted
their respective business in compliance with all federal, state, county and
municipal laws, statutes, regulations, rules, ordinances, orders, directives,
restrictions and requirements relating to, without limitation, responsible
property transfer, underground storage tanks, petroleum products, air
pollutants, water pollutants or storm water or process waste water or otherwise
relating to the environment, air, water, soil or toxic or hazardous substances
or to the manufacturing, recycling, handling, processing, distribution, use,
generation, treatment, storage, disposal or transport of any hazardous or toxic
substances or petroleum products (including polychlorinated biphenyls, whether
contained or uncontained, and asbestos-containing materials, whether friable or
not), including, without limitation, the Federal Solid Waste Disposal Act, the
Hazardous and Solid Waste Amendments, the Federal Clean Air Act, the Federal
Clean Water Act, the Occupational Health and Safety Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980 and
the Superfund Amendments and Reauthorization Act of 1986, all as amended, and
regulations of the Environmental Protection Agency, the Nuclear Regulatory
Agency, the Army Corp of Engineers, the Department of Interior, the United
States Fish and Wildlife Service and any state department of natural resources
or state environmental protection agency now or at any time thereafter in effect
(collectively, "Environmental Laws"). There are no pending or, to the knowledge
of 1st Independence or 1st Bank, threatened, claims, actions or proceedings by
any local municipality, sewage district or other governmental entity against 1st
Independence or 1st Bank with respect to the Environmental Laws, and to 1st
Independence's knowledge there is no reasonable basis or grounds for any such
claim, action or proceeding. No environmental clearances are required for the
conduct of the business of 1st Independence or 1st Bank as currently conducted
or the consummation of the Merger contemplated hereby. To 1st Independence's
knowledge, neither 1st Independence nor 1st Bank is the owner, or has been in
the chain of title or the operator or lessee, of any property on which any
substances have been used, stored, deposited, treated, recycled or disposed of,
which substances if known to be present on, at or under such property would
require clean-up, removal, treatment, abatement, response costs, or any other
remedial action under any Environmental Law. To 1st Independence's knowledge,
neither 1st Independence nor 1st Bank has any liability for any clean-up or
remediation under any of the Environmental Laws with respect to any real
property.
3.12. Loans and Investments.
(a) Except as set forth in the Disclosure Schedule, there is no loan by
1st Bank in excess of $25,000 that has been classified by regulatory examiners
or management as "Other Loans Specially Mentioned," "Substandard," "Doubtful" or
"Loss" or in excess of $25,000 that has been identified by accountants or
auditors (internal or external) as having a significant risk of
uncollectability. The most recent loan watch list of 1st Bank and a list of all
loans in excess of $25,000 which 1st Bank has determined to be thirty (30) days
or more past due with respect to principal or interest payments or has placed on
nonaccrual status are set forth in the Disclosure Schedule.
(b) All loans reflected in the 1st Independence Financial Statements as
of September 30, 2007, and which have been made, extended, renewed,
restructured, approved, amended or acquired since September 30, 2007: (i) have
been made for good, valuable and adequate consideration in the ordinary course
of business; (ii) constitute the legal, valid and binding obligation of the
obligor and any guarantor named therein, except to the extent limited by general
principles of equity and public policy or by bankruptcy, insolvency, fraudulent
transfer, reorganization, liquidation, moratorium, readjustment of debt or other
laws of general application relative to or affecting the enforcement of
creditors' rights; (iii) are evidenced by notes, instruments or other evidences
of indebtedness which are true, genuine and what they purport to be; and
(iv) are secured, to the extent that 1st Bank has a security interest in
collateral or a mortgage securing such loans, by perfected security interests or
recorded mortgages naming 1st Bank as the secured party or mortgagee (unless by
written agreement to the contrary).
(c) The reserves, the allowance for possible loan and lease losses and
the carrying value for real estate owned which are shown on the 1st Independence
Financial Statements are, in the judgment of management of 1st Independence and
1st Bank, adequate in all material respects under the requirements of generally
accepted accounting principles applied on a consistent basis to provide for
possible losses on items for which reserves were made, on loans and leases
outstanding and real estate owned as of the respective dates.
(d) Except as set forth in the Disclosure Schedule, none of the
investments reflected in the 1st Independence Financial Statements as of and for
the period ended September 30, 2007, and none of the investments made by 1st
Bank since September 30, 2007 are subject to any restriction, whether
contractual or statutory, which materially impairs the ability of 1st Bank to
dispose freely of such investment at any time. 1st Bank is not a party to any
repurchase agreements with respect to securities.
(e) Set forth in the Disclosure Schedule is a true, accurate and
complete list of all loans in which 1st Bank has any participation interest in
excess of $125,000 or which have been made with or through another financial
institution on a recourse basis against 1st Bank.
(f) Except as set forth in the Disclosure Schedule, and except for
customer deposits and ordinary trade payables, 1st Bank has not, nor will it
have at the Effective Time, any indebtedness for borrowed money.
3.13. Shareholder Rights Plan and Anti-takeover Mechanisms. 1st
Independence has taken all actions required to exempt MainSource, the Agreement
and the Merger from any provisions of an anti-takeover nature contained in its
organizational documents, any shareholder rights plan or similar plan, and the
provisions of any "anti-takeover," "fair price," "moratorium," "control share
acquisition" or similar laws or regulations to which 1st Independence is
subject.
3.14. Employee Benefit Plans.
(a) With respect to the employee benefit plans, as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), sponsored or otherwise maintained by 1st Independence or 1st Bank,
whether written or oral, in which 1st Independence or 1st Bank participates as a
participating employer, or to which 1st Independence or 1st Bank contributes, or
any nonqualified employee benefit plans or deferred compensation, bonus, stock
or incentive plans, or other employee benefit or fringe benefit programs for the
benefit of former or current employees or directors (or their beneficiaries or
dependents) of 1st Independence or 1st Bank, and including any such plans, to
1st Independence's knowledge, which have been terminated, merged into another
plan, frozen or discontinued since January 1, 2001 (collectively, "1st
Independence Plans"), except as set forth in the Disclosure Schedule:
(i) all such 1st Independence Plans have, on a continuous basis
since their adoption, been, in all material respects, maintained in compliance
with the requirements prescribed by all applicable statutes, orders and
governmental rules or regulations, including, without limitation, ERISA and the
Department of Labor ("Department") Regulations promulgated thereunder and the
Code and Treasury Regulations promulgated thereunder;
(ii) all 1st Independence Plans intended to constitute
tax-qualified plans under Section 401(a) of the Code have complied since their
adoption or have been timely amended to comply in all material respects with all
applicable requirements of the Code and the Treasury Regulations promulgated
thereunder;
(iii) except for the 1st Independence Employee Stock Ownership
and 401(k) Plan (the "1st Independence KSOP"), no 1st Independence Plan (or its
related trust) holds any stock or other securities of 1st Independence;
(iv) neither 1st Independence nor 1st Bank nor, to the knowledge
of 1st Independence, any other fiduciary of any 1st Independence Plan has
engaged in any transaction that may subject 1st Independence or 1st Bank, or any
1st Independence Plan, to a civil penalty imposed by Section 502 or any other
provision of ERISA or excise taxes under Sections 4971, 4975, 4976, 4977, 4979
or 4980B of the Code with respect to any 1st Independence Plan;
(v) all obligations required to be performed by 1st Independence
or 1st Bank under any provision of any 1st Independence Plan have been performed
by it in all material respects and it is not in default under or in violation of
any provision of any 1st Independence Plan;
(vi) to the knowledge of 1st Independence, no event has occurred
which would constitute grounds for an enforcement action by any party under
Part 5 of Title I of ERISA with respect to any 1st Independence Plan;
(vii) there are no examinations, audits, enforcement actions or
proceedings, or any other investigations, pending, threatened or currently in
process by any governmental agency involving any 1st Independence Plan;
(viii) there are no actions, suits, proceedings or claims pending
(other than routine claims for benefits) or, to the knowledge of 1st
Independence or 1st Bank, threatened, against 1st Independence or 1st Bank in
connection with any 1st Independence Plan or the assets of any 1st Independence
Plan;
(ix) any 1st Independence Plan may be terminated at any time and
this right has always been maintained by 1st Independence or 1st Bank.
(b) 1st Independence has provided or made available to MainSource true,
accurate and complete copies and, in the case of any plan or program which has
not been reduced to writing, a materially complete summary, of all of the
following, as applicable:
(i) pension, retirement, profit-sharing, savings, stock
purchase, stock bonus, stock ownership, stock option and stock appreciation
right plans, all amendments thereto, and, if required under the reporting and
disclosure requirements of ERISA, all amendments thereto and all summary plan
descriptions thereof (including any modifications thereto);
(ii) all employment, deferred compensation (whether funded or
unfunded), salary continuation, consulting, bonus, severance and collective
bargaining, agreements, arrangements or understandings;
(iii) all executive and other incentive compensation plans,
programs and agreements;
(iv) all group insurance and health insurance contracts, policies
or plans;
(v) all other incentive, welfare or employee benefits plans,
understandings, arrangements or agreements, maintained or sponsored,
participated in, or contributed to by 1st Independence for its current or former
directors, officers or employees;
(vi) all reports filed with the Internal Revenue Service
("Service") or the Department within the preceding three years by 1st
Independence or 1st Bank with respect to any 1st Independence Plan;
(vii) descriptions of all current participants in such plans and
programs and all participants with benefit entitlements under such plans and
programs; and
(viii) valuations or allocation reports for any defined contribution
plan, including the 1st Independence KSOP, as of the most recent date.
(c) Except as set forth on the Disclosure Schedule, no current or
former director, officer or employee of 1st Independence or 1st Bank (i) is
entitled to or may become entitled to any benefit under any welfare benefit
plans (as defined in Section 3(1) of ERISA) after termination of employment with
1st Independence or 1st Bank, except to the extent that such individuals may be
entitled to continue their group health care coverage pursuant to Section 4980B
of the Code, or (ii) is currently receiving, or entitled to receive, a
disability benefit under a long-term or short-term disability plan maintained by
1st Independence or 1st Bank.
(d) The Financial Institutions Retirement Fund ("Benefit Plan") is the
only defined benefit pension plan maintained by 1st Independence or 1st Bank or
their predecessor which is subject to Title IV of ERISA. Other than the Benefit
Plan, no 1st Independence Plan is, and neither 1st Independence nor 1st Bank has
any liability with respect to any plan that is, (i) a defined benefit pension
plan subject to Title IV of ERISA, (ii) a pension plan subject to Section 302 of
ERISA or Section 412 of the Code, or (iii) a multi-employer pension plan (as
that term is defined in Sections 4001(a)(3) and 3(37) of ERISA).
(e) With respect to any group health plan (as defined in
Section 607(1) of ERISA) sponsored or maintained by 1st Independence or 1st
Bank, no director, officer, employee or agent of 1st Independence or 1st Bank
has engaged in any action or failed to act in such a manner that, as a result of
such action or failure to act, would cause a tax to be imposed on 1st
Independence or 1st Bank under Code Section 4980B(a). With respect to all such
plans, all applicable provisions of Section 4980B of the Code and
Sections 601-606 of ERISA have been complied with in all material respects by
1st Independence or 1st Bank.
(f) Except as otherwise provided in the Disclosure Schedule, there are
no collective bargaining, employment, management, consulting, deferred
compensation, reimbursement, indemnity, retirement, early retirement, severance
or similar plans or agreements, commitments or understandings, or any employee
benefit or retirement plan or agreement, binding upon 1st Independence or 1st
Bank and no such agreement, commitment, understanding or plan is under
discussion or negotiation by management with any employee or group of employees,
any member of management or any other person.
(g) Except as otherwise provided in the Disclosure Schedule, no
Voluntary Employees' Beneficiary Association ("VEBA") as defined in Code
Section 501(c)(9) is sponsored or maintained by 1st Independence or 1st Bank.
(h) Except as otherwise provided in the Disclosure Schedule or as
contemplated in this Agreement, there are no benefits or liabilities under any
employee benefit plan or program that will be accelerated as a result of the
transactions contemplated by the terms of this Agreement.
(i) Except as may be disclosed in the Disclosure Schedule, 1st
Independence and 1st Bank are and have been in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including, without limitation, any
such laws respecting employment discrimination and occupational safety and
health requirements.
(k) All liabilities of the Benefit Plan have been funded on the basis
of consistent methods in accordance with sound actuarial assumptions and
practices, and at the end of any plan year, the Benefit Plan does not and has
not previously had an accumulated funding deficiency. No actuarial assumptions
have been changed since the last written report of actuaries on the Benefit
Plan. All insurance premiums (including premiums to the Pension Benefit Guaranty
Corporation) have been paid in full, subject only to normal retrospective
adjustments in the ordinary course. 1st Independence and 1st Bank have no
contingent or actual liabilities under Title IV of ERISA. No accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of the
Code) has been incurred with respect to any of the 1st Independence Plans,
whether or not waived, nor does 1st Independence have any liability or potential
liability as a result of the under funding of, or termination of any plan by 1st
Independence or by any person which may be aggregated with 1st Independence for
purposes of Section 412 of the Code. No reportable event (as defined in
Section 4043 of ERISA) has occurred with respect to the Benefit Plan as to which
a notice would be required to be filed with the Pension Benefit Guaranty
Corporation.
(l) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, any termination
of employment relating thereto and occurring prior to, at or following the
Effective Time), 1st Independence, 1st Bank, and their respective successors
will not be obligated to make a payment that would be characterized as an
"excess parachute payment" to an individual who is a "disqualified individual"
(as such terms are defined in Section 280G of the Code). Among the nonexclusive
list of payments to be considered are those payments referred to under Sections
2.01(b), 5.14, 5.15, 5.16, 5.18, 5.19, 6.03(b), and 6.05 of the Agreement, as
well as any other payments made under the 1st Independence Plans because of the
transactions contemplated herein.
3.15. Obligations to Employees. All accrued obligations and
liabilities of and all payments by 1st Independence or 1st Bank and all 1st
Independence Plans, whether arising by operation of law, by contract or by past
custom, for payments to trusts or other funds, to any government agency or
authority or to any present or former director, officer, employee or agent (or
his or her heirs, legatees or legal representatives) have been and are being
paid to the extent required by applicable law or by the plan, trust, contract or
past custom or practice, and adequate actuarial accruals and reserves for such
payments have been and are being made by 1st Independence or 1st Bank in
accordance with generally accepted accounting principles and applicable law
applied on a consistent basis and actuarial methods with respect to the
following: (a) withholding taxes, unemployment compensation or social security
benefits; (b) all pension, profit-sharing, savings, stock purchase, stock bonus,
stock ownership, stock option and stock appreciation rights plans and
agreements; (c) all employment, deferred compensation (whether funded or
unfunded), salary continuation, consulting, retirement, early retirement,
severance, reimbursement, bonus or collective bargaining plans and agreements;
(d) all executive and other incentive compensation plans, programs, or
agreements; (e) all group insurance and health contracts, policies and plans;
and (f) all other incentive, welfare (including, without limitation, vacation
and sick pay), retirement or employee benefit plans or agreements maintained or
sponsored, participated in, or contributed to by 1st Independence or 1st Bank
for its current or former directors, officers, employees and agents, including,
without limitation, all liabilities and obligations to the 1st Independence
Plans (as defined in Section 3.14(a) hereof). All obligations and liabilities of
1st Independence or 1st Bank, whether arising by operation of law, by contract
or by past custom or practice, for all other forms of compensation which are or
may be payable to its current or former directors, officers, employees or agents
or to any 1st Independence Plan have been and are being paid to the extent
required by applicable law or by the plan or contract, and adequate actuarial
accruals and reserves for payment therefore have been and are being made by 1st
Independence or 1st Bank in accordance with generally accepted accounting and
actuarial principles applied on a consistent basis. All accruals and reserves
referred to in this Section 3.15 are correctly and accurately reflected and
accounted for in all material respects in the 1st Independence Financial
Statements and the books, statements and records of 1st Independence.
3.16. Taxes, Returns and Reports. Except as set forth in the
Disclosure Schedule, each of 1st Independence and 1st Bank has since January 1,
2003 (a) duly and timely filed all federal, state, local and foreign tax returns
of every type and kind required to be filed, and each such return is true,
accurate and complete in all material respects; (b) paid or otherwise adequately
reserved in accordance with generally accepted accounting principles for all
taxes, assessments and other governmental charges due or claimed to be due upon
it or any of its income, properties or assets; and (c) not requested an
extension of time for any such payments (which extension is still in force). 1st
Independence has established, and shall establish in the Subsequent 1st
Independence Financial Statements (as hereinafter defined), in accordance with
generally accepted accounting principles, a reserve for taxes in the 1st
Independence Financial Statements adequate to cover all of 1st Independence's
and 1st Bank's tax liabilities (including, without limitation, income taxes,
payroll taxes and withholding, and franchise fees) for the periods then ending.
Neither 1st Independence nor 1st Bank has, nor will either have, any liability
for material taxes of any nature for or with respect to the operation of its
business, from the date hereof up to and including the Effective Time, except to
the extent set forth in the Subsequent 1st Independence Financial Statements (as
hereinafter defined) or as accrued or reserved for on the books and records of
1st Independence or 1st Bank. To the knowledge of 1st Independence, neither 1st
Independence nor 1st Bank is currently under audit by any state or federal
taxing authority. No federal, state or local tax returns of 1st Independence or
1st Bank have been audited by any taxing authority during the past five
(5) years.
3.17. Deposit Insurance. The deposits of 1st Bank are insured by the
Federal Deposit Insurance Corporation in accordance with the Federal Deposit
Insurance Act, as amended, to the fullest extent provided by applicable law and
1st Independence or 1st Bank has paid or properly reserved or accrued for all
current premiums and assessments with respect to such deposit insurance.
3.18. Insurance. Set forth in the Disclosure Schedule is a list and
brief description of all policies of insurance (including, without limitation,
bankers' blanket bond, directors' and officers' liability insurance, property
and casualty insurance, group health or hospitalization insurance and insurance
providing benefits for employees) owned or held by 1st Independence or 1st Bank
on the date hereof or with respect to which 1st Independence or 1st Bank pays
any premiums. Each such policy is in full force and effect and all premiums due
thereon have been paid when due, and a true, accurate and complete copy thereof
has been made available to MainSource prior to the date hereof.
3.19. Books and Records. The books and records of 1st Independence
are, in all material respects, complete, correct and accurately reflect the
basis for the financial condition, results of operations, business, assets and
capital of 1st Independence on a consolidated basis set forth in the 1st
Independence Financial Statements.
3.20. Broker's, Finder's or Other Fees. Except for reasonable fees
and expenses of 1st Independence' attorneys, accountants and investment bankers,
all of which shall be paid by 1st Independence at or prior to the Effective
Time, except as set forth in the Disclosure Schedule, no agent, broker or other
person acting on behalf of 1st Independence or 1st Bank or under any authority
of 1st Independence or 1st Bank is or shall be entitled to any commission,
broker's or finder's fee or any other form of compensation or payment from any
of the parties hereto relating to this Agreement and the Merger contemplated
hereby.
3.21. Disclosure Schedule and Documents. All written data, documents,
materials and information referred to in this Agreement and delivered by 1st
Independence or 1st Bank pursuant to the Disclosure Schedule which were prepared
by 1st Independence or 1st Bank, and with respect to any such data, documents,
materials and information that have been prepared by third parties, to the
knowledge of 1st Independence and 1st Bank such written data, documents,
materials and information, are true, accurate and complete in all material
respects as of the date hereof and with respect to such items prepared by 1st
Independence or 1st Bank and delivered subsequent to the date hereof with any
updates to the Disclosure Schedule, will be true, accurate and complete in all
material respects on the date of delivery thereof.
3.22. Interim Events. Except as otherwise permitted hereunder, since
September 30, 2007, or as set forth in the Disclosure Schedule, neither 1st
Independence nor 1st Bank has:
(a) Suffered any changes having a Material Adverse Effect;
(b) Suffered any damage, destruction or loss to any of its
properties, not fully paid by insurance proceeds, in excess of $10,000
individually or in the aggregate;
(c) Declared, distributed or paid any dividend or other
distribution to its shareholders, except for payment of dividends as permitted
by Section 5.03(a)(iii) hereof;
(d) Repurchased, redeemed or otherwise acquired shares of its
common stock, issued any shares of its common stock or stock appreciation rights
or sold or agreed to issue or sell any shares of its common stock or any right
to purchase or acquire any such stock or any security convertible into such
stock or taken any action to reclassify, recapitalize or split its stock;
(e) Granted or agreed to grant any increase in benefits payable
or to become payable under any pension, retirement, profit sharing, health,
bonus, insurance or other welfare benefit plan or agreement to employees,
officers or directors of 1st Independence or 1st Bank except pursuant to the
express terms thereof or otherwise in the ordinary course of business;
(f) Increased the salary of any director, officer or employee,
except for normal increases in the ordinary course of business and in accordance
with past practices, or entered into any employment contract, indemnity
agreement or understanding with any officer or employee or installed any
employee welfare, pension, retirement, stock option, stock appreciation, stock
dividend, profit sharing or other similar plan or arrangement;
(g) Leased, sold or otherwise disposed of any of its assets
except in the ordinary course of business or leased, purchased or otherwise
acquired from third parties any assets except in the ordinary course of
business;
(h) Except for the Merger contemplated by this Agreement,
merged, consolidated or sold shares of its common stock, agreed to merge or
consolidate with or into any third party, agreed to sell any shares of its
common stock or acquired or agreed to acquire any stock, equity interest, assets
or business of any third party;
(i) Incurred, assumed or guaranteed any obligation or liability
(fixed or contingent) other than obligations and liabilities incurred in the
ordinary course of business;
(j) Mortgaged, pledged or subjected to a lien, security
interest, option or other encumbrance any of its assets except for tax and other
liens which arise by operation of law and with respect to which payment is not
past due and except for pledges or liens: (i) required to be granted in
connection with acceptance by 1st Bank of government deposits; or (ii) granted
in connection with repurchase or reverse repurchase agreements;
(k) Except as set forth in the Disclosure Schedule, canceled,
released or compromised any loan, debt, obligation, claim or receivable other
than in the ordinary course of business;
(l) Entered into any transaction, contract or commitment other
than in the ordinary course of business;
(m) Agreed to enter into any transaction for the borrowing or
loaning of monies, other than in the ordinary course of its lending business; or
(n) Conducted its business in any manner other than
substantially as it was being conducted through September 30, 2007.
3.23. 1st Independence Securities and Exchange Commission Filings.
1st Independence has filed all reports and other documents required to be filed
by it under the Securities Exchange Act of 1934 and the Securities Act of 1933,
including 1st Independence's Annual Report on Form 10-K for the year ended
December 31, 2006 and Quarterly Report on Form 10-Q for the quarter ended
September 30, 2007. All such Securities and Exchange Commission filings were
true, accurate and complete in all material respects as of the dates of the
filings, and no such filings contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements,
at the time and in the light of the circumstances under which they were made,
not false or misleading.
3.24. Insider Transactions. Except as set forth on the Disclosure
Schedule, since December 31, 2004, no officer or director of 1st Independence or
1st Bank or member of the "immediate family" or "related interests" (as such
terms are defined in Regulation O) of any such officer or director
(collectively, "1st Independence Insiders"), has currently, or has had during
such time period, any direct or indirect interest in any property, assets,
business or right which is owned, leased, held or used by 1st Independence and
1st Bank or in any liability, obligation or indebtedness of 1st Independence or
1st Bank.
3.25. Indemnification Agreements.
(a) Other than as set forth in the Disclosure Schedule, neither 1st
Independence nor 1st Bank is a party to any indemnification, indemnity or
reimbursement agreement, contract, commitment or understanding to indemnify any
present or former director, officer, employee, shareholder or agent against
liability or hold the same harmless from liability other than as expressly
provided in the Articles of Incorporation or By-Laws of 1st Independence or the
Articles of Incorporation or Bylaws of 1st Bank.
(b) Since January 1, 2002, no claims have been made against or filed
with 1st Independence or 1st Bank nor have, to the knowledge of 1st
Independence, any claims been threatened against 1st Independence or 1st Bank,
for indemnification against liability or for reimbursement of any costs or
expenses incurred in connection with any legal or regulatory proceeding by any
present or former director, officer, shareholder, employee or agent of 1st
Independence or 1st Bank.
3.26. Shareholder Approval. The affirmative vote of the holders of a
majority of the 1st Independence Common Stock (which are issued and outstanding
on the record date relating to the meeting of shareholders) is required for
shareholder approval of this Agreement and the Merger.
3.27. Opinion of Financial Advisor. The Board of Directors of 1st
Independence, at a duly constituted and held meeting at which a quorum was
present throughout, has been informed orally by Sandler O'Neil + Partners, L.P.
that the terms of the Merger are fair to the shareholders of 1st Independence
from a financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MAINSOURCE
On or prior to the date hereof, MainSource has delivered to 1st
Independence a schedule (the "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in this
Article IV or to one or more of its covenants contained in Article VI.
For the purpose of this Agreement, and in relation to MainSource and
its subsidiaries, a "Material Adverse Effect on MainSource" means any effect
that (i) is material and adverse to the financial position, results of
operations or business of MainSource and its subsidiaries taken as a whole, or
(ii) would materially impair the ability of MainSource to perform its
obligations under this Agreement or otherwise materially threaten or materially
impede the consummation of the Merger and the other transactions contemplated by
this Agreement; provided, however, that Material Adverse Effect on MainSource
shall not be deemed to include the impact of (a) changes in banking and similar
laws of general applicability to banks or savings associations or their holding
companies or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or regulatory accounting
requirements applicable to banks, savings associations, or their holding
companies generally, (c) any modifications or changes to valuation policies and
practices in connection with the Merger or restructuring charges taken in
connection with the Merger, in each case in accordance with generally accepted
accounting principles, (d) changes in general level of interest rate (including
the impact on the securities portfolios of MainSource or its subsidiaries) or
conditions or circumstances that affect the banking industry generally, (e) the
impact of the announcement of this Agreement and the transactions contemplated
hereby, and compliance with this Agreement on the business, financial condition
or results of operations of MainSource and its subsidiaries, (f) changes
resulting from expenses (such as legal, accounting and investment bankers' fees)
incurred in connection with this Agreement or the transactions contemplated
herein, and (g) the occurrence of any military or terrorist attack within the
United States or any of its possessions or offices; provided that in no event
shall a change in the trading price of the MainSource Common Stock, by itself,
be considered to constitute a Material Adverse Effect on MainSource and its
subsidiaries taken as a whole (it being understood that the foregoing proviso
shall not prevent or otherwise affect a determination that any effect underlying
such decline has resulted in a Material Adverse Effect).
For the purpose of this Agreement, and in relation to MainSource,
"knowledge" means the actual knowledge of Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxxxxxx
Xxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxx and Xxxxx Xxxxxxx.
Accordingly, MainSource represents and warrants to 1st Independence as
follows, except as set forth in its Disclosure Schedule:
4.01. Organization and Authority. Each of MainSource and its
subsidiaries is an entity duly organized and validly existing under the laws of
its applicable state or country. MainSource and its subsidiaries have full power
and authority (corporate and otherwise) to own and lease its properties as
presently owned and leased and to conduct its business in the manner and by the
means utilized as of the date hereof. Each of MainSource and its subsidiaries is
duly qualified to do business in each jurisdiction in which the nature of the
business conducted or the properties or assets owned or leased by it make such
qualification necessary except where the failure to so qualify would not have a
Material Adverse Effect on MainSource.
4.02. Authorization.
(a) MainSource has the requisite corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder, subject to the
fulfillment of the conditions precedent set forth in Section 7.01(e) and
(f) hereof. As of the date hereof, MainSource is not aware of any reason why the
approvals set forth in Section 7.01(e) will not be received in a timely manner
and without the imposition of a condition, restriction or requirement of the
type described in Section 7.02(e). This Agreement and its execution and delivery
by MainSource has been duly authorized by the Board of Directors of MainSource.
Assuming due execution and delivery by 1st Independence and 1st Bank, this
Agreement constitutes a valid and binding obligation of MainSource, subject to
the conditions precedent set forth in Section 7.01 hereof, and is enforceable in
accordance with its terms, except to the extent limited by general principles of
equity and public policy and by bankruptcy, insolvency, reorganization,
liquidation, moratorium, readjustment of debt or other laws of general
application relating to or affecting the enforcement of creditors' rights.
(b) Neither the execution of this Agreement nor consummation of the
Merger contemplated hereby: (i) conflicts with or violates the Articles of
Incorporation or By-Laws of MainSource or any of its subsidiaries;
(ii) conflicts with or violates in any material respect any local, state,
federal or foreign law, statute, ordinance, rule or regulation (provided that
the approvals of or filings with applicable government regulatory agencies or
authorities required for consummation of the Merger are obtained) or any court
or administrative judgment, order, injunction, writ or decree; or
(iii) conflicts with, results in a breach of or constitutes a material default
under any note, bond, indenture, mortgage, deed of trust, license, contract,
lease, agreement, arrangement, commitment or other instrument to which
MainSource is subject or bound and which is material to MainSource on a
consolidated basis.
(c) Other than in connection or in compliance with applicable federal
and state banking, securities, antitrust and corporation statutes, all as
amended, and the rules and regulations promulgated thereunder, no notice to,
filing with, exemption by or consent, authorization or approval of any
governmental agency or body is necessary for the consummation by MainSource of
the Merger contemplated by this Agreement.
4.03. Capitalization. (a) The authorized capital stock of MainSource
as of the date hereof consists, and at the Effective Time will consist, of
25,000,000 shares of MainSource Common Stock, 18,570,139 of which shares are
outstanding as of the date hereof, plus options to purchase a total of 275,837
shares of MainSource Common Stock as of December 31, 2007, and 400,000 shares of
preferred stock, none of which are outstanding. Such issued and outstanding
shares of MainSource Common Stock have been duly and validly authorized by all
necessary corporate action of MainSource, are validly issued, fully paid and
nonassessable and have not been issued in violation of any pre-emptive rights of
any present or former MainSource shareholder. MainSource has no capital stock
authorized, issued or outstanding other than as described in this
Section 4.03(a) and has no intention or obligation to authorize or issue any
other capital stock or any additional shares of MainSource Common Stock other
than in connection with employee and director stock options under its existing
stock option plans or as described in the Disclosure Schedule. Each share of
MainSource Common Stock is entitled to one vote per share. MainSource wholly
owns the subsidiaries listed in the Disclosure Schedule which includes their
names and jurisdictions of organization.
(b) Except as set forth on the Disclosure Schedule, there are no
options, warrants, commitments, calls, puts, agreements, understandings,
arrangements or subscription rights relating to any shares of MainSource Common
Stock, or any securities convertible into or representing the right to purchase
or otherwise acquire any common stock or debt securities of MainSource, by which
MainSource is or may become bound. MainSource does not have any outstanding
contractual or other obligation to repurchase, redeem or otherwise acquire any
of the issued and outstanding shares of MainSource Common Stock.
(c) The shares of MainSource Common Stock issued as part of the Merger
Consideration shall be when issued duly and validly authorized, validly issued,
fully paid and non-assessable shares of MainSource Common Stock and will not be
issued in violation of any pre-emptive rights of any present or former
MainSource shareholder.
4.04. Litigation and Pending Proceedings. Except as set forth in the
Disclosure Schedule:
(a) Except for lawsuits involving collection of delinquent accounts,
there are no claims, actions, suits, proceedings, mediations, arbitrations or
investigations pending and served against MainSource or any of its subsidiaries
or, to the knowledge of MainSource, threatened in any court or before any
government agency or authority, arbitration panel or otherwise against
MainSource or any of its subsidiaries. MainSource does not have knowledge of a
basis for any claim, action, suit, proceeding, litigation, arbitration or
investigation against MainSource or any of its subsidiaries.
(b) Neither MainSource nor any of its subsidiaries is: (i) subject to
any outstanding judgment, order, writ, injunction or decree of any court,
arbitration panel or governmental agency or authority; (ii) presently charged
with or, to the knowledge of MainSource, under governmental investigation with
respect to, any actual or alleged violations of any law, statute, rule,
regulation or ordinance; or (iii) the subject of any pending or, to the
knowledge of MainSource, threatened proceeding by any government regulatory
agency or authority having jurisdiction over their respective business, assets,
capital, properties or operations
4.05. Organizational Documents. The Articles of Incorporation and
By-Laws of MainSource, representing true, accurate and complete copies of such
corporate documents in effect as of the date of this Agreement, have been
delivered to 1st Independence and are included in the Disclosure Schedule.
4.06. Accuracy of Statements Made and Materials Provided to 1st
Independence. No representation, warranty or other statement made, or any
information provided, by MainSource in this Agreement, and no written report,
statement, list, certificate, materials or other information furnished or to be
furnished by MainSource to 1st Independence through and including the Effective
Time in connection with this Agreement or the Merger contemplated hereby,
contains or shall contain (in the case of information relating to the proxy
statement at the time it is mailed to 1st Independence's shareholders) any
untrue or misleading statement of material fact or omits or shall omit to state
a material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they are made, not false or misleading.
4.07. Financial Statements and Reports. (a) MainSource has delivered
to 1st Independence copies of the following financial statements and reports of
MainSource, including the notes thereto (collectively, the "MainSource Financial
Statements"):
(i) Consolidated Balance Sheets and the related Consolidated Statements
of Income and Consolidated Statements of Changes in Shareholders' Equity of
MainSource as of and for the fiscal years ended December 31, 2006 and 2005 and
as of and for the nine months ended September 30, 2007; and
(ii) Consolidated Statements of Cash Flows of MainSource for the fiscal
years ended December 31, 2006 and 2005 and for the nine months ended September
30, 2007;
(b) The MainSource Financial Statements present fairly the consolidated
financial position of MainSource as of and at the dates shown and the
consolidated results of operations for the periods covered thereby and are
complete, correct, represent bona fide transactions, and have been prepared from
the books and records of MainSource and its subsidiaries. The MainSource
Financial Statements described in clauses (i) and (ii) above for completed
fiscal years are audited financial statements and have been prepared in
conformance with generally accepted accounting principles applied on a
consistent basis, except as may otherwise be indicated in any accountants' notes
or reports with respect to such financial statements.
(c) Since September 30, 2007 on a consolidated basis MainSource and its
subsidiaries have not incurred any material liability other than in the ordinary
course of business consistent with past practice
4.08. MainSource Securities and Exchange Commission Filings.
MainSource has filed all reports and other documents required to be filed by it
under the Securities Exchange Act of 1934 and the Securities Act of 1933,
including MainSource's Annual Report on Form 10-K for the year ended
December 31, 2006 and Quarterly Report on Form 10-Q for the quarter ended
September 30, 2007. All such Securities and Exchange Commission filings were
true, accurate and complete in all material respects as of the dates of the
filings, and no such filings contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements,
at the time and in the light of the circumstances under which they were made,
not false or misleading.
4.09. Shareholder Approval. Approval by MainSource's shareholders of
the Merger or any other actions contemplated by this Agreement is not required.
4.10. Compliance with Law. (a) Neither MainSource nor any of its
subsidiaries has engaged in any activity nor taken or omitted to take any action
which has resulted in the violation of any local, state, federal or foreign law,
statute, regulation, rule, ordinance, order, restriction or requirement, nor are
they in violation of any order, injunction, judgment, writ or decree of any
court or government agency or body, except where such activity, omission to act
or violation would not have a Material Adverse Effect on MainSource.
(b) Set forth on the Disclosure Schedule is a list of all agreements,
understandings and commitments with, and all orders and directives of, all
government regulatory agencies or authorities with respect to the financial
condition, results of operations, business, assets or capital of MainSource or
its subsidiaries which presently are binding upon or require action by, or at
any time during the last three (3) years have been binding upon or have required
action by, MainSource or its subsidiaries, and all documents relating thereto
have been made available to 1st Independence, including, without limitation, all
correspondence, communications and commitments related thereto, are set forth in
the Disclosure Schedule. There are no refunds or restitutions required to be
paid as a result of any criticism of any regulatory agency or body, cited in any
examination report of MainSource or its subsidiaries as a result of an
examination by any regulatory agency or body, or set forth in any accountant's
or auditor's report to MainSource or its subsidiaries.
(c) Since the enactment of the Xxxxxxxx-Xxxxx Act, MainSource has been
and is in compliance in all material respects with the applicable provisions of
the Xxxxxxxx-Xxxxx Act.
(d) All of the existing offices and branches of MainSource or its
subsidiaries have been legally authorized and established in accordance with all
applicable federal, state and local laws, statutes, regulations, rules,
ordinances, orders, restrictions and requirements, except such as would not have
a Material Adverse Effect on MainSource.
4.11. Absence of Changes. Since September 30, 2007, there has not
been any material change in the financial condition, the results of operations
or the business of MainSource or its subsidiaries.
4.12. Broker's, Finder's or Other Fees. Except for reasonable fees
and expenses of MainSource's attorneys, accountants and investment bankers, all
of which shall be paid by MainSource prior to the Effective Time, and except as
set forth on the Disclosure Schedule, no agent, broker or other person acting on
behalf of MainSource or its subsidiaries or under any authority of MainSource or
its subsidiaries is or shall be entitled to any commission, broker's or finder's
fee or any other form of compensation or payment from any of the parties hereto
relating to this Agreement and the Merger contemplated hereby.
4.13. Absence of Undisclosed Liabilities. Except as provided in the
MainSource Financial Statements and in the Disclosure Schedule, except for
unfunded loan commitments and obligations on letters of credit to customers of
MainSource and its subsidiaries made in the ordinary course of business, except
for trade payables incurred in the ordinary course of MainSource and its
subsidiaries' business, and except for the transactions contemplated by this
Agreement and obligations for services rendered pursuant thereto, or any other
transactions which would not result in a material liability, neither MainSource
nor any of its Subsidiaries has, nor will have at the Effective Time, any
obligation, agreement, contract, commitment, liability, lease or license which
exceeds $250,000 individually, or any obligation, agreement, contract,
commitment, liability, lease or license made outside of the ordinary course of
business, nor does there exist any circumstances resulting from transactions
effected or events occurring on or prior to the date of this Agreement or from
any action omitted to be taken during such period which could reasonably be
expected to result in any such obligation, agreement, contract, commitment,
liability, lease or license.
4.14 Loans and Investments.
(a) All loans reflected in the MainSource Financial Statements as of
September 30, 2007, and which have been made, extended, renewed, restructured,
approved, amended or acquired since September 30, 2007: (i) have been made for
good, valuable and adequate consideration in the ordinary course of business;
(ii) constitute the legal, valid and binding obligation of the obligor and any
guarantor named therein, except to the extent limited by general principles of
equity and public policy or by bankruptcy, insolvency, fraudulent transfer,
reorganization, liquidation, moratorium, readjustment of debt or other laws of
general application relative to or affecting the enforcement of creditors'
rights; (iii)are evidenced by notes, instruments or other evidences of
indebtedness which are true, genuine and what they purport to be; and (iv) are
secured, to the extent that MainSource or a subsidiary thereof has a security
interest in collateral or a mortgage securing such loans, by perfected security
interests or recorded mortgages naming MainSource or such subsidiary as the
secured party or mortgagee (unless by written agreement to the contrary).
(b) The reserves, the allowance for possible loan and lease losses and
the carrying value for real estate owned which are shown on the MainSource
Financial Statements are, in the judgment of management of MainSource and its
subsidiaries, adequate in all material respects under the requirements of
generally accepted accounting principles applied on a consistent basis to
provide for possible losses on items for which reserves were made, on loans and
leases outstanding and real estate owned as of the respective dates.
(c) Except as set forth in the Disclosure Schedule, none of the
investments reflected in the MainSource Financial Statements as of and for the
period ended September 30, 2007, and none of the investments made by MainSource
or its subsidiaries since September 30, 2007 are subject to any restriction,
whether contractual or statutory, which materially impairs the ability of
MainSource or its subsidiaries to dispose freely of such investment at any time.
4.15 Taxes, Returns and Reports. Except as set forth in the
Disclosure Schedule, MainSource and its subsidiaries have since January 1, 2003
(a) duly and timely filed all federal, state, local and foreign tax returns of
every type and kind required to be filed, and each such return is true, accurate
and complete in all material respects; (b) paid or otherwise adequately reserved
in accordance with generally accepted accounting principles for all taxes,
assessments and other governmental charges due or claimed to be due upon it or
any of its income, properties or assets; and (c) not requested an extension of
time for any such payments (which extension is still in force). To the knowledge
of MainSource, neither MainSource nor any of its subsidiaries is currently under
audit by any state or federal taxing authority.
4.16. Deposit Insurance. The deposits of the banking subsidiaries of
MainSource are insured by the Federal Deposit Insurance Corporation in
accordance with the Federal Deposit Insurance Act, as amended, to the fullest
extent provided by applicable law and each such subsidiary has paid or properly
reserved or accrued for all current premiums and assessments with respect to
such deposit insurance.
4.17. Insurance. MainSource and its subsidiaries maintain adequate
insurance from reputable insurers with respect to their respective assets,
operations and businesses consistent with the types of insurance typically
maintained by similarly-situated banking organizations. Each such policy is in
full force and effect and all premiums due thereon have been paid when due.
4.18 Available Funds. MainSource has, and will have at the Effective
Time, the ability to obtain funds in cash in amounts equal to the Cash
Consideration and other payment obligations of MainSource set forth in this
Agreement by means of credit facilities, available cash or otherwise.
4.19 Employee Benefit Plans. With respect to the employee benefit
plans, as defined in Section 3(3) of ERISA, sponsored or maintained by
MainSource which are intended to be tax-qualified under Section 401(a) of the
Code (collectively, "MainSource Plans"), all MainSource Plans have, on a
continuous basis since their adoption, been, in all material respects,
maintained in compliance with their terms and with the requirements prescribed
by all applicable statutes, orders and governmental rules or regulations,
including without limitation, ERISA and the Department Regulations promulgated
thereunder and the Code and the Treasury Regulations promulgated thereunder
ARTICLE V
COVENANTS OF 1st INDEPENDENCE
1st Independence covenants and agrees with MainSource and covenants and
agrees to cause 1st Bank to act as follows (and MainSource covenants and agrees
with 1st Independence as follows):
5.01. Shareholder Approval.1st Independence will submit this
Agreement to its shareholders for approval and adoption at a meeting to be
called and held in accordance with applicable law and the Articles of
Incorporation and By-Laws of 1st Independence at the earliest possible
reasonable date. Subject to Section 5.06 hereof or the exercise of its fiduciary
duties, the Board of Directors of 1st Independence shall recommend to 1st
Independence's shareholders that such shareholders approve and adopt this
Agreement and the Merger contemplated hereby and will solicit proxies voting in
favor of this Agreement from 1st Independence's shareholders.
5.02. Other Approvals. (a) 1st Independence and 1st Bank shall
proceed expeditiously, cooperate fully and use commercially reasonable efforts
to assist MainSource in procuring upon reasonable terms and conditions all
consents, authorizations, approvals, registrations and certificates, in
completing all filings and applications and in satisfying all other requirements
prescribed by law which are necessary for consummation of the Merger on the
terms and conditions provided in this Agreement at the earliest possible
reasonable date.
(b) 1st Independence and 1st Bank will use commercially reasonable
efforts to obtain any required third party consents to agreements, contracts,
commitments, leases, instruments and documents described in the Disclosure
Schedule and to which 1st Independence and MainSource agree are material.
(c) Any materials or information provided by 1st Independence or 1st
Bank to MainSource for use by MainSource in any filing with any state or federal
regulatory agency or authority shall not contain any untrue or misleading
statement of material fact or shall omit to state a material fact necessary to
make the statements contained therein, in light of the circumstances in which
they are made, not false or misleading.
5.03. Conduct of Business. (a)On and after the date of this
Agreement and until the Effective Time or until this Agreement is terminated as
herein provided, neither 1st Independence nor 1st Bank will, without the prior
written consent of MainSource:
(i) make any changes in its capital stock accounts (including,
without limitation, any stock issuance, stock split, stock dividend,
recapitalization or reclassification);
(ii)authorize a class of stock or issue, or authorize the
issuance of, securities other than or in addition to the issued and outstanding
common stock as set forth in Section 3.03 hereof;
(iii)distribute or pay any dividends on its shares of common
stock, or authorize a stock split, or make any other distribution to its
shareholders, except that (A) 1st Bank may pay cash dividends to 1st
Independence in the ordinary course of business for payment of reasonable and
necessary business and operating expenses of 1st Independence and to provide
funds for 1st Independence's dividends to its shareholders in accordance with
this Agreement, and (B) 1st Independence may pay to its shareholders its usual
and customary cash dividend of no greater than $.08 per share for any quarterly
period, provided that no dividend may be paid for the quarterly period in which
the Merger is scheduled to be consummated or consummated if, during such period,
1st Independence shareholders will become entitled to receive dividends on their
shares of MainSource Common Stock received pursuant to this Agreement;
(iv) redeem any of its outstanding shares of common stock;
(v) merge, combine or consolidate or effect a share exchange
with or sell its assets or any of its securities to any other person,
corporation or entity or enter into any other similar transaction not in the
ordinary course of business;
(vi) purchase any assets or securities or assume any liabilities
of a bank holding company, bank, corporation or other entity, except in the
ordinary course of business necessary to manage its investment portfolio;
(vii) make any loan or commitment to lend money, issue any letter
of credit or accept any deposit, except in the ordinary course of business in
accordance with its existing banking practices;
(viii) except as provided in the Disclosure Schedule and for the
acquisition or disposition in the ordinary course of business of other real
estate owned, acquire or dispose of any real or personal property or fixed asset
constituting a capital investment in excess of $25,000 individually or $100,000
in the aggregate;
(ix) make any investment subject to any restrictions, whether
contractual or statutory, which materially impairs the ability of 1st
Independence or 1st Bank to dispose freely of such investment at any time;
subject any of their properties or assets to a mortgage, lien, claim, charge,
option, restriction, security interest or encumbrance, except for tax and other
liens which arise by operation of law and with respect to which payment is not
past due or is being contested in good faith by appropriate proceedings, pledges
or liens required to be granted in connection with acceptance by 1st
Independence or 1st Bank of government deposits and pledges or liens in
connection with FHLB borrowings;
(x) except as contemplated by this Agreement, promote to a new
position or increase the rate of compensation (except for promotions and
compensation increases in the ordinary course of business and in accordance with
past practices), or enter into any agreement to promote to a new position or
increase the rate of compensation, of any director, officer or employee of 1st
Independence or 1st Bank, modify, amend or institute new employment policies or
practices, or enter into, renew or extend any employment, indemnity,
reimbursement, consulting, compensation or severance agreements with respect to
any present or former directors, officers or employees of 1st Independence or
1st Bank;
(xi) except as contemplated by this Agreement, execute, create,
institute, modify, amend or terminate any pension, retirement, savings, stock
purchase, stock bonus, stock ownership, stock option, stock appreciation or
depreciation right or profit sharing plans; any employment, deferred
compensation, consulting, bonus or collective bargaining agreement; any group
insurance or health contract or policy; or any other incentive, retirement,
welfare or employee welfare benefit plan, agreement or understanding for current
or former directors, officers or employees of 1st Independence or 1st Bank; or
change the level of benefits or payments under any of the foregoing or increase
or decrease any severance or termination of pay benefits or any other fringe or
employee benefits other than as required by law or regulatory authorities or the
terms of any of the foregoing;
(xii) amend, modify or restate 1st Independence's or 1st Bank's
organizational documents from those in effect on the date of this Agreement and
as delivered to MainSource hereunder;
(xii) give, dispose of, sell, convey or transfer; assign,
hypothecate, pledge or encumber, or grant a security interest in or option to or
right to acquire any shares of common stock or substantially all of the assets
of 1st Independence or 1st Bank, or enter into any agreement or commitment
relative to the foregoing;
(xiv) fail to maintain a quarterly loan loss reserve provision
expense at a minimum of the amounts set forth in the budget presented by 1st
Independence to MainSource unless 1st Independence determines doing so would be
inconsistent with generally accepted accounting principles applied on a
consistent basis;
(xv) fail to accrue, pay, discharge and satisfy all debts,
liabilities, obligations and expenses, including, but not limited to, trade
payables, incurred in the regular and ordinary course of business as such debts,
liabilities, obligations and expenses become due, unless the same are being
contested in good faith;
(xvi) issue, or authorize the issuance of, any securities
convertible into or exchangeable for any shares of the capital stock of 1st
Independence or 1st Bank;
(xvii) except for obligations disclosed within this Agreement or the
Disclosure Statement, FHLB advances, trade payables and similar liabilities and
obligations incurred in the ordinary course of business and the payment,
discharge or satisfaction in the ordinary course of business of liabilities
reflected in the 1st Independence Financial Statements or the Subsequent 1st
Independence Financial Statements, borrow any money or incur any indebtedness
including, without limitation, through the issuance of debentures, or incur any
liability or obligation (whether absolute, accrued, contingent or otherwise), in
an aggregate amount exceeding $25,000;
(xiii) open, close, move or, in any material respect, expand,
diminish, renovate, alter or change any of its offices or branches, other than
as disclosed in the Disclosure Schedule;
(xix) pay or commit to pay any management or consulting or other
similar type of fees other than as disclosed in the Disclosure Schedule; or
(xx) enter into any contract, agreement, lease, commitment,
understanding, arrangement or transaction or incur any liability or obligation
(other than as contemplated by Section 5.03(a)(vii) hereof and legal, accounting
and fees related to the Merger) requiring payments by 1st Independence or 1st
Bank which exceed $50,000, whether individually or in the aggregate, or that is
not a trade payable or incurred in the ordinary course of business.
(b) On and after the date of this Agreement and until the Effective
Time or until this Agreement is terminated as herein provided, each of 1st
Independence and 1st Bank shall: (i) carry on its business diligently,
substantially in the manner as is presently being conducted and in the ordinary
course of business; (ii) use commercially reasonable best efforts to preserve
its business organization intact, keep available the services of the present
officers and employees and preserve its present relationships with customers and
persons having business dealings with it; (iii) use commercially reasonable
efforts to maintain all of the properties and assets that it owns or utilizes in
the operation of its business as currently conducted in good operating condition
and repair, reasonable wear and tear excepted; (iv) maintain its books, records
and accounts in the usual, regular and ordinary manner, on a basis consistent
with prior years and in compliance in all material respects with all statutes,
laws, rules and regulations applicable to them and to the conduct of its
business; (v) use commercially reasonable efforts to maintain a CRA rating of
satisfactory; (vi) timely file all documents and reports required to be filed
pursuant to the Securities Exchange Act of 1934, as amended; and (vii) not
knowingly do or fail to do anything which will cause a breach of, or default in,
any contract, agreement, commitment, obligation, understanding, arrangement,
lease or license to which it is a party or by which it is or may be subject or
bound which would reasonably be expected to have a Material Adverse Effect on
1st Independence.
5.04. Insurance. 1st Independence and 1st Bank shall use commercially
reasonable efforts to maintain, or cause to be maintained, in full force and
effect, insurance on its assets, properties and operations, fidelity coverage
and directors' and officers' liability insurance in such amounts and with regard
to such liabilities and hazards as are currently insured by 1st Independence or
1st Bank as of the date of this Agreement.
5.05. Accruals for Loan Loss Reserve and Expenses.(a) Prior to the
Effective Time, 1st Independence and 1st Bank shall make, consistent with
generally accepted accounting principles applied on a consistent basis, the
rules and regulations of the SEC and applicable banking laws and regulations,
such appropriate accounting entries in its books and records and use
commercially reasonable efforts to take such other actions as 1st Independence
and 1st Bank shall deem to be necessary or desirable in anticipation of the
Merger, including without limitation additional provisions to its loan loss
reserve in the amount set forth in the Disclosure Schedule, and accruals or the
creation of reserves for employee benefits and Merger-related expenses.
(b)1st Independence recognizes that MainSource may have adopted
different loan and accounting policies and practices (including loan
classifications and levels of loan loss allowances).Subject to applicable law
(including without limitation the rules and regulations of the SEC, applicable
banking laws and regulations and generally accepted accounting principles
applied on a consistent basis), from and after the date hereof 1st Independence
shall consult and cooperate in good faith with MainSource with respect to
conforming the loan and accounting policies and practices of 1st Independence to
those policies and practices of MainSource for financial accounting and/or
income tax reporting purposes, as reasonably specified in each case in writing
from MainSource to 1st Independence, based upon such consultation and subject to
the conditions in Section 5.05(d).
(c) Subject to applicable law (including without limitation the rules
and regulations of the SEC, applicable banking laws and regulations and
generally accepted accounting principles applied on a consistent basis), 1st
Independence shall consult and cooperate in good faith with MainSource with
respect to determining, as reasonably specified in a written notice from
MainSource to 1st Independence, based upon such consultation and subject to the
conditions in Section 5.05(d), the amount and the timing for recognizing for
financial accounting and/or income tax reporting purposes of 1st Independence's
and 1st Bank's expenses of the Merger.
(d) Subject to applicable law (including without limitation the rules
and regulations of the SEC, applicable banking laws and regulations and
generally accepted accounting principles applied on a consistent basis), 1st
Independence shall consult and cooperate in good faith to (i) make such
conforming entries to conform the loan and accounting policies and practices of
1st Independence to the policies and practices of MainSource as contemplated in
Section 5.05(b) above and (ii) recognize 1st Independence's expenses of the
Merger for financial accounting and/or income tax reporting purposes at such
times as are reasonably requested in writing by MainSource as contemplated in
Section 5.05(c) above, but in no event prior to the 5th day next preceding the
Closing Date and only after MainSource acknowledges that all conditions to its
obligation to consummate the Merger have been satisfied and certifies to 1st
Independence that MainSource will at the Effective Time deliver to 1st
Independence the certificate contemplated in Section 7.02(g).
(e) 1st Independence and 1st Bank's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached in any respect for any purpose as a consequence of any modifications or
changes undertaken on account of Section 5.05(d), nor shall any such
modifications or changes undertaken on account of this Section 5.05(d)(i) have
any impact or result in any adjustments to 1st Independence's Consolidated
Tangible Shareholders' Equity as determined pursuant to Section 2.02.
5.06. Acquisition Proposals. (a) On and after the date of this
Agreement and until the Effective Time or until this Agreement is terminated as
herein provided, except with the prior written approval of MainSource, neither
1st Independence nor 1st Bank shall permit, nor shall they authorize any of
their directors, officers, employees, agents or representatives to, directly or
indirectly, initiate, solicit or encourage, or provide information to, any
corporation, association, partnership, person or other entity or group
concerning any merger, consolidation, share exchange, combination, purchase or
sale of substantial assets, sale of shares of common stock (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement or
instrument evidencing the right to acquire, capital stock) or similar
transaction relating to 1st Independence or 1st Bank or to which 1st
Independence or 1st Bank may become a party (all such transactions are
hereinafter referred to as "Acquisition Transactions").
(b) 1st Independence shall promptly communicate to MainSource the terms
of any proposal or offer which 1st Independence or 1st Bank may receive with
respect to an Acquisition Transaction. Notwithstanding anything to the contrary
elsewhere in this Agreement, 1st Independence may, in response to an unsolicited
written proposal with respect to an Acquisition Transaction from a third party,
furnish information to, and negotiate, explore or otherwise engage in
substantive discussions with such third party, and enter into any such
agreement, arrangement or understandings, and recommend the approval of such
agreement, arrangement or understandings to the shareholders of 1st
Independence, in each case, only if 1st Independence's Board of Directors
determines in good faith by majority vote, after consultation with its financial
advisors and outside legal counsel, that failing to take such action would be a
breach of or otherwise inconsistent with the fiduciary duties of 1st
Independence's Board of Directors. In the event 1st Independence enters into an
agreement, arrangement or understanding for an Acquisition Transaction in
accordance with the foregoing sentence, 1st Independence's Board of Directors
may terminate this Agreement on written notice to MainSource; provided, however,
that in connection with terminating this Agreement, 1st Independence has paid
the amounts referred to in Section 8.03 to MainSource.
(c) In the event 1st Independence's Board of Directors, after
consultation with its financial advisors and outside legal counsel, determines
in good faith that it would result in a violation of or otherwise be
inconsistent with its fiduciary duties under applicable law to recommend this
Agreement and the Merger to 1st Independence's shareholders for their approval,
then if the Board Directors does not elect to terminate this Agreement pursuant
to Section 5.06(b) above and elects to submits this Agreement to the
shareholders at the meeting of shareholders, 1st Independence may submit this
Agreement without recommendation of approval, in which case the Board of
Directors may communicate the basis for its lack of a recommendation of approval
to the shareholders in the proxy statement or an appropriate amendment or
supplement thereto to the extent required by law.
(d) This Section 5.06 shall not authorize 1st Independence or 1st Bank,
or any of their directors, officers, employees, agents or representatives on
their behalf, to initiate any discussions or negotiations with respect to an
Acquisition Transaction with a third party.
5.07. Press Releases. Unless prior notice and comment is not possible
or practicable as the result of applicable law or any listing or exchange rule,
neither 1st Independence nor 1st Bank nor MainSource will issue any press or
news releases or make any other public announcements or disclosures relating to
the Merger without providing a final copy of such press or news release to the
other party and providing such party with a reasonable opportunity to comment on
such press or news release.
5.08. Material Changes to Disclosure Schedules. 1st Independence and
1st Bank shall promptly supplement, amend and update, upon the occurrence of any
change prior to the Effective Time, and as of the Effective Time, the Disclosure
Schedule with respect to any matters or events hereafter arising which, if in
existence or having occurred as of the date of this Agreement, would have been
required to be set forth or described in the Disclosure Schedule or this
Agreement and including, without limitation, any fact which, if existing or
known as of the date hereof, would have made any of the representations or
warranties of 1st Independence or 1st Bank contained herein materially
incorrect, untrue or misleading. No such supplement, amendment or update shall
become part of the Disclosure Schedule unless MainSource shall have first
consented in writing with respect thereto.
5.09. Access; Information. (a) MainSource and 1st Independence, and
their representatives and agents, shall, at all times during normal business
hours prior to the Effective Time, have full and continuing access to the
properties, facilities, operations, books and records of the other party.
MainSource and 1st Independence, and their representatives and agents may, prior
to the Effective Time, make or cause to be made such reasonable investigation of
the operations, books, records and properties of the other party and their
subsidiaries and of their financial and legal condition as deemed necessary or
advisable to familiarize themselves with such operations, books, records,
properties and other matters; provided, however, that such access or
investigation shall not interfere unnecessarily with the normal business
operations of 1st Independence, 1st Bank or MainSource. Upon request, 1st
Independence and MainSource will furnish the other party or its representatives
or agents, their attorneys' responses to external auditors requests for
information, management letters received from their external auditors and such
financial, loan and operating data and other information reasonably requested by
MainSource or 1st Independence which has been or is developed by the other
party, its auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure would not result in the waiver by the other party of
any claim of attorney-client privilege), and will permit MainSource or 1st
Independence or their representatives or agents to discuss such information
directly with any individual or firm performing auditing or accounting functions
for 1st Independence or MainSource, as applicable, and such auditors and
accountants will be directed to furnish copies of any reports or financial
information as developed to MainSource or 1st Independence or its
representatives or agents, as applicable. No investigation by MainSource or 1st
Independence shall affect the representations and warranties made by 1st
Independence, 1st Bank or MainSource herein. Any confidential information or
trade secrets received by MainSource, 1st Independence or their representatives
or agents in the course of such examination will be treated confidentially, and
any correspondence, memoranda, records, copies, documents and electronic or
other media of any kind containing such confidential information or trade
secrets or both shall be destroyed by MainSource or 1st Independence, as
applicable, or at MainSource's or 1st Independence's request, returned to
MainSource or 1st Independence, as applicable, in the event this Agreement is
terminated as provided in Article VIII hereof. This Section 5.09 will not
require the disclosure of any information to MainSource or 1st Independence
which would be prohibited by law. The ability of MainSource or 1st Independence
to consult with any tax advisor (including a tax advisor independent from all
other entities involved in the transactions contemplated hereby) shall not be
limited by this Agreement in any way, provided that any such tax advisor is
otherwise subject to and is bound by this Section 5.09. Notwithstanding anything
herein to the contrary (other than the preceding sentence), except as reasonably
necessary to comply with applicable securities laws, MainSource and 1st
Independence (and each employee, representative or agent of MainSource and 1st
Independence) may disclose to any and all persons, without limitation of any
kind, the tax treatment (as defined in Treas. Reg. 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are or have been provided to MainSource or
1st Independence relating to such tax structure, provided that, in the case of
any materials that contain information other than the tax treatment or tax
structure of the transactions contemplated hereby (including, but not limited
to, any information relating to the pricing or any cost of the transactions
contemplated hereby or the identity of any party to the transactions
contemplated hereby), this sentence shall apply to such materials only to the
extent that such materials contain the tax treatment or tax structure of the
transactions contemplated hereby and MainSource and 1st Independence shall take
all action necessary to prevent the disclosure of such other information as
otherwise provided herein. The immediately preceding sentence shall not be
effective until the earliest of (a) the date of the public announcement of
discussions relating to any of the transactions contemplated hereby, (b) the
date of the public announcement of any of the transactions contemplated hereby
or (c) the date of the execution of an agreement, with or without conditions, to
enter into any of the transactions contemplated hereby.
(b) Beginning on the date of this Agreement, the President of
MainSource, or his designees, shall be entitled to receive notice of and to
attend all regular and special meetings of the Board of Directors and all
committees of 1st Independence and 1st Bank, including, without limitation, the
loan committee, investment committee, the executive committee, the personnel
committee, and any other committee of 1st Independence and 1st Bank, except that
any such person shall be excluded from the portion of any meeting where this
Agreement or the transactions contemplated by this Agreement are being
discussed.
5.10. Financial Statements. As soon as reasonably available after the
date of this Agreement, 1st Independence will deliver to MainSource any
additional audited consolidated financial statements which have been prepared on
its behalf or at its direction, the monthly consolidated unaudited balance
sheets and profit and loss statements of 1st Independence prepared for its
internal use, 1st Bank's Call Reports for each quarterly period completed prior
to the Effective Time, and all other financial reports or statements submitted
to regulatory authorities after the date hereof, to the extent permitted by law
(collectively, "Subsequent 1st Independence Financial Statements"). The
Subsequent 1st Independence Financial Statements will be prepared on a basis
consistent with past accounting practices and generally accepted accounting
principles applied on a consistent basis to the extent applicable and shall
present fairly the financial condition and results of operations as of the dates
and for the periods presented (except in the case of unaudited financials or
Call Report information for the absence of notes and/or year end adjustments).
The Subsequent 1st Independence Financial Statements, including the notes
thereto, will not include any assets, liabilities or obligations or omit to
state any assets, liabilities or obligations, absolute or contingent, or any
other facts, which inclusion or omission would render such financial statements
inaccurate, incomplete or misleading in any material respect. As soon as
internally available after the date of this Agreement, MainSource will deliver
to 1st Independence any additional audited consolidated financial statements
which have been prepared on its behalf or at its direction and the quarterly
consolidated unaudited balance sheets and profit and loss statements of
MainSource (collectively, "Subsequent MainSource Financial Statements"). The
Subsequent MainSource Financial Statements will be prepared on a basis
consistent with past accounting practices and generally accepted accounting
principles applied on a consistent basis to the extent applicable and shall
present fairly the financial condition and results of operations as of the dates
and for the periods presented (except in the case of unaudited financials or
Call Report information for the absence of notes and/or year end adjustments).
The Subsequent MainSource Financial Statements, including the notes thereto,
will not include any assets, liabilities or obligations or omit to state any
assets, liabilities or obligations, absolute or contingent, or any other facts,
which inclusion or omission would render such financial statements inaccurate,
incomplete or misleading in any material respect.
5.11. Environmental.(a) If requested by MainSource, 1st Independence
and 1st Bank will cooperate with an environmental consulting firm designated by
MainSource in connection with the conduct by such firm of a phase one and/or
phase two environmental investigation on all real property owned or leased by
1st Independence or 1st Bank as of the date of this Agreement, and any real
property acquired or leased by 1st Independence or 1st Bank after the date of
this Agreement. MainSource shall be responsible for the costs of the phase one
and, if the phase two is determined to be advisable by the environmental
consulting firm, 1st Independence shall be responsible for the costs of the
phase two.
(b) If the environmental consultant's good faith estimate, based upon
the results of the environmental studies and other diligence conducted by the
environmental consultant, of the dollar amount, if any, that 1st Independence or
1st Bank would be required to expend under applicable Environmental Laws for
clean-up, remediation and penalties relating to pollutants, contaminants,
wastes, toxic substances, petroleum, petroleum products and any other materials
regulated under the Environmental Laws with respect to 1st Independence or 1st
Bank's own or leased real properties or any adjoining properties, is in excess
of $200,000, then MainSource shall have the right to terminate this Agreement
pursuant to Section 8.01(b)(v), which termination shall be MainSource's sole
remedy in such event.
5.12. Governmental Reports. Promptly upon its becoming available, 1st
Independence shall furnish to MainSource one (1) copy of each financial
statement, report, notice, or proxy statement sent by 1st Independence or 1st
Bank to any Governmental Authority or to 1st Independence's shareholders
generally and of each regular or periodic report, registration statement or
prospectus filed by 1st Independence with the SEC or any successor agency, and
of any order issued by any Governmental Authority in any proceeding to which 1st
Independence or 1st Bank is a party. Promptly upon its becoming publicly
available, MainSource shall furnish to 1st Independence one (1) copy of each
financial statement, report, notice, or proxy statement sent by MainSource to
any Governmental Authority or to MainSource's shareholders generally and of each
regular or periodic report, registration statement or prospectus filed by
MainSource with the SEC or any successor agency, and of any order issued by any
Governmental Authority in any proceeding to which MainSource is a party. For
purposes of this provision, "Governmental Authority" shall mean any government
(or any political subdivision or jurisdiction thereof), court, bureau, agency or
other governmental entity having or asserting jurisdiction over the applicable
party or its business, operations or properties.
5.13. Adverse Actions. Neither 1st Independence nor 1st Bank shall
knowingly take any action that is intended or is reasonably likely to result in
(w) any of their representations and warranties set forth in this Agreement
being or becoming untrue in any respect at any time at or prior to the Effective
Time, subject to the standard set forth in Section 7.01(a), (x) any of the
conditions to the Merger set forth in Article VII not being satisfied, (y) a
material violation of any provision of this Agreement or (z) a material delay in
the consummation of the Merger except, in each case, as may be required by
applicable law or regulation.
5.14. 1st Independence KSOP. (a) 1st Independence shall take any such
actions as are necessary at or prior to the Effective Time to ensure that
(i) all 1st Independence employees and former employees who are participants in
the 1st Independence KSOP at the Closing have the opportunity to complete a
Participant Direction Form and to direct the 1ST Independence KSOP trustee to
vote 1st Independence stock allocated to their 1ST Independence KSOP accounts
with respect to the Merger, and (ii) the 1ST Independence KSOP trustee has the
authority necessary to sell or exchange the 1st Independence stock held by the
1ST Independence KSOP and to otherwise participate in the transactions
contemplated by this Agreement.
(b) 1st Independence, pursuant to the applicable provisions of the 1st
Independence KSOP, shall (i) terminate the 1st Independence KSOP effective as of
a date that is not later than the day before the Closing, and (ii) shall amend
the 1st Independence KSOP effective as of a date that is not later than the plan
termination date to provide that no distributions of accrued benefits shall be
made from the 1st Independence KSOP, or its related employee benefit trust,
subsequent to the plan termination date and until such time as the Internal
Revenue Service issues a favorable determination letter to the effect that the
plan termination does not adversely affect the plan's qualification for
favorable income tax treatment under the Code, other than distributions required
by the terms of the plan to be made upon the retirement, death, disability, or
termination of employment of a plan participant, or any other event other than
the plan termination that requires a distribution of plan benefits from the
plan.
(c) Ist Independence agrees that prior to the Closing it shall file, or
cause to be filed, with the Internal Revenue Service an application for a
favorable determination upon plan termination (IRS Form 5310) requesting the
issuance to 1st Independence of the favorable determination letter described in
the preceding paragraph (b).
(d) 1st Independence agrees to take such actions as may be necessary to
ensure that no violation of ERISA or the Code occurs in the termination of the
1ST Independence KSOP, the 1ST Independence KSOP's sale or exchange of the 1st
Independence stock held by the 1ST Independence KSOP, or the transactions
contemplated by this Agreement, that cannot be cured to the satisfaction of the
Service.
(e) 1st Independence agrees to take such actions as may be necessary to
ensure that upon the termination of the 1st Independence KSOP all outstanding
indebtedness of the 1st Independence KSOP shall be repaid using: (i)
unallocated 1st Independence shares held by the 1st Independence KSOP or the
Cash Consideration received for unallocated 1st Independence shares held by the
1st Independence KSOP, to the extent determined by 1st Independence and the 1st
Independence KSOP Trustee not to be inconsistent with applicable law, the 1st
Independence KSOP plan and applicable trust documents; (ii) all amounts held in
the 1st Independence KSOP's suspense account; and finally (iii) such other
payments as determined appropriate by 1st Independence. Any assets remaining in
the suspense fund under the 1st Independence KSOP after payment of all
outstanding indebtedness and other liabilities of the KSOP shall be allocated to
the contribution accounts of the 1st Independence employees who are participants
in the 1st Independence KSOP and the net assets of the 1st Independence KSOP
shall be distributed to such participants under the 1st Independence KSOP.
(f) 1st Independence may make any amendments to the 1ST Independence
KSOP at or prior to the Effective Time to maintain its qualified status under
Section 401(a) of the Code; provided, however, that: (i) no such amendment shall
require or have the effect of requiring MainSource to make any contributions to
the 1st Independence KSOP after the Effective Time; (ii) no such amendments
shall require or have the effect of requiring 1st Independence to make any
contributions to the 1st Independence KSOP at or prior to the Effective Time in
addition to any contributions that otherwise would be required; (iii) any such
amendment shall be conditioned upon its not having an adverse effect upon the
qualified status of the 1st Independence KSOP under Section 401(a) of the Code;
and (iv) no such amendment shall require or have the effect of requiring the
continuation of the 1st Independence KSOP after the Effective Time.
(g) Except as otherwise provided in Section 5.17, 1st Independence
shall make no contributions to the 1st Independence KSOP between the date of
this Agreement and the Effective Time other than such as may be required to
maintain the tax-qualified status of the 1st Independence KSOP or to enable the
1st Independence KSOP to make required payments on the loans currently
outstanding to it.
(h) With respect to 1st Independence stock allocated to the accounts of
each 1ST Independence KSOP participant, said participants shall be entitled to
direct the 1ST Independence KSOP trustee to vote stock allocated to their
accounts in the 1ST Independence KSOP on the approval and adoption of this
Agreement. Unallocated 1st Independence stock held by the 1ST Independence KSOP
shall be voted by the 1ST Independence KSOP Trustee as provided in the 1ST
Independence KSOP.
5.15. 1st Independence Stock Option Plan. As of the date of this
Agreement, the Board of Directors of 1st Independence shall take all actions
necessary to ensure that no further automatic or discretionary grants of an
Incentive Stock Option or Non-Qualified Stock Option, as defined therein, shall
be awarded to any participant under the 2004 Option Plan. Within forty-five (45)
days of the date of this Agreement, 1st Independence shall use its best efforts
to obtain written consents from each holder of an outstanding 1st Independence
Stock Option consenting to the disposition of such option in accordance with the
provisions of Section 2.01 above (unless such holder exercises said option prior
to the Effective Time in accordance with the terms thereof) unless this
Agreement is terminated and the Merger is abandoned pursuant to Article VIII;
provided, however, that 1st Independence shall obtain such consents from the
members of the Board of Directors of 1st Independence who hold such 1st
Independence Stock Options. As of the Effective Time, the Board of Directors of
1st Independence shall terminate the 2004 Option Plan and, if necessary, the
1996 Option Plan.
5.16. Restricted Stock Plan. As of the date of this Agreement, the
Board of Directors of 1st Independence shall take all actions necessary to
ensure that no further awards of Restricted Stock are granted to any participant
under the 2006 Restricted Stock Plan (the "2006 RSP"). As of the Effective Time,
1st Independence shall take all actions necessary to terminate the 2006 RSP.
5.17. Defined Contribution Plan. On and after the date of this
Agreement, and until the earlier of (i) the date, to be determined by
MainSource, that the 1st Independence KSOP is terminated pursuant to Section
5.14 above or (ii) the date on which this Agreement is terminated, but not later
than the Effective Time:
(i) 1st Independence shall continue to sponsor the 1st
Independence KSOP in accordance with its terms and conditions, as set forth in
its plan and trust document as of the date of this Agreement, and in accordance
with the requirements of Section 5.14 of this Agreement and applicable law;
(ii) 1st Independence or 1st Bank shall continue to fund all
employee and employer contributions to the 1st Independence KSOP which are
required during this time period. However, 1st Independence and 1st Bank may
only make discretionary employer contributions after receipt of written approval
from MainSource, which approval shall not be unreasonably withheld if the amount
of any discretionary employer contributions are not in excess of the
discretionary employer contributions made by 1st Independence or 1st Bank to the
1st Independence KSOP during the last Plan Year;
(iii) neither 1st Independence nor 1st Bank shall amend, or cause
an amendment of, the 1st Independence KSOP without the prior written consent of
MainSource, except for any amendment which is required by Section 5.14 of this
Agreement or is necessary to maintain the qualification of the 1st Independence
KSOP and its related employee benefit trust for favorable income tax treatment
under Sections 401(a) and 501(a) of the Code, respectively, or as otherwise
required by law, regulations, the Service or the Department;
(iv) 1st Independence and 1st Bank shall not terminate or agree
to the termination of the appointment of any fiduciary as defined in ERISA with
respect to the 1st Independence KSOP without the prior written consent of
MainSource, which consent shall not be unreasonably withheld, except for any
termination attributable to a breach by such fiduciary of any fiduciary duty
imposed on the fiduciary under ERISA; and
(v) neither 1st Independence nor 1st Bank shall terminate, agree to the
termination of, or cause the termination of any agreement with any service
provider providing services to the 1st Independence KSOP as of the date of this
Agreement without the prior written consent of MainSource, which consent shall
not be unreasonably withheld, except for any termination attributable to a
breach by such service provider of its service agreement.
5.18. Employment Agreements.
(a) Prior to the Effective Time, N. Xxxxxxx Xxxxx, President and CEO of
1st Bank, will continue to be paid the compensation provided for in his
employment agreement with 1st Independence and 1st Bank dated as of July 9,
2004, as amended, and will continue participating in the employee benefit,
retirement, and compensation plans and other perquisites provided for in such
Agreement. Any benefits payable under insurance, health, retirement and bonus
plans through the Closing Date will be paid when due under those plans. At the
Effective Time, Xx. Xxxxx'x employment agreement with 1st Independence shall
terminate, and 1st Independence shall pay to Xx. Xxxxx, in consideration of such
termination, a cash sum equal to the amount payable to Xx. Xxxxx under Section
8(e) of the Agreement, subject to any reduction required by such section. 1st
Independence shall use its best efforts to obtain from Xx. Xxxxx within thirty
(30) days after the date of this Agreement a binding written commitment, in the
event the Merger is consummated, to (i) accept the amounts payable under this
Section 5.18(a) in lieu of any amounts that otherwise would be payable, and
benefits to which he would be entitled, under his employment agreement, and (ii)
in exchange for such cash payment, a release from Xx. Xxxxx of all claims
against 1st Independence and MainSource, in a form and substance reasonably
satisfactory to MainSource.
(b) Prior to the Effective Time, R. Xxxxxxx Xxxxxxxx, Executive Vice
President and Chief Financial Officer of 1st Bank, will continue to be paid the
compensation provided for in his employment agreement with 1st Independence and
1st Bank dated as of July 9, 2004, as amended, and will continue participating
in the employee benefit, retirement, and compensation plans and other
perquisites provided for in such Agreement. Any benefits payable under
insurance, health, retirement and bonus plans through the Closing Date will be
paid when due under those plans. At the Effective Time, Xx. Xxxxxxxx'x
employment agreement with 1st Independence shall terminate, and 1st Independence
shall pay to Xx. Xxxxxxxx, in consideration of such termination, a cash sum
equal to the amount payable to Xx. Xxxxxxxx under Section 8(e) of the Agreement,
subject to any reduction required by such section. 1st Independence shall use
its best efforts to obtain from Xx. Xxxxxxxx within thirty (30) days after the
date of this Agreement a binding written commitment, in the event the Merger is
consummated, to (i) accept the amounts payable under this Section 5.18(b) in
lieu of any amounts that otherwise would be payable, and benefits to which he
would be entitled, under his employment agreement, and (ii) in exchange for such
cash payment, a release from Xx. Xxxxxxxx of all claims against 1st Independence
and MainSource, in a form and substance reasonably satisfactory to MainSource.
(c) Prior to the Effective Time, Xxxxx X. Beach, Executive Vice
President and Chief Operating Officer of 1st Bank, will continue to be paid the
compensation provided for in her employment agreement with 1st Independence and
1st Bank dated as of August 20, 2004, as amended, and will continue
participating in the employee benefit, retirement, and compensation plans and
other perquisites provided for in such Agreement. Any benefits payable under
insurance, health, retirement and bonus plans through the Closing Date will be
paid when due under those plans. At the Effective Time, Ms. Beach's employment
agreement with 1st Independence shall terminate, and 1st Independence shall pay
to Ms. Beach, in consideration of such termination, a cash sum equal to the
amount payable to Ms. Beach under Section 8(e) of the Agreement, subject to any
reduction required by such section. 1st Independence shall use its best efforts
to obtain from Ms. Beach within thirty (30) days after the date of this
Agreement a binding written commitment, in the event the Merger is consummated,
to (i) accept the amounts payable under this Section 5.18(c) in lieu of any
amounts that otherwise would be payable, and benefits to which he would be
entitled, under his employment agreement, and (ii) in exchange for such cash
payment, a release from Ms. Beach of all claims against 1st Independence and
MainSource, in a form and substance reasonably satisfactory to MainSource.
(d) Prior to the Effective Time, Xxxxx X. Xxxxxxxx, will continue to be
paid the compensation provided for in his employment agreement with 1st
Independence and 1st Bank dated as of May 17, 2007, as amended, and will
continue participating in the employee benefit, retirement, and compensation
plans and other perquisites provided for in such Agreement. Any benefits payable
under insurance, health, retirement and bonus plans through the Closing Date
will be paid when due under those plans. At the Effective Time, Xx. Xxxxxxxx'x
employment agreement with 1st Independence shall terminate, and 1st Independence
shall pay to Xx. Xxxxxxxx, in consideration of such termination, a cash sum
equal to the amount payable to Xx. Xxxxxxxx under Section 8(f) of the Agreement,
subject to any reduction required by such section. 1st Independence shall use
its best efforts to obtain from Xx. Xxxxxxxx within thirty (30) days after the
date of this Agreement a binding written commitment, in the event the Merger is
consummated, to (i) accept the amounts payable under this Section 5.18(d) in
lieu of any amounts that otherwise would be payable, and benefits to which he
would be entitled, under his employment agreement, and (ii) in exchange for such
cash payment, a release from Xx. Xxxxxxxx of all claims against 1st Independence
and MainSource, in a form and substance reasonably satisfactory to MainSource.
(e) The Disclosure Schedule sets forth a good faith estimate of the
amount of the payments required pursuant to this Section 5.18.
5.19. Change of Control Agreements. (a) Within 30 days of the date of
this Agreement, 1st Independence shall take such steps as are necessary to amend
the Change of Control Agreements between 1st Independence and 1st Bank and each
of Xxxx Xxxxxx and Xxxxx X. Xxxxxx to delete the provisions of Section 8(b)(iv).
In the event such amendments are obtained, such change of control agreements
shall remain in effect, as amended. In the event such amendments are not made,
1st Independence shall take such steps as are necessary to terminate such change
of control agreements. If such change of control agreements are required to be
terminated, 1st Independence shall pay Xx. Xxxxxx and Xx. Xxxxxx a cash sum
equal to the amount payable to Xx. Xxxxxx and Xx. Xxxxxx under such agreements
as a result of the Merger, and 1st Independence shall use its best efforts to
obtain from each of Xx. Xxxxxx and Xx. Xxxxxx, prior to the Effective Time, a
binding written commitment, in the event the Merger is consummated, to (i)
accept the amounts payable under this Section 5.19 in lieu of any amounts that
would otherwise be payable, and benefits to which he or she would be entitled,
under his or her change of control agreement, and (ii) in exchange for such cash
payment, a release from Xx. Xxxxxx and Xx. Xxxxxx of all claims against 1st
Independence and MainSource, in a form and substance reasonably satisfactory to
MainSource.
(b) The Disclosure Schedule sets forth a good faith estimate of the
amount of the payments required pursuant to this Section 5.19.
5.20. Short-Swing Trading Exception. 1st Independence's Board of
Directors shall adopt such resolutions as are necessary to cause any shares of
1st Independence Common Stock or 1st Independence Stock Options owned by
executive officers and directors of 1st Independence and canceled in the Merger
to qualify for the exemptions provided in Rule 16b-3(d) under the Securities
Exchange Act of 1934, as amended.
5.21. Confirmation of Total Outstanding Shares. 1st Independence shall
confirm in writing by a certificate to MainSource signed by the Chief Financial
Officer of 1st Independence on the date that is five (5) days prior to the
Effective Time (which certificate may be based on information obtained from 1st
Independence's stock transfer agent) the total number of outstanding shares of
1st Independence Common Stock as of such date and the number of such outstanding
shares that resulted from the exercise of options granted under the 2006 Option
Plan following the date of this Agreement (the "Exercised Option Shares"). In
the event there are more than 2,000,000 shares of 1st Independence Common Stock
outstanding after deducting the Exercised Option Shares, then MainSource shall
have the right to terminate this Agreement pursuant to Section 8.01(b)(v)
regardless of materiality.
5.22. 1st Bank. From time to time until the Effective Time, 1st
Independence and 1st Bank shall cooperate with MainSource and take such action
as may be reasonably necessary to (i) change the name of 1st Bank as of the
Effective Time, (ii) amend the Articles of Incorporation and By-laws of 1st Bank
as of the Effective Time, and (iii) subject to Section 6.08, reconstitute the
directors and officers of 1st Bank as of the Effective Time.
5.23 Trust Preferred Securities. 1st Independence and MainSource shall
each cooperate and use commercially reasonable efforts to execute and deliver
such instruments and take such actions as may be required or necessary prior to
the Effective Time for MainSource to assume at the Effective Time the
obligations of 1st Independence under any indenture or other agreement to which
1st Independence is a party with respect to trust preferred securities that are
identified in 1st Independence's Disclosure Schedule, including but not limited
to executing and delivering one or more supplemental indentures and providing
any required opinions of counsel to the applicable trustees.
ARTICLE VI
COVENANTS OF MAINSOURCE
MainSource covenants and agrees with 1st Independence and 1st Bank as
follows:
6.01. Approvals. MainSource shall have primary responsibility for the
preparation, filing and costs of all bank regulatory applications required for
consummation of the Merger, and shall file such applications as promptly as
practicable and in the most expeditious manner practicable, and in any event,
within thirty (30) days after the execution of this Agreement. MainSource shall
provide to 1st Independence's counsel copies of all applications filed and
copies of all material written communications with all state and federal bank
regulatory agencies relating to such applications. MainSource shall proceed
expeditiously, cooperate fully and use its best efforts to procure, upon terms
and conditions reasonably acceptable to MainSource, all consents,
authorizations, approvals, registrations and certificates, to complete all
filings and applications and to satisfy all other requirements prescribed by law
which are necessary for consummation of the Merger on the terms and conditions
provided in this Agreement at the earliest possible reasonable date.
6.02. SEC Registration. (a) MainSource shall file with the SEC as
promptly as practicable and in the most expeditious manner practicable, and in
any event, within forty-five (45) days after the execution of this Agreement, a
Registration Statement on an appropriate form under the 1933 Act covering the
shares of MainSource Common Stock to be issued pursuant to this Agreement and
shall use its best efforts to cause the same to become effective and thereafter,
until the Effective Time or termination of this Agreement, to keep the same
effective and, if necessary, amend and supplement the same. Such Registration
Statement and any amendments and supplements thereto are referred to in this
Agreement as the "Registration Statement". The Registration Statement shall
include a proxy statement-prospectus reasonably acceptable to MainSource and 1st
Independence, prepared for use in connection with the meeting of shareholders of
1st Independence referred to in Section 5.01 hereof, all in accordance with the
rules and regulations of the SEC. MainSource shall, as soon as practicable after
filing the Registration Statement, make all filings required to obtain all blue
sky exemptions, authorizations, consents or approvals required for the issuance
of MainSource common stock.
(b) Any materials or information provided by MainSource for use in any
filing with any state or federal regulatory agency or authority shall not
contain any untrue or misleading statement of material fact or shall omit to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not false or misleading.
6.03. Employee Benefit Plans.
(a) As of the Effective Time, MainSource will make available to the
officers and employees of 1st Independence and 1st Bank who continue as
employees of 1st Bank or any subsidiary of MainSource after the Effective Time
("Former 1st Independence Employees"), subject to Section 6.03(c) hereof,
substantially the same employee benefits on substantially the same terms and
conditions as MainSource offers to similarly situated officers and employees.
Former 1st Independence Employees will receive full credit for prior service
with 1st Independence or 1st Bank, or their predecessors, for purposes of
eligibility and vesting under the employee benefit plans of MainSource and its
subsidiaries. Former 1st Independence Employees shall become eligible to
participate in MainSource's employee benefit plans as soon as reasonably
practicable after the Effective Time, and shall not be subject to any waiting
periods or additional pre-existing condition limitations under the medical,
dental and health plans of MainSource or its subsidiaries in which they are
eligible to participate at the Effective Time than they otherwise would have
been subject to under the medical, dental and health plans of 1st Independence
or 1st Bank.
(b) As of the Effective Time, subject to applicable law and the
requirements of the MainSource Financial Group, Inc. 401(k) Plan ("MainSource
401(k) Plan"), MainSource shall amend as necessary the MainSource 401(k) Plan so
that, (i) from and after the Effective Time, Former 1st Independence Employees
will accrue benefits pursuant to the MainSource 401(k) Plan, and (ii) former
1st Independence employees participating in the MainSource 401(k) Plan shall
receive credit for eligibility and vesting purposes, for the service of such
employees with 1st Independence and 1st Bank or their predecessors prior to the
Effective Time, as if such service were with MainSource or its subsidiaries.
(c) Neither the terms of this Section 6.03 nor the provision of any
employee benefits by MainSource or any of its subsidiaries to employees of 1st
Independence or 1st Bank shall:
(i) create any employment contract, agreement or understanding with or
employment rights for, or constitute a commitment or obligation of employment
to, any of the officers or employees of 1st Independence or 1st Bank; or
(ii) prohibit or restrict MainSource, whether before or after the
Effective Time, from changing, amending or terminating any employee benefits
provided to its employees from time to time, provided such change, amendment or
termination does not affect the qualified status of such employee benefits or
violate applicable law or regulations.
(d) MainSource shall succeed 1st Independence as the plan sponsor of
the 1st Independence KSOP and MainSource shall take any further actions that may
be necessary in order to satisfy the provisions of Sections 5.17 and 5.14 above
including, but not limited to, the filing of any and all applicable final
reports or forms with any government agency. Neither 1st Independence nor 1st
Bank shall be responsible or liable for any MainSource actions or failures to
act in connection with the 1st Independence KSOP following the Effective Time.
6.04. Adverse Actions. MainSource shall not knowingly take any action
that is intended or is reasonably likely to result in (a) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any respect at any time at or prior to the Effective Time, subject to
the standard set forth in Section 7.02(b), (b) any of the conditions to the
Merger set forth in Article VII not being satisfied, (c) a material violation of
any provision of this Agreement or (d) a material delay in the consummation of
the Merger except, in each case, as may be required by applicable law or
regulation.
6.05. Severance. With the exception of the employees referenced in
Sections 5.18 and 5.19 of this Agreement, those employees of 1st Independence or
its subsidiaries as of the Effective Time whom MainSource or its subsidiaries
elect not to employ after the Effective Time or who are terminated other than
for cause or who voluntarily resign for good reason within one year after the
Closing Date ("Separated Employees") shall be entitled to severance benefits
equal to those provided by MainSource from time to time to its employees. A copy
of MainSource's current Separation Pay Guidelines ("Guidelines") have been
provided to 1st Independence. For purposes of determining each Separated
Employee's length of service under the Guidelines, each Separated Employee shall
receive credit for years of service with 1st Independence or 1st Bank, or their
predecessors. Additionally, MainSource shall reimburse each Separated Employee
an amount not to exceed $1,500 for placement services within thirty (30) days of
the date of termination of such Separated Employee's employment. Nothing in this
Section 6.05 shall be deemed to limit or modify MainSource's at-will employment
policy.
For purposes of this Section 6.05, a voluntary resignation for good
reason means the employee resigns as a result of any of the following: (a)
relocation of the employee's location of employment to a location that results
in an increase in employee's commute from home to work of at least 25 miles, or
(b) a material or substantial reduction in the employee's salary from that of
the employee immediately prior to the Effective Time.
6.06. D &O Insurance. MainSource shall cause the individuals serving as
officers and directors of 1st Independence and 1st Bank immediately before the
Effective Time to be covered for a period of three (3) years from the Effective
Time by the directors' and officers' liability insurance policy maintained by
1st Independence (provided that MainSource may substitute therefor policies of
at least the same coverage and amounts containing terms and conditions that are
not less advantageous to such officers and directors than such policy) with
respect to acts or omissions occurring before the Effective Time.
6.07. Short-Swing Trading Exemption. Prior to the Closing Date, the
Board of Directors of MainSource shall adopt such resolutions as necessary to
cause any shares of MainSource Common Stock to be received by executive officers
and directors of 1st Independence as part of the Merger Consideration to qualify
for the exemptions provided in Rule 16b-3(d) under the Securities Exchange Act
of 1934, as amended.
6.08 Board Composition. From and after the Effective Time until 1st
Bank is merged into or consolidated with another banking subsidiary of
MainSource, MainSource agrees that 1st Bank will have a board of directors
comprised of five (5) members, at least three (3) of whom shall be selected by
mutual agreement of MainSource and 1st Independence from the board of directors
of 1st Bank immediately prior to the Effective Time.
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
7.01. MainSource. The obligation of MainSource to consummate the
Merger is subject to the satisfaction and fulfillment of each of the following
conditions on or prior to the Effective Time, unless waived in writing by
MainSource:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of 1st Independence and 1st Bank contained in
this Agreement shall be true, accurate and correct in all material respects at
and as of the Effective Time as though such representations and warranties had
been made or given on and as of the Effective Time (except that representations
and warranties that by their express terms speak as of the date of this
Agreement or some other date shall be true and correct only as of such date);
provided that no representation or warranty of 1st Independence or 1st Bank
shall be deemed untrue, inaccurate or incorrect for purposes hereunder as a
consequence of the existence of any fact, event or circumstance inconsistent
with such representation or warranty, unless such fact, event or circumstance,
individually or taken together with all other facts, events or circumstances
inconsistent with any representations or warranty of 1st Independence or 1st
Bank, has had or would result in a Material Adverse Effect on 1st Independence.
(b) Covenants. Each of the covenants and agreements of 1st
Independence and 1st Bank shall have been fulfilled or complied with in all
material respects from the date of this Agreement through and as of the
Effective Time.
(c) Deliveries at Closing. MainSource shall have received from 1st
Independence at the Closing the items and documents, in form and content
reasonably satisfactory to MainSource, set forth in Section 10.02(b) hereof.
(d) Registration Statement Effective. MainSource shall have
registered its shares of MainSource Common Stock to be issued to shareholders of
1st Independence in accordance with this Agreement with the SEC pursuant to the
1933 Act, and all state securities and blue sky approvals, authorizations and
exemptions required to offer and sell such shares shall have been received by
MainSource. The Registration Statement with respect thereto shall have been
declared effective by the SEC and no stop order shall have been issued or
threatened.
(e) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the Board of Directors of
MainSource reasonably determines in good faith would (i) following the Effective
Time, have a Material Adverse Effect on 1st Independence or (ii) reduce the
benefits of the transactions contemplated hereby to such a degree that
MainSource would not have entered into this Agreement had such conditions,
restrictions or requirements been known at the date hereof.
(f) Shareholder Approval. The shareholders of 1st Independence shall
have approved and adopted this Agreement as required by applicable law and its
Articles of Incorporation, and the Dissenting Shares shall represent no more
than twelve percent (12%) of the outstanding shares of 1st Independence Common
Stock.
(g) Officers' Certificate. 1st Independence shall have delivered to
MainSource a certificate signed by its President and its Secretary, dated as of
the Effective Time, certifying that: (i) the representations and warranties of
1st Independence and 1st Bank contained in Article III are true, accurate and
correct in all material respects on and as of the Effective Time, subject to the
standard specified in Section 7.01(a) above; (ii) all the covenants of 1st
Independence and 1st Bank have been complied with in all material respects from
the date of this Agreement through and as of the Effective Time; and (iii) 1st
Independence and 1st Bank have satisfied and fully complied with all conditions
necessary to make this Agreement effective as to it.
(h) Fairness Opinion. 1st Independence's investment banker shall have
issued (as of a date not later than the mailing date of the proxy
statement-prospectus relating to the Merger to be mailed to the shareholders of
1st Independence) its fairness opinion stating that the Merger Consideration
relating to the Merger is fair to the shareholders of 1st Independence from a
financial point of view.
(i) Tax Opinion. The Board of Directors of MainSource shall have
received a written opinion of the law firm of Xxxxx XxXxxxx LLP, dated as of the
Effective Time, in form and content reasonably satisfactory to MainSource, to
the effect that the Merger to be effected pursuant to this Agreement will
constitute a tax-free reorganization under the Code (as described in Section
1.03 hereof) to each party hereto and to the shareholders of 1st Independence,
except with respect to cash received by the shareholders of 1st Independence for
the Cash Consideration and fractional shares resulting from application of the
Exchange Ratio and pursuant to Section 2.01(b). In rendering such opinion,
counsel may require and rely upon customary representation letters of the
parties hereto and rely upon customary assumptions.
(j) 280G Opinion. MainSource shall have received a letter of tax
advice, in a form satisfactory to MainSource and at its expense, from 1st
Independence's outside, independent certified public accountants to the effect
that any amounts that are paid by 1st Independence or 1st Bank before the
Effective Time, or required under 1st Independence's Plans or this Agreement to
be paid at or after the Effective Time, to persons who are disqualified
individuals in respect of 1st Independence, 1st Bank or their successors, and
that otherwise should be allowable as deductions for federal income tax
purposes, should not be disallowed as deductions for such purposes by reason of
Section 280G of the Code. Among the nonexclusive list of payments to be
considered are those payments referred to under Sections 2.01(b), 5.14, 5.15,
5.16, 5.18, 5.19, 6.03(b), and 6.05 of this Agreement, as well as any other
payments made under the 1st Independence Plans because of the transactions
contemplated herein.
(k) Share Certification. MainSource shall have received the
certification of an officer of 1st Independence as required by Section 5.21 of
this Agreement.
(l) Loan Loss Reserve. 1st Independence and 1st Bank shall have
complied with the requirements of Section 5.05 of this Agreement.
(m) Material Proceedings. None of MainSource, 1st Independence or 1st
Bank, or any subsidiary of MainSource, shall be subject to any statute, rule,
regulation, injunction, order or decree, which shall have been enacted, entered,
promulgated or enforced, which prohibits, prevents or makes illegal completion
of the Merger, and no material claim, litigation or proceeding shall have been
initiated or threatened relating to the Agreement or the Merger or seeking to
prevent the completion of the Merger.
(n) Accrued Expenses. 1st Independence shall have paid or fully accrued
for the expenses and payments provided in Section 3.09(e) relating to the
termination of 1st Independence's data processing agreements, Section 5.18
relating to the termination of the employment agreements and Section 5.19
relating to the change in control agreements, as if such change in control
agreements has been terminated prior to or on the Closing Date.
7.02. 1st Independence. The obligation of 1st Independence to
consummate the Merger is subject to the satisfaction and fulfillment of each of
the following conditions on or prior to the Effective Time, unless waived in
writing by 1st Independence:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of MainSource contained in this Agreement shall
be true, accurate and correct in all material respects on and as of the
Effective Time as though the representations and warranties had been made or
given at and as of the Effective Time (except that representations and
warranties that by their express terms speak as of the date of this Agreement or
some other date shall be true and correct only as of such date); provided that
no representation or warranty of MainSource shall be deemed untrue, inaccurate
or incorrect for purposes hereunder as a consequence of the existence of any
fact, event or circumstance inconsistent with such representation or warranty,
unless such fact, event or circumstance, individually or taken together with all
other facts, events or circumstances inconsistent with any representations or
warranty of MainSource, has had or would result in a Material Adverse Effect on
MainSource.
(b) Covenants. Each of the covenants and agreements of MainSource
shall have been fulfilled or complied with in all material respects from the
date of this Agreement through and as of the Effective Time.
(c) Deliveries at Closing. 1st Independence shall have received from
MainSource at the Closing the items and documents, in form and content
reasonably satisfactory to 1st Independence, listed in Section 10.02(a) hereof.
(d) Registration Statement Effective. MainSource shall have
registered its shares of MainSource Common Stock to be issued to shareholders of
1st Independence in accordance with this Agreement with the SEC pursuant to the
1933 Act, and all state securities and Blue Sky approvals, authorizations and
exemptions required to offer and sell such shares shall have been received by
MainSource. The Registration Statement with respect thereto shall have been
declared effective by the MainSource and no stop order shall have been issued or
threatened.
(e) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the Board of Directors of 1st
Independence reasonably determines in good faith would (i) following the
Effective Time, have a Material Adverse Effect on MainSource or (ii) reduce the
benefits of the transactions contemplated hereby to such a degree that 1st
Independence would not have entered into this Agreement had such conditions,
restrictions or requirements been known at the date hereof.
(f) Shareholder Approval. The shareholders of 1st Independence shall
have approved and adopted this Agreement as required by applicable law and 1st
Independence's Articles of Incorporation.
(g) Officers' Certificate. MainSource shall have delivered to 1st
Independence a certificate signed by its Chairman or President and its
Secretary, dated as of the Effective Time, certifying that: (i) the
representations and warranties of MainSource contained in Article IV are true,
accurate and correct in all material respects on and as of the Effective Time,
subject to the standard specified in Section 7.02(a) above; (ii) all the
covenants of MainSource have been complied with in all material respects from
the date of this Agreement through and as of the Effective Time; and
(iii) MainSource has satisfied and fully complied with all conditions necessary
to make this Agreement effective as to it.
(h) Fairness Opinion. 1st Independence's investment banker shall have
issued (as of a date not later than the mailing date of the proxy
statement-prospectus relating to the Merger to be mailed to the shareholders of
1st Independence) its fairness opinion stating that the Merger Consideration
relating to the Merger is fair to the shareholders of 1st Independence from a
financial point of view.
(i) Tax Opinion of MainSource's Counsel. The Board of Directors of
1st Independence shall have received a written opinion of the law firm of Xxxxx
XxXxxxx LLP, dated as of the Effective Time, in form and content reasonably
satisfactory to 1st Independence, to the effect that the Merger to be effected
pursuant to this Agreement will constitute a tax-free reorganization under the
Code (as described in Section 1.03 hereof) to each party hereto and to the
shareholders of 1st Independence, except with respect to cash received by the
shareholders of 1st Independence for the Cash Consideration and fractional
shares resulting from application of the Exchange Ratio and pursuant to Section
2.01(b). In rendering such opinion, counsel may require and rely upon customary
representation letters of the parties hereto and rely upon customary
assumptions.
(j) Listing. The shares of MainSource Common Stock to be issued in
the Merger shall have been approved for listing on the Nasdaq stock exchange,
subject to official notice of issuance.
(k) Payments Required by Sections 5.18 and 5.19. The payments
required by Sections 5.18 and 5.19 shall have been made or accrued, as
applicable.
(l) Material Proceedings. None of MainSource, 1st Independence or 1st
Bank, or any subsidiary of MainSource, shall be subject to any statute, rule,
regulation, injunction, order or decree, which shall have been enacted, entered,
promulgated or enforced, which prohibits, prevents or makes illegal completion
of the Merger, and no material claim, litigation or proceeding shall have been
initiated or threatened relating to the Agreement or the Merger or seeking to
prevent the completion of the Merger.
ARTICLE VIII
TERMINATION OF MERGER
8.01. Manner of Termination. This Agreement and the Merger may be
terminated at any time prior to the Effective Time by written notice delivered
by MainSource to 1st Independence, or by 1st Independence to MainSource, as
follows:
(a) By MainSource or 1st Independence, if:
(i) the Merger contemplated by this Agreement has not been
consummated by September 30, 2008 (or such later date as 1st Independence and
MainSource may agree to in writing); provided, however, that a party hereto in
willful breach of or willful default hereunder shall have no right to terminate
this Agreement pursuant to this Section 8.01(a)(i); or
(ii) the Agreement and the Merger are not approved by the
requisite vote of the shareholders of 1st Independence at the meeting of
shareholders of 1st Independence contemplated in Section 5.01; or
(iii) the respective Boards of Directors of MainSource and 1st
Independence mutually agree to terminate this Agreement.
(b) By MainSource if:
(i) at any time prior to the Effective Time, MainSource's Board
of Directors so determines, in the event of either:
(A) a breach by 1st Independence of any representation or warranty
contained herein that would be reasonably likely, individually or in the
aggregate with other breaches to result in a Material Adverse Effect, unless the
breach is cured within thirty (30) days from the giving of written notice to 1st
Independence of such breach and the same does not result in a Material Adverse
Effect; or
(B) a breach by 1st Independence of any of the covenants or
agreements contained herein that would be reasonably likely, individually or in
the aggregate with other breaches to result in a Material Adverse Effect, unless
the breach is cured within thirty (30) days from the giving of written notice to
1st Independence of such breach and the same does not result in a Material
Adverse Effect; or
(ii) there has been a Material Adverse Effect in the business,
assets, capitalization, financial condition or results of operations of 1st
Independence or 1st Bank as of the Effective Time, as compared to that in
existence as of the date of this Agreement; or
(iii) 1st Independence's Board of Directors, after receiving an
Acquisition Transaction proposal from a third party, has withdrawn, modified or
changed its approval or recommendation of this Agreement and approved or
recommended an Acquisition Transaction with a third party; or
(iv) 1st Independence fulfills the requirements of Section 5.01
hereof but the shareholders of 1st Independence do not approve and adopt the
Merger and this Agreement; or
(v) MainSource elects to exercise its right of termination
pursuant to Sections 5.11 or 5.21; or
(vi) In the event of any situation or occurrence with respect to
1st Bank which would jeopardize MainSource's status as a financial holding
company under the BHC Act, so long as MainSource, 1st Independence and 1st Bank
have been unable, in good faith, to reach a mutually satisfactory agreement with
the applicable banking regulators to avoid such jeopardy; or
(vii) The average per share closing prices of a share of
MainSource Common Stock as quoted on the Nasdaq Stock Market during the twenty
trading days preceding the fifth (5th) calendar day preceding the Effective Time
(the "Average Closing Price") shall be greater than $16.50 per share, subject,
however, to the following: If MainSource elects to exercise its termination
right pursuant to this Section 8.01(b)(vii), it shall give written notice to 1st
Independence. During the five day period commencing with its receipt of such
notice, 1st Independence shall have the option to decrease the Stock
Consideration to be received by the holders of 1st Independence Common Stock
hereunder, by adjusting the Exchange Ratio (calculated to the nearest one
one-thousandth) to equal the product of (a) $16.50 divided by the Average
Closing Price of MainSource Common Stock, (b) multiplied by the Exchange Ratio.
If 1st Independence so elects within such five day period, it shall give prompt
written notice to MainSource of such election and the revised Stock
Consideration. Whereupon no termination shall have occurred pursuant to this
Section 8.01(b)(vii) and this Agreement shall remain in effect in accordance
with its terms (except as the Stock Consideration shall have been so modified).
(c) By 1st Independence, if:
(i) at any time prior to the Effective Time, 1st Independence's
Board of Directors so determines, in the event of either:
(A) a breach by MainSource of any representation or warranty
contained herein that would be reasonably likely, individually or in the
aggregate with other breaches to result in a Material Adverse Effect on
MainSource, unless the breach is cured within thirty (30) days from the giving
of written notice to 1st Independence of such breach and the cure does not
result in a Material Adverse Effect on MainSource; or
(B) a breach by MainSource of any of the covenants or agreements
contained herein that would be reasonably likely, individually or in the
aggregate with other breaches, to result in a Material Adverse Effect on
MainSource, unless the breach is cured within thirty (30) days after the giving
of written notice to MainSource of such breach and any such cure would not
result in a Material Adverse Effect on MainSource; or
(ii) there has been a change constituting a Material Adverse Effect on
MainSource in the financial condition, results of operations, business, assets
or capitalization of MainSource on a consolidated basis as of the Effective
Time, as compared to that in existence as of the date of this Agreement; or
(iii) 1st Independence fulfills the requirements of Section 5.01 hereof
but the shareholders of 1st Independence do not approve and adopt the Merger and
this Agreement; or
(iv) 1st Independence elects to exercise its right of termination
pursuant to Section 5.6; or
(v) The Average Closing Price of MainSource Common Stock shall be less
than $12.50 per share, subject, however, to the following: If 1st Independence
elects to exercise its termination right pursuant to this Section 8.01(c)(v), it
shall give written notice to MainSource. During the five day period commencing
with its receipt of such notice, MainSource shall have the option to increase
the Stock Consideration to be received by the holders of 1st Independence Common
Stock hereunder, by adjusting the Exchange Ratio (calculated to the nearest one
one-thousandth) to equal the product of (a) $12.50 divided by the Average Share
Price of MainSource Common Stock, (b) multiplied by the Exchange Ratio. If
MainSource so elects within such five day period, it shall give prompt written
notice to 1st Independence of such election and the revised Stock Consideration.
Whereupon no termination shall have occurred pursuant to this Section 8.01(c)(v)
and this Agreement shall remain in effect in accordance with its terms (except
as the Stock Consideration shall have been so modified).
8.02. Effect of Termination. Upon termination by written notice, this
Agreement shall be of no further force or effect, and there shall be no further
obligations or restrictions on future activities on the part of MainSource or
1st Independence and their respective directors, officers, employees, agents and
shareholders, except as provided in compliance with: (i) the confidentiality
provisions of this Agreement set forth in Section 5.09 hereof; and (ii) the
payment of expenses set forth in Section 11.11 hereof, provided, however, that
termination will not in any way release a breaching party from liability for any
willful breach of this Agreement giving rise to such termination; and (iii) the
payment of the Termination Fee as provided by Section 8.03 hereof. The
obligation to pay the Termination Fee in accordance with Section 8.03 hereof
will survive any termination of this Agreement.
8.03. Termination Fee. (a) In recognition of the efforts, expenses
and other opportunities foregone by MainSource and 1st Independence while
structuring and pursuing the Merger, the parties agree that a termination fee
and/or out-of-pocket expenses up to the amounts set forth below (collectively,
the " Termination Fee ") shall be paid by the applicable party an indicated
below:
(i) If this Agreement is terminated by MainSource (A) pursuant to
Section 8.01(b)(iii), or (B) pursuant to Section 8.01(b)(i) as a result of 1st
Independence willfully and intentionally breaching any of its representations,
warranties or covenants in this Agreement; or this Agreement is terminated by
1st Independence pursuant to Section 8.01(c)(iv), then in either case, 1st
Independence shall pay a Termination Fee to MainSource equal to $1.1 million
plus its documented out-of-of pocket expenses up to $250,000.
(ii) If this Agreement is terminated by MainSource pursuant to Section
8.01(b)(i) other than as contemplated by Section 8.03(a)(i)(B), 1st Independence
shall pay a Termination Fee to MainSource equal to its documented out-of-of
pocket expenses up to $250,000.
(iii) If this Agreement is terminated by 1st Independence pursuant to
Section 8.01(c)(i) as a result of MainSource willfully and intentionally
breaching any of its representations, warranties or covenants in this Agreement,
then MainSource shall pay to 1st Independence a Termination Fee equal to $1.1
million plus its documented out-of-of pocket expenses up to $250,000.
(iv) If this Agreement is terminated by 1st Independence pursuant to
Section 8.01(c)(i) other than as contemplated by Section 8.03(a)(iii),
MainSource shall pay a Termination Fee to 1st Independence equal to its
documented out-of-of pocket expenses up to $250,000.
(b) Each party acknowledges that the agreements contained in this
Section 8.03 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, each party would not have entered
into this Agreement; accordingly, if a party fails promptly to pay the amount
due pursuant to this Section 8.03, and, in order to obtain such payment, the
other party commences an action which results in a judgment against the other
party for the Termination Fee, the payor party shall pay to the payee party its
costs and expenses (including attorneys' fees and expenses) in connection with
such action, together with interest on the amount of the Termination Fee at the
rate of six percent (6%) per annum. If any party is required to pay a
Termination Fee hereunder, upon such payment, such party shall have no further
liability to the other party for any breach of this Agreement resulting in the
requirement to pay the Termination Fee.
ARTICLE IX
EFFECTIVE TIME OF THE MERGER
Upon the terms and subject to the conditions specified in this
Agreement, the Merger will become effective on the day and at the time (the
"Closing Date") specified in the Articles of Merger of MainSource and 1st
Independence as filed with the Indiana Secretary of State (the "Effective
Time"). Unless otherwise mutually agreed to by the parties hereto, the Effective
Time will occur on the seventh full Nasdaq trading day immediately following the
date on which the last of the conditions set forth in Article VII (other than
the delivery of certificates, opinions and other instruments and documents to be
delivered at the Closing, but subject to the delivery at the Closing of such
certificates, opinions and other instruments and documents) is fulfilled or
waived following (a) the fulfillment of all conditions precedent to the Merger
set forth in Article VIII of this Agreement and (b) the expiration of all
waiting periods in connection with the bank regulatory applications filed for
the approval of the Merger.
ARTICLE X
CLOSING
10.01. Closing Date and Place. So long as all conditions precedent
set forth in Article VII hereof have been satisfied and fulfilled, the closing
of the Merger (the "Closing") will take place at the Effective Time at a
location to be reasonably determined by MainSource.
10.02. Deliveries. (a) At the Closing, MainSource will deliver to 1st
Independence the following:
(i) the officers' certificate contemplated by
Section 7.02(g) hereof;
(ii) copies of all approvals by government regulatory agencies
necessary to consummate the Merger;
(iii) copies of the resolutions adopted by the Board of Directors
of MainSource certified by the Secretary of MainSource relative to the approval
of this Agreement and the Merger;
(iv) the tax opinion required by Sections 7.01(i) and
7.02(i) hereof; and
(v) such other documents as 1st Independence or its legal counsel
may reasonably request.
(b) At the Closing, 1st Independence will deliver to MainSource the
following:
(i) the officers' certificate contemplated by
Section 7.01(g) hereof;
(ii) copies of the resolutions adopted by the Board of Directors
and shareholders of 1st Independence certified by the Secretary of 1st
Independence relative to the approval of this Agreement and the Merger;
(iii) the opinion required by Section 7.01(j) hereof;
(iv) the fairness opinion required by Sections 7.01(h) and
7.02(h) hereof; and
(v) such other documents as MainSource or its legal counsel may
reasonably request.
ARTICLE XI
MISCELLANEOUS
11.01. Effective Agreement. This Agreement and the recitals hereof
shall be binding upon and inure to the benefit of and be enforceable by the
respective parties hereto and their respective successors and assigns; provided,
however, that neither this Agreement nor any of the rights, interests or
obligations of the respective parties hereto under this Agreement may be
assigned by any party hereto without the prior written consent of the other
parties hereto. The representations, warranties, covenants and agreements
contained in this Agreement, as well as the documents and instruments referred
to herein, are for the sole benefit of the parties hereto and their successors
and assigns, and they will not be construed as conferring any rights on any
other persons, except for Sections 5.14, 5.18, 5.19, 5.20, 6.03, 6.05, 6.06 and
11.08 hereof (which are intended for the benefit of those present and former
officers and directors of 1st Independence and 1st Bank affected thereby and may
be enforced by such persons).
11.02. Waiver; Amendment. (a) The parties hereto may by an instrument
in writing: (i) extend the time for the performance of or otherwise amend any of
the covenants, conditions or agreements of the other parties under this
Agreement; (ii) waive any inaccuracies in the representations or warranties of
the other parties contained in this Agreement or in any document delivered
pursuant hereto or thereto; (iii) waive the performance by the other parties of
any of the covenants or agreements to be performed by it or them under this
Agreement; or (iv) waive the satisfaction or fulfillment of any condition, the
nonsatisfaction or nonfulfillment of which is a condition to the right of the
party so waiving to consummate the Merger. The waiver by any party hereto of a
breach of or noncompliance with any provision of this Agreement will not operate
or be construed as a continuing waiver or a waiver of any other or subsequent
breach or noncompliance hereunder.
(b) This Agreement may be amended, modified or supplemented only
by a written agreement executed by the parties hereto.
11.03. Notices. All notices, requests and other communications
hereunder will be in writing (which will include telecopier communication) and
will be deemed to have been duly given if delivered by hand and receipted for,
delivered by certified United States Mail, return receipt requested, first class
postage pre-paid, delivered by overnight express receipted delivery service or
telecopied if confirmed immediately thereafter by also mailing a copy of such
notice, request or other communication by certified United States Mail, return
receipt requested, with first class postage pre-paid as follows:
If to MainSource: with a copy to (which will not
constitute notice):
MainSource Financial Group, Inc. Xxxxx XxXxxxx LLP
0000 X. Xxxxx Xxxx 3 By-Pass Xxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000 Suite 2800
ATTN: Xxxxxx X. Xxxxxx, Chairman, Xxxxxxxxxxxx, Xxxxxxx 00000
President and Chief Executive Officer ATTN: Xxxxx Xxxx Xxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
If to 1st Independence or 1st Bank with a copy to (which will not
constitute notice):
1st Independence Financial Group, Inc. Xxxxx Xxxxxxx & Xxxxx, LLP
0000 Xxxxxx Xxxx Xxxx 000 Xxxx Xxxxxxxxx, Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000 Xxxxxxxxxx, Xxxxxxxx 00000-0000
ATTN: N. Xxxxxxx Xxxxx ATTN: Xxxx X. Xxxxx
President and Chief Executive Officer Telephone: (000) 000-0000
Telephone: (000) 000-0000 x000 Fax: (000) 000-0000
Fax: (000) 000-0000
or such substituted address or person as any of them have given to the
other in writing. All such notices, requests or other communications shall be
effective: (a) if delivered by hand, when delivered; (b) if mailed in the manner
provided herein, five (5) business days after deposit with the United States
Postal Service; (c) if delivered by overnight express delivery service, on the
next business day after deposit with such service; and (d) if by telecopier, on
the next business day if also confirmed by mail in the manner provided herein.
11.04. Headings. The headings in this Agreement have been inserted
solely for ease of reference and should not be considered in the interpretation
or construction of this Agreement.
11.05. Severability. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
11.06. Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts and by facsimile, each of which will be an original, but
such counterparts shall together constitute one and the same instrument.
11.07. Governing Law; Enforcement; Specific Performance; Jury Trial.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Indiana and applicable federal laws, without regard to principles
of conflicts of law. The parties hereto hereby agree that all claims, actions,
suits and proceedings between the parties hereto relating to this Agreement
shall be filed, tried and litigated only in the Circuit or Superior Courts of
Decatur County, Indiana or the United States District Court for the Southern
District of Indiana - Indianapolis Division. In connection with the foregoing,
the parties hereto consent to the jurisdiction and venue of such courts and
expressly waive any claims or defenses of lack of personal jurisdiction of or
proper venue by such courts. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms on a timely basis or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or other equitable relief to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court identified above, this being in addition to any other remedy to which they
are entitled at law or in equity. WAIVER OF JURY TRIAL. EACH OF THE PARTIES
HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, IN
ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE TRANSACTION
AGREEMENTS.
11.08. Indemnification. (a) All rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors or
officers of 1st Independence or 1st Bank as provided in either of their charters
or by-laws (or comparable organizational documents) and any existing
indemnification agreements or arrangements of 1st Independence or 1st Bank
described in the Disclosure Schedule, shall survive the Merger and shall
continue in full force and effect in accordance with their terms to the extent
permitted by law, and shall not be amended, repealed or otherwise modified for a
period of six (6) years after the Effective Time in any manner that would
adversely affect the rights thereunder of such individuals for acts or omissions
occurring or alleged to occur at or prior to the Effective Time.
(b) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action suit, proceeding or
investigation in which any individual who is now, or has been at any time prior
to the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer of 1st Independence or 1st Bank (the "Indemnified Parties"),
is, or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he is or
was a director, officer or employee of 1st Independence or 1st Bank or its
predecessors or (ii) this Agreement or any of the transactions contemplated
hereby, whether in any case asserted or arising before or after the Effective
Time, the parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto.
(c) MainSource shall cause any successor, whether by consolidation,
merger or transfer of substantially all of its properties or assets, to comply
with its obligations under this Article. The provisions of this Article shall
survive the Effective Time and are intended to be for the benefit of, and shall
be enforceable by, each Indemnified Party and other person named herein and his
or her heirs and representatives.
11.09. Entire Agreement. This Agreement and the Exhibits hereto
supersede all other prior or contemporaneous understandings, commitments,
representations, negotiations or agreements, whether oral or written, among the
parties hereto relating to the Merger or matters contemplated herein and
constitute the entire agreement between the parties hereto, except as otherwise
provided herein. Upon the execution of this Agreement by all the parties hereto,
any and all other prior writings of either party relating to the Merger, will
terminate and will be rendered of no further force or effect. The parties hereto
agree that each party and its counsel reviewed and revised this Agreement and
that the normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party will not be employed in the
interpretation of this Agreement or any amendments or exhibits hereto.
11.10. Survival of Representations, Warranties or Covenants. Except
as set forth in the following sentence, none of the representations, warranties
or covenants of the parties will survive the Effective Time or the earlier
termination of this Agreement, and thereafter MainSource, 1st Independence, 1st
Bank, and all the respective directors, officers and employees of MainSource,
1st Independence and 1st Bank will have no further liability with respect
thereto. The covenants contained in Sections 5.09 (regarding confidentiality),
8.02, 8.03, 11.07, 11.09, 11.10 and 11.11 shall survive termination of this
Agreement. The covenants contained in Sections 5.09 (regarding confidentiality),
5.14, 5.17, 6.03, 6.05, 6.06, 6.08, 6.09, 11.07, 11.08, 11.09, 11.10 and 11.11
shall survive the Effective Time.
11.11. Expenses. Except as provided elsewhere in this Agreement
(including Section 8.03 hereof), each party to this Agreement shall pay its own
expenses incidental to the Merger contemplated hereby.
11.12. Certain References. Whenever in this Agreement a singular word
is used, it also will include the plural wherever required by the context and
vice-versa, and the masculine or neuter gender shall include the masculine,
feminine and neuter genders. Except expressly stated otherwise, all references
in this Agreement to periods of days shall be construed to refer to calendar,
not business, days. The term "business day" will mean any day except Saturday
and Sunday when MainSource Bank, in Greensburg, Indiana, a wholly-owned
subsidiary of MainSource, is open for the transaction of business.
11.13 Disclosure Schedules. The mere inclusion of an item in a party's
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by such party that such item represents a material exception
or fact, event or circumstance or that such item is reasonably likely to result
in a Material Adverse Effect. Further, while each party will use commercially
reasonable efforts to specifically reference each Section of this Agreement
under which such disclosure is made pursuant to such party's Disclosure
Schedule, any information disclosed with respect to one Section shall not be
deemed to be disclosed for purposes of any other Section of this Agreement in
such party's Disclosure Schedule unless it is reasonably apparent the disclosed
information relates to another Section or Sections of this Agreement
notwithstanding the absence of a specific cross-reference.
[Signature Page Follow
IN WITNESS WHEREOF, MainSource, 1st Independence and 1st Bank have made
and entered into this Agreement as of the day and year first above written and
have caused this Agreement to be executed, attested in counterparts and
delivered by their duly authorized officers.
MAINSOURCE FINANCIAL GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman, President and Chief
Executive Officer
1st INDEPENDENCE FINANCIAL GROUP, INC.
By: /s/ N. Xxxxxxx Xxxxx
N. Xxxxxxx Xxxxx, President
1st INDEPENDENCE BANK, INC.
By: /s/ N. Xxxxxxx Xxxxx
N. Xxxxxxx Xxxxx, President
Exhibit A
Form of
VOTING AGREEMENT
Each of the undersigned directors of 1st Independence Financial Group,
Inc. ("1st Independence") hereby agrees in his individual capacity as a
shareholder to vote his shares of 1st Independence Common Stock that are
registered in his personal name (and agrees to use his reasonable efforts to
cause all additional shares of 1st Independence Common Stock owned jointly by
him with any other person or by his spouse) in favor of the Agreement and Plan
of Merger by and among 1st Independence, 1st Independence Bank, Inc. ("1st
Bank") and MainSource Financial Group, Inc. ("MainSource"), dated February ___,
2008 (the "Agreement"). In addition, each of the undersigned directors hereby
agrees not to make any transfers of shares of 1st Independence with the purpose
of avoiding his agreements set forth in the preceding sentence and agrees to
cause any transferee of such shares to abide by the terms of this Voting
Agreement. Each of the undersigned is entering into this Voting Agreement solely
in his capacity as an individual shareholder and, notwithstanding anything to
the contrary in this Voting Agreement, nothing in this Voting Agreement is
intended or shall be construed to require any of the undersigned, in his
capacity as a director of 1st Independence or 1st Bank, to act or fail to act in
accordance with his fiduciary duties in such director capacity. Furthermore,
none of the undersigned makes any agreement or understanding herein in his or
her capacity as a director of 1st Independence or 1st Bank.
Dated this ____ day of February, 2008.
___________________________________ ___________________________________
Xxxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxx
___________________________________ ___________________________________
Xxxx X. Xxxxxxx, Xx. W. Xxxxxx Xxxxxxx
___________________________________ ___________________________________
Xxxxxx Xxx Xxxxxx H. Xxxxxx Xxxxxxxxxx, Xx.
___________________________________ ___________________________________
Xxxxxxx X. Xxxxxxx N. Xxxxxxx Xxxxx
___________________________________
Xxxxxxx X. Xxxxx XX
KD_IM-1279182_1.DOC
Exhibit 1.01(e)(i)
Form of
ARTICLES OF MERGER
OF
1st INDEPENDENCE FINANCIAL GROUP, INC.
(A Delaware Corporation)
WITH AND INTO
MAINSOURCE FINANCIAL GROUP, INC.
(An Indiana Corporation)
In compliance with the requirements of the Indiana Business Corporation
Law, as amended (the "Act"), the undersigned corporation, desiring to effect a
merger, sets forth the following facts:
Article I
SURVIVING CORPORATION
Section 1. The corporation surviving the merger is MainSource Financial
Group, Inc. (the "Surviving Corporation"). The Surviving Corporation's name has
not been changed as a result of the merger, and shall remain "MainSource
Financial Group, Inc."
Section 2. The Surviving Corporation is a domestic corporation existing
pursuant to the provisions of the Act, was incorporated in Indiana on March 30,
1983, and will maintain its principal office at 0000 Xxxxx Xxxxx Xxxx 0 Xxxxxx,
Xxxxxxxxxx, Xxxxxxx Xxxxxx, Xxxxxxx 00000.
Article II
MERGING CORPORATION
The name, state of incorporation and date of incorporation of the
corporation, other than the Surviving Corporation, which is a party to the
merger is as follows:
1st Independence Financial Group, Inc.
(Name of Corporation)
Delaware June 7, 1995
(State of Domicile) (Date of Incorporation)
Article III
PLAN OF MERGER
The Plan of Merger (the "Agreement") dated February ___, 2008 by and
among MainSource Financial Group, Inc., 1st Independence Financial Group, Inc.
and 1st Independence Bank, Inc. contains the plan of merger of 1st Independence
Financial Group, Inc., a Delaware corporation into MainSource Financial Group,
Inc., an Indiana corporation, and such information as required by the Act and is
set forth in Exhibit A attached hereto and made a part hereof.
Article IV
MANNER OF ADOPTION AND VOTE
Action by Domestic Surviving Corporation
Approval by MainSource's Shareholders of the merger contemplated by
this Agreement is not required, pursuant to Section 23-1-40-3(g) of the Act.
Action by Merging Corporation
Vote of Shareholders. With respect to 1st Independence Financial Group,
Inc., the designation, number of outstanding shares, number of votes entitled to
be cast by each voting group entitled to vote separately on the merger, and
number of shares voted in favor or against or having abstained as to the merger
are set forth below:
Designation of Voting Group Common Stock
Number of Outstanding Shares _________
Number of Votes Entitled to be Cast _________
Shares Voted in Favor _________
Shares Voted Against _________
Shares Abstained _________
The number of votes cast for approval of the Agreement by the
shareholders of 1st Independence Financial Group, Inc. was sufficient for
approval thereof.
Article V
EFFECTIVE DATE
The effective date of the merger hereby effectuated shall be _________, 2008.
IN WITNESS WHEREOF, the undersigned Surviving Corporation and merging
corporation, by their respective Presidents, and attested by their respective
Secretaries, acting for and on behalf of such companies, hereby executes these
Articles of Merger on the ___ day of __________, 2008.
MAINSOURCE FINANCIAL GROUP, INC.
("Surviving Corporation")
By: _____________________________________
Xxxxxx X. Xxxxxx, President
ATTEST:
MAINSOURCE FINANCIAL GROUP, INC.
By: __________________________________
______________, Secretary
STATE OF INDIANA )
) SS:
COUNTY OF DECATUR )
The undersigned, a Notary Public in and for said County and State,
hereby certifies that Xxxxxx X. Xxxxxx, the President of MainSource Financial
Group, Inc., an Indiana corporation, the officer executing the foregoing
Articles of Merger, personally appeared before me, acknowledged the execution
thereof for and on behalf of such corporation, and swore or attested to the
truth and accuracy of the facts and actions therein stated relating to such
corporation.
WITNESS my hand and Notarial seal this ___ day of ________, 2008.
My Commission Expires: ___________
Notary Public -- Signature
My County of Residence: ___________ Printed Name:
1st INDEPENDENCE FINANCIAL GROUP, INC.
("Merging Corporation")
By: _____________________________________
N. Xxxxxxx Xxxxx, President
ATTEST:
1st INDEPENDENCE FINANCIAL GROUP, INC.
By: __________________________________
______________, Secretary
STATE OF INDIANA )
) SS:
COUNTY OF ___________ )
The undersigned, a Notary Public in and for said County and State,
hereby certifies that N. Xxxxxxx Xxxxx, the President of 1st Independence
Financial Group, Inc., a Delaware corporation, the officer executing the
foregoing Articles of Merger, personally appeared before me, acknowledged the
execution thereof for and on behalf of such corporation, and swore or attested
to the truth and accuracy of the facts and actions therein stated relating to
such corporation.
WITNESS my hand and Notarial seal this ___ day of ________, 2008.
My Commission Expires: ___________
Notary Public -- Signature
My County of Residence: ___________ Printed Name:
KD_IM-1279209_1.DOC
Exhibit 1.01(e)(ii)
Form of
PLAN OF MERGER
THIS PLAN OF MERGER ("Agreement") is made and entered into this 26th
day of February, 2008 by and among MainSource Financial Group, Inc.
("MainSource" or the "Surviving Corporation"), 1st Independence Financial Group,
Inc. ("1st Independence") and 1st Independence Bank, Inc. ("1st Bank").
W I T N E S S E T H:
WHEREAS, MainSource is an Indiana corporation registered as a financial
holding company under the federal Bank Holding Company Act of 1956, as amended
(the "BHC Act"), with its principal office located in Greensburg, Decatur
County, Indiana; and
WHEREAS, 1st Independence is a Delaware corporation registered as a
bank holding company under the BHC Act, with its principal office located in
Louisville, Jefferson County, Kentucky; and
WHEREAS, 1st Bank is a Kentucky chartered commercial bank with its
principal office located in Louisville, Jefferson County, Kentucky, and is a
wholly-owned subsidiary of 1st Independence; and
WHEREAS, MainSource and 1st Independence seek to affiliate through a
corporate reorganization whereby 1st Independence will merge with and into
MainSource, as a result of which merger 1st Bank will become a wholly-owned
subsidiary of MainSource; and
WHEREAS, pursuant to a separate Agreement and Plan of Merger (the
"Merger Agreement"), dated February 26, 2008, 1st Independence has agreed to
merge with and into MainSource; and
WHEREAS, the Boards of Directors of each of the parties hereto have
determined that it is in the best interests of their respective corporations or
banks and their respective shareholders to consummate the merger provided for
herein and have approved this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby make this Agreement and prescribe the terms and
conditions of the merger of 1st Independence with and into MainSource, and the
mode of carrying such merger into effect as follows:
ARTICLE I
THE MERGER
Upon the terms and subject to the conditions of this Agreement, at the
Effective Time (as defined herein), 1st Independence shall be merged with and
into and under the Articles of Incorporation of MainSource (the "Merger").
MainSource shall be the surviving corporation in the Merger (the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Indiana. At the Effective Time, the separate corporate existence of 1st
Independence shall cease.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Name and Offices. Upon and following the Effective Time of
the Merger, the name of the Surviving Corporation shall be MainSource Financial
Group, Inc., and shall continue its corporate existence under the laws of the
State of Indiana pursuant to the provisions of and with the effect provided in
the Indiana Business Corporation Law (the "IBCL"). The principal office of the
Surviving Corporation shall be located at 0000 Xxxxx Xxxxx Xxxx 0 Xxxxxx,
Xxxxxxxxxx, Xxxxxxx until such time as the Board of Directors designates
otherwise.
Section 2.2 Authorized Shares. The total number of shares that
MainSource shall have authority to issue is 25,000,000 shares of common stock
and 400,000 shares of preferred stock.
Section 2.3 Directors of the Surviving Corporation. At the Effective
Time, each person who was a director of MainSource immediately prior to the
Effective Time shall continue to serve as a director of the Surviving
Corporation following the Effective Time until such time as his or her successor
has been duly elected and has qualified or until his or her earlier resignation,
death, or removal as a director.
Section 2.4 Officers of the Surviving Corporation. At the Effective
Time, each person who was an officer of MainSource immediately prior to the
Effective Time shall continue to serve as an officer of the Surviving
Corporation following the Effective Time until such time as his or her successor
has been duly elected and has qualified or until his or her earlier resignation,
death or removal from office.
Section 2.5 Articles of Incorporation and Bylaws.
(a) Articles of Incorporation. The Articles of Incorporation of
MainSource in existence at the Effective Time shall remain the Articles of
Incorporation of the Surviving Corporation following the Effective Time, until
such Articles of Incorporation shall be amended or repealed as provided therein
or by applicable law.
(b) Bylaws. The Bylaws of the Surviving Corporation of MainSource in
existence at the Effective Time shall remain the Bylaws of the Surviving
Corporation following the Effective Time, until such Bylaws shall be amended or
repealed as provided therein or by applicable law.
Section 2.6 Effect of the Merger. The effect of the Merger upon
consummation shall be as set forth in the Indiana Business Corporation Law, as
amended.
ARTICLE III
CAPITAL
Section 3.1 Manner of Conversion of Shares. Upon and by virtue of the
Merger becoming effective at the Effective Time,
(a) Each share of common stock of 1st Independence issued and
outstanding immediately prior to the Effective Time shall become and be
converted into the right to receive $5.475 (the "Cash Consideration") and
0.881036 shares of common stock of MainSource (the "Exchange Ratio"), without
par value, (collectively, the "Merger Consideration") by virtue of the Merger,
without any action on the part of the holder thereof (except as provided in
Section 3.5 below); and
(b) Each holder of 1st Independence common stock who otherwise would be
entitled to a fractional share of MainSource common stock shall receive an
amount in cash determined by multiplying such fraction by the average per share
closing prices of a share of MainSource common stock as quoted on the Nasdaq
Stock Market during the ten trading days preceding the fifth (5th) calendar day
preceding the Effective Time (the "Average Share Price").
Section 3.2 Effect of Conversion. At and after the Effective Time, each
share certificate which immediately prior to the Effective Time represented
outstanding shares of common stock of 1st Independence ("1st Independence
Certificate") shall represent only the right to receive the Merger
Consideration.
Section 3.3 Exchange of Certificate. Each holder of 1st Independence
common stock shall, upon the surrender of such certificate to the Surviving
Corporation for cancellation after the Effective Time, be entitled to receive
from the Surviving Corporation a certificate representing that number of whole
shares of MainSource common stock that each holder of 1st Independence has the
right to receive, and a check in the amount of any cash that such holder has the
right to receive, including any cash in lieu of fractional share, pursuant to
Section 3.1 hereof.
Section 3.4 Stock Options. By virtue of the Merger and without any
action on the part of the holder, each outstanding option to purchase common
stock of 1st Independence ("1st Independence Stock Option") which is outstanding
immediately prior to the Effective Time shall be converted into and become a
right to receive from MainSource, at the Effective Time, an amount in cash equal
to the product of (A) the sum of (i)(x) the Cash Consideration plus (y) the
product of the Average Share Price of MainSource common stock multiplied by the
Exchange Ratio, less (ii) the per share exercise price for each share of 1st
Independence common stock subject to such 1st Independence Stock Option,
multiplied by (B) the number of shares of 1st Independence common stock subject
to such 1st Independence Stock Option, and (ii) regardless of whether such
calculation results in a positive or negative number, each 1st Independence
Stock Option will be cancelled and shall cease to exist by virtue of such
payment.
Section 3.5 Treasury Stock. Each share of 1st Independence common stock
that, immediately prior to the Effective Time, is held as treasury stock of 1st
Independence or held directly or indirectly by MainSource (other than shares
held by MainSource in a fiduciary capacity or in satisfaction of a debt
previously contracted) shall by virtue of the Merger be canceled and retired and
shall cease to exist, and no exchange or payment shall be made therefor shall by
virtue of the Merger be cancelled and retired and shall cease to exist, and no
exchange or payment shall be made therefor.
ARTICLE IV
CONDITIONS PRECEDENT
The obligation of MainSource and 1st Independence to consummate the
Merger contemplated by this Agreement is subject to the receipt of all required
approvals of the shareholders of 1st Independence and the receipt of all
appropriate orders, consents, approvals and clearances from all necessary
regulatory agencies and governmental authorities whose orders, consents,
approvals or clearances are required by law for consummation of the Merger, as
well as the satisfaction of the conditions set forth in the Merger Agreement.
ARTICLE V
EFFECTIVE TIME
Subject to the terms and upon satisfaction of all requirements of law
and the conditions specified in this Agreement, the Merger shall become
effective on the date and at the time specified in the Articles of Merger filed
with the Indiana Secretary of State.
ARTICLE VI
TERMINATION
Section 6.1 Manner of Termination. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time prior to the
Effective Time as provided in the Merger Agreement.
Section 6.2 Effect of Termination. Upon termination by written notice,
this Agreement shall be of no further force or effect, and there shall be no
further obligations or liabilities by reason of this Agreement or the
termination thereof on the part of any party hereto or their respective
directors, officers, employees, agents and shareholders, except as expressly
provided in the Merger Agreement, including without limitation: (i) the
confidentiality provisions of the Merger Agreement; and (ii) the payment of
their respective expenses, as set forth in the Merger Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
Section 7.2 Entire Agreement. This Agreement together with the Merger
Agreement set forth the entire understanding of the parties hereto with respect
to the subject matter and merges and supersedes all prior and contemporaneous
understandings with respect to the subject matter hereof. This Agreement is
delivered subject to the terms and conditions of the Merger Agreement and in the
event of any conflict between the provisions of this Agreement and the
provisions of the Merger Agreement, the provisions of the Merger Agreement shall
control.
Section 7.3 Notices. Any notices, request or instruction to be given
hereunder to any party hereto shall be in writing and delivered by hand and
receipted for, sent by certified United States Mail, return receipt requested,
first class postage pre-paid, delivered by overnight express receipted delivery
service or telecopied if confirmed immediately thereafter by also mailing a copy
of such notice, request or other communication by certified United States Mail,
return receipt requested, with first class postage pre-paid to the other party
hereto and marked to the attention of the Chairman of the Board or President of
such party.
Section 7.4 Amendments; Waivers. No amendments of this Agreement shall
be binding unless executed in writing by all parties hereto. Any waiver of any
provision of this Agreement shall be in writing, and no waiver of any provision
shall be deemed a waiver of any other provision or constitute a continuing
waiver.
Section 7.5 Severability. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had ever been contained herein.
Section 7.6 Governing Law. This Agreement has been executed and
delivered in the State of Indiana and shall be construed and governed in
accordance with the laws of the State of Indiana, without reference to the
conflict or choice of law principles thereof.
Section 7.7 Counterparts. This Agreement may be executed in any number
of counterparts and by facsimile, each of which shall be an original, but such
counterparts shall together constitute one and the same instrument.
* * *
IN WITNESS WHEREOF, MainSource Financial Group, Inc., 1st Independence
Financial Group, Inc. and 1st Independence Bank, Inc. have made and entered into
this Agreement as of the day and year first above written and have caused this
Agreement to be executed and attested by their duly authorized officers.
MainSource Financial Group, Inc.
"MainSource"
By:
Xxxxxx X. Xxxxxx, President
ATTEST:
By: _____________________________
___________________, Secretary
1st Independence Financial Group, Inc.
"1st Independence"
By:
N. Xxxxxxx Xxxxx, President
ATTEST:
By: _____________________________
___________________, Secretary
1st Independence Bank, Inc.
"1st Bank
By:
N. Xxxxxxx Xxxxx, President
ATTEST:
By: _____________________________
___________________, Secretary
KD_IM-1282368_1.DOC
