AGREEMENT AND PLAN OF MERGER
Exhibit
10.1
THIS
AGREEMENT AND PLAN OF MERGER
(this
"Agreement") is dated to be effective as of August 23, 2005, by and among
MAINSOURCE
FINANCIAL GROUP, INC.
("MainSource"), UNION
COMMUNITY BANCORP
(“UCBC”)
and UNION
FEDERAL SAVINGS AND LOAN ASSOCIATION
("Union
Federal").
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,
UCBC is an Indiana corporation registered as a savings and loan holding company
under the Home Owners’ Loan Act, as amended (“HOLA”), with its principal office
located in Crawfordsville, Xxxxxxxxxx County, Indiana; and
WHEREAS,
Union Federal is a federal savings association with its principal office
located
in Crawfordsville, Xxxxxxxxxx County, Indiana, and is a wholly-owned subsidiary
of UCBC; and
WHEREAS,
MainSource and UCBC seek to affiliate through a corporate reorganization
whereby
UCBC will first merge with and into MainSource and Union Federal will
immediately thereafter merge with and into MainSource Bank - Crawfordsville
(“Merger Corp”), a to-be-formed interim Indiana commercial bank with its
principal offices located in Greensburg, Decatur County, Indiana, and the
wholly-owned subsidiary of MainSource, as a result of which merger Union
Federal
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 mergers provided for herein and
have
approved this Agreement, authorized its execution and designated this Agreement
a plan of merger.
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 UCBC with and into MainSource, and the merger
of
Union Federal with and into Merger Corp, and the mode of carrying such mergers
into effect as follows:
ARTICLE
I
THE
COMPANY MERGER
1.01. The
Company 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), UCBC shall merge with and into and under the
Articles of Incorporation of MainSource (the "Company Merger"). The Company
Merger is subject to the Subsidiary Merger (as defined in Section 2.01 hereof)
occurring immediately after the Company Merger, and if the Subsidiary Merger
will not close immediately thereafter, the Company Merger shall not occur.
MainSource shall survive the Company 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 000 Xxxxx Xxxxxxxx, 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
of
MainSource serving as directors 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 Company Merger.
At the
Effective Time, the title to all assets, real estate and other property owned
by
UCBC 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 UCBC shall be assumed by Surviving Corporation.
(e)
Integration.
At the
Effective Time, the parties hereto currently intend to effectuate, or cause
to
be effectuated, the Company 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 it take all reasonable actions prior to or
following the Effective Time, including executing all requisite documentation,
as may be reasonably necessary to effect the Company Merger.
1.02. Reservation
of Right to Revise Structure.
At
MainSource’s election, the Company Merger may alternatively be structured so
that (a) UCBC 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 UCBC; provided, however, that
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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,
without par value, of UCBC (“UCBC Common Stock”) or options for UCBC Common
Stock (“UCBC Stock Options”), (y) prevent the parties from obtaining the opinion
of Bose XxXxxxxx & Xxxxx LLP referred to in Sections 8.01 and 8.02, 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.
ARTICLE
II
THE
SUBSIDIARY MERGER
2.01. The
Subsidiary Merger.
(a)
General
Description.
Upon the
terms and subject to the conditions of this Agreement, at the Effective Time,
Union Federal shall merge with and into and under the Articles of Incorporation
of Merger Corp (the “Subsidiary Merger”). Merger Corp shall survive the
Subsidiary Merger (the “Surviving Bank”) 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 Financial Institutions Act and
the
IBCL.
(b)
Name,
Offices, Officers and Directors.
The name
of the Surviving Bank shall be “MainSource Bank - Crawfordsville”. Its principal
office shall be located at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxxxxxx, Xxxxxxxxxx
Xxxxxx, Indiana, and its branches shall consist of the branch offices of
Union
Federal as of the Effective Time. The officers of Merger Corp at the Effective
Time shall continue to serve as the officers of the Surviving Bank until
such
time as their successors shall have been duly elected and have qualified
or
until their earlier resignation, death or removal from office. In addition,
immediately following the Effective Time, Xxxx X. Xxxxxxx shall be appointed
the
Chairman of the Board, President, and Chief Executive Officer and J. Xxx
Xxxxxx
shall be appointed as an executive officer of the Surviving Bank. The directors
of the Surviving Bank following the Effective Time shall consist of Xxxx
X.
Xxxxxxx and four (4) other individuals mutually acceptable to MainSource
and
UCBC, 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 Merger Corp in existence at the
Effective Time shall remain the Articles of Incorporation and By-Laws of
the
Surviving Bank 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 Subsidiary Merger.
At the
Effective Time, the title to all assets, real estate and other property owned
by
Union Federal shall vest in Surviving Bank as set forth in Indiana Code Section
28-1-7-19, as amended, without reversion or impairment. At the Effective
Time,
all liabilities of Union Federal shall be assumed by Surviving
Bank.
(e)
Integration.
At the
Effective Time, the parties hereto currently intend to effectuate, or cause
to
be effectuated, the Subsidiary Merger, pursuant to Articles of Merger
substantially in
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the
form
attached hereto as Exhibit
2.01(e)(i)
and an
Agreement and Plan of Merger substantially in the form attached hereto as
Exhibit
2.01(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 Subsidiary Merger. UCBC and
Union
Federal also agree to cooperate with MainSource and to take all reasonable
restructuring steps for regulatory purposes, as may be reasonably requested
by
MainSource to effect the Company Merger and the Subsidiary Merger (collectively,
the “Mergers”), or otherwise consolidate such legal entities to the extent
desirable for regulatory or other reasons.
2.02. Reservation
of Right to Revise Structure.
At
MainSource’s election, the Subsidiary Merger may alternatively be structured so
that (a) Union Federal 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 Union Federal; provided,
however, that no such change shall (x) alter or change the amount or kind
of the
Merger Consideration or the treatment of the holders of UCBC Common Stock
or
UCBC Stock Options, (y) prevent the parties from obtaining the opinion of
Bose
XxXxxxxx & Xxxxx LLP referred to in Sections 8.01 and 8.02, 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.
ARTICLE
III
MANNER
AND BASIS OF EXCHANGE OF STOCK
3.01. Consideration.
(a)
Subject to the terms and conditions of this Agreement, at the Effective
Time:
(a)
Each
share of UCBC Common stock issued and outstanding immediately prior to the
Effective Time (other than shares held as treasury stock of UCBC and shares
held
directly or indirectly by MainSource, except shares held in a fiduciary capacity
or in satisfaction of a debt previously contracted, if any) shall become
and be
converted into the right to receive in accordance with this
Article:
(i)
An
amount of cash equal to the Purchase Price (as such amount is determined
and
adjusted in accordance with Section 3.02 below) divided by the number of
shares
of UCBC Common Stock outstanding as of the Effective Time (such amount is
the
“Cash Consideration”), or
(ii)
Such
number of shares of common stock, without par value, of MainSource (“MainSource
Common Stock”) equal to the quotient (the “Exchange Ratio”) arrived at by
dividing:
A.
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the
Cash Consideration, by
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B.
|
the
average of the per share closing prices of a share of MainSource
Common
Stock as quoted on the Nasdaq Stock Market during the ten trading
days
|
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preceding
the fifth (5th) calendar day preceding the Effective Time (the “MainSource
Average Stock Price”), subject to adjustment, if any, pursuant to Sections 3.02
and 3.06 hereof (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 Section 6.15 hereof, at the
Effective Time, each outstanding option to purchase UCBC Common Stock (“UCBC
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 excess of the Cash Consideration over the per
share
exercise price for each share of UCBC Common Stock subject to such UCBC Stock
Option; provided, however, that the payer shall withhold from such cash payment
those taxes required to be withheld by applicable law, if any. Each UCBC
Stock
Option to which this paragraph applies will be cancelled and shall cease
to
exist by virtue of such payment.
(c)
Each
share of UCBC Common Stock that, immediately prior to the Effective Time,
is
held as treasury stock of UCBC 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 Company Merger be canceled
and
retired and shall cease to exist, and no exchange or payment shall be made
therefor.
3.02.
Purchase
Price; Adjustments to Purchase Price.
(a)
Purchase
Price.
Subject
to the adjustments in this Section 3.02, the Purchase Price shall be equal
to
$52,993,000.
(b)
Adjustment
Based Upon UCBC’s Consolidated Shareholders’ Equity.
(i)
Unless waived by MainSource pursuant to Article X of this Agreement, if as
of
the last business day of the month preceding the month in which the Effective
Time occurs (the “Computation Date”)
the UCBC
Consolidated Shareholders’ Equity, as determined in accordance with Section
3.02(b)(ii), is less than $30,600,000, the Purchase Price shall be reduced
on a
dollar-for-dollar basis by an amount equal to the difference between $30,600,000
and the actual UCBC Consolidated Shareholders’ Equity as of the
Computation Date determined in accordance with Section 3.02(b)(ii). If at
the
Computation Date UCBC’s Consolidated Shareholders’ Equity is greater than
$31,100,000, the Purchase Price shall be increased on a dollar-for-dollar
basis
by an amount equal to the difference between $31,100,000 and the actual UCBC
Consolidated Shareholders’ Equity as of the
Computation Date determined in accordance with Section 3.02(b)(ii).
(ii)
The
UCBC Consolidated Shareholders’ Equity shall be determined based upon the
balance sheet of UCBC as of the
Computation Date, prepared in accordance with generally accepted accounting
principles consistently applied, after making adjustments for the following
items and tax effecting those adjustments, using a 39% tax rate, where
appropriate:
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(A)
|
the
accrual of any fees payable to a broker or investment advisor by
UCBC as a
result of the consummation of the transactions contemplated
herein;
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(B)
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the
accrual of the payments contemplated by Section 6.19
hereof;
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(C)
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the
accrual or payment of a penalty in the amount of $1,841,840 for
the
termination of UCBC’s data processing
contract;
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(D)
|
the
funding in full of the UCBC Financial Institutions Retirement Fund
upon
its termination;
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(E)
|
the
accrual of all compensable vacation and sick days for employees
of UCBC as
of the Computation Date; and
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(F)
|
the
accrual of an additional loan loss provision in the amount of $500,000
above the amount calculated in accordance with Section
6.03(xiv);
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(c)
Adjustment Based on Market Price of MainSource Common Stock.
(i)
If
the MainSource Average Stock Price is less than $16.50 per share, the Exchange
Ratio shall be equal to the Cash Consideration divided by $16.50 (as further
adjusted pursuant to Section 3.06, as necessary).
(ii)
If
the MainSource Average Stock Price is greater than $21.50 per share, the
Exchange Ratio shall be equal to the Cash Consideration divided by $21.50
(as
further adjusted pursuant to Section 3.06, as necessary).
3.03. 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 Company Merger; instead, MainSource
shall pay to each holder of UCBC 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 MainSource Average
Stock Price.
3.04. Election
and Proration Procedures.
(a)
An
election form and letter of transmittal (the “Election Form”) shall be mailed to
each record holder of UCBC Common Stock along with the proxy materials for
the
special shareholders’ meeting at which the Company Merger will be submitted to a
vote of UCBC’s shareholders. The shareholders of UCBC entitled to receive the
Election Form shall be those shareholders of record as of the record date
fixed
for the special shareholders’ meeting at which
6
the
Company Merger will be submitted to a vote of UCBC’s shareholders (the “Special
Record Date”). UCBC and MainSource shall also establish a deadline for receipt
of such Election Forms (the “Election Deadline”), which deadline shall be the
close of business on the date of the special meeting at which the Company
Merger
will be submitted to a vote of UCBC’s shareholders. MainSource shall also use
commercially reasonable efforts to provide the Election Form to shareholders
of
record who become such after the record date and before the Election Deadline.
The Election Forms UCBC shall provide to MainSource shall include all
information reasonably necessary for UCBC to perform its obligations as
specified herein.
(b)
Each
Election Form shall entitle the holder of shares of UCBC Common Stock
to:
(i)
elect
to receive the Cash Consideration for all of such holder's shares (a "Cash
Election");
(ii)
elect to receive the Stock Consideration for all of such holder's shares
(a
"Stock Election");
(iii)
elect to receive the Cash Consideration with respect to some of such holder's
shares and the Stock Consideration with respect to such holder's remaining
shares (a "Mixed Election"); or
(iv)
make
no election or to indicate that such holder has no preference as to the receipt
of the Cash Consideration or the Stock Consideration (a
"Non-Election").
Shares
of
UCBC Common Stock as to which a Cash Election has been made (including pursuant
to a Mixed Election) are referred to herein as "Cash Election Shares." Shares
of
UCBC Common Stock as to which a Stock Election has been made (including pursuant
to a Mixed Election) are referred to herein as "Stock Election Shares." Shares
of UCBC Common Stock as to which no election has been made are referred to
herein as "Non-Election Shares." The aggregate number of Stock Election Shares
and Non-Election Shares are referred to herein as the "Stock Election
Number."
(c)
An
election shall be duly made by completing the Election Form and any other
required documents in accordance with the instructions set forth therein
and
delivering them to MainSource before 5:00 p.m., E.S.T., on the Election
Deadline. An election shall have been properly made only if MainSource shall
have actually received a properly completed Election Form by the Election
Deadline. An Election Form shall be deemed properly completed only if
accompanied by one or more certificates therefor representing UCBC Common
Stock
("Certificates") (or customary affidavits and, if required by MainSource
pursuant to Section 3.05(g), a bond as indemnity against any claim that may
be
made with respect to such Certificates or the guaranteed delivery of such
Certificates) representing all shares of UCBC Common Stock covered by such
Election Form, together with duly executed transmittal materials included
with
the Election Form. Subject to the terms of this Agreement and of the Election
Form, MainSource shall have reasonable discretion to determine whether any
election, revocation, or change has been properly or timely made and to
disregard immaterial defects in
7
any
Election Form, and any good faith decisions of MainSource regarding such
matters
shall be binding and conclusive.
(d)
Notwithstanding any other provision contained in this Agreement, fifty-five
percent (55%) of the total number of shares of UCBC Common Stock outstanding
at
the Effective Time (the "Stock Conversion Number") shall be converted into
the
Stock Consideration and the remaining outstanding shares of UCBC Common Stock
shall be converted into the Cash Consideration; provided, however, that for
federal income tax purposes, it is intended that the Mergers will qualify
as an
integrated plan of reorganization under the provisions of Section 368(a)(1)(A)
of the Code and, notwithstanding anything to the contrary contained herein,
in
order that the aforementioned integrated plan of reorganization will not
fail to
satisfy continuity of interest requirements under applicable federal income
tax
principles relating to reorganizations under Section 368(a)(1)(A) of the
Code,
MainSource reserves the right to increase the number of shares of UCBC Common
Stock that will be converted into Stock Consideration and reduce the number
of
shares of UCBC Common Stock that will be converted into the right to receive
the
Cash Consideration to ensure that the Stock Consideration will represent
at
least fifty percent (50%) of the value of the total of the aggregate Merger
Consideration plus any amount treated as merger consideration for federal
income
tax purposes.
(e)
Within five (5) business days after the Effective Time, MainSource shall
effect
the allocation among holders of UCBC Common Stock of rights to receive the
Cash
Consideration and the Stock Consideration and to distribute such consideration
as follows:
(i)
if
the Stock Election Number equals the Stock Conversion Number, then (A) all
Cash
Election Shares shall be converted into the right to receive the Cash
Consideration, and (B) all Stock Election Shares and Non-Election Shares
shall
be converted into the right to receive the Stock Consideration;
(ii)
if
the Stock Election Number is less than the Stock Conversion Number, the Cash
Elections shall be eliminated (each in its entirety) and converted to Stock
Elections (each in its entirety) by first eliminating and converting the
Cash
Election which covers the smallest number of shares of UCBC Common Stock,
and
then eliminating and converting the Cash Election which covers the next smallest
number of shares and continuing this process until the total remaining number
of
outstanding UCBC shares covered by Cash Elections is such that fifty-five
percent (55%) of the total number of shares of UCBC Common Stock outstanding
at
the Effective Time shall be converted into the Stock Consideration, subject
to
MainSource’s reserved right in Section 3.04(d) to increase the number of shares
of UCBC Common Stock that will be converted into Stock Consideration to ensure
that the Company Merger is a tax-free reorganization; and
(iii)
if
the Stock Election Number exceeds the Stock Conversion Number, the Non-Elections
shall be eliminated (each in its entirety) and converted to Cash Elections
(each
in its entirety) by first eliminating and converting the Non-Election which
covers the smallest number of shares of UCBC Common Stock, and then eliminating
and converting the Non-Election which covers the next smallest number of
shares
and continuing this process until either all Non-Elections are converted
into
the Cash Consideration or the total remaining number of
8
outstanding
UCBC shares covered by Non-Elections (when added to all Stock Elections)
is such
that 55% of the total number of shares of UCBC Common Stock outstanding at
the
Effective Time shall be converted into the Stock Consideration, subject to
MainSource’s reserved right in Section 3.04(d) to increase the number of shares
of UCBC Common Stock that will be converted into Stock Consideration to ensure
that the Company Merger is a tax-free reorganization. In the event that,
following the elimination and conversion of all Non-Elections to Cash Elections,
the Stock Election Number still exceeds the Stock Conversion Number, the
Stock
Elections will be eliminated (each in its entirety) and converted to Cash
Elections (each in its entirety) in the same manner as the Non-Elections
in this
Section 3.04(e)(iii), until such time as the total remaining number of UCBC
Common Shares covered by Stock Elections is such that 55% of the total number
of
shares of UCBC Common Stock outstanding at the Effective Time shall be converted
into the Stock Consideration, subject to MainSource’s reserved right in Section
3.04(d), as provided herein.
For
purposes of this Section 3.04(e), if MainSource is obligated to increase
the
number of shares of UCBC Common Stock to be converted into shares of MainSource
Common Stock as a result of the application of the last clause of Section
3.04(d) hereof, then the higher number shall be substituted for the Stock
Conversion Number in the calculations set forth in this Section
3.04(e).
(f)
Notwithstanding anything to the contrary in this Section 3.04, if (i) a
shareholder of UCBC certifies in writing at the time of filing a Cash Election
for all of his shares (the "Certifying Cash Elector"), that his outstanding
UCBC
shares are deemed to be constructively owned by another shareholder of UCBC
(the
"Constructive Owner") under the provisions of Section 318(a) of the Code,
and
(ii) the Constructive Owner has filed a valid Cash Election, then the elections
of the Certifying Cash Elector or Electors and the Constructive Owner or
Owners
shall be treated as a single election, and their shares shall be aggregated
for
purposes of determining priority for conversion into cash.
(g)
A
holder of UCBC's shares that is a bank, trust company, security broker-dealer
or
other recognized nominee, may submit one or more Election Forms for the persons
for whom it holds shares as nominee provided that such bank, trust company,
security broker-dealer or nominee certifies to the satisfaction of UCBC and
MainSource the names of the persons for whom it is so holding shares (the
"Beneficial Owners"). In such case, each Beneficial Owner for whom an Election
Form is submitted shall be treated as a separate owner for purposes of the
election procedure and allocation of shares set forth herein.
3.05. Exchange
Procedures.
(a)
Distributions by MainSource of the Merger Consideration shall be made in
accordance with Section 3.04. At and after the Effective Time, each certificate
representing shares of UCBC 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 reserve a sufficient number
of
shares of MainSource Common Stock to be issued as part of the Merger
Consideration and shall
9
deposit
with MainSource Bank an estimated amount of cash to be issued as part of
the
Merger Consideration.
(c)
MainSource shall cause a certificate representing that number of whole shares
of
MainSource Common Stock that each holder of UCBC Common Stock has the right
to
receive pursuant to Section 3.04, if any, and a check in the amount of any
cash
that such holder has the right to receive pursuant to Section 3.04, if any,
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 UCBC Common Stock ("Old Certificates")
(or bond as indemnity satisfactory to MainSource if any of such certificates
are
lost, stolen or destroyed) owned by such shareholder. No interest will be
paid
on any Merger Consideration that any such person shall be entitled to receive
pursuant to this Article III 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 UCBC Common Stock converted
in the Company 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 3.05. After becoming so entitled in accordance with this
Section 3.05, 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 UCBC 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 UCBC of any shares of UCBC 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 3.05.
(f)
MainSource shall be entitled to rely upon UCBC'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
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 in such amount 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 3.04 hereof.
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(h)
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to any former holder of UCBC Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
3.06. 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 UCBC would have received if any of the foregoing actions
had not
occurred.
3.07. Exchange
Agent.
UCBC
and MainSource agree that Registrar and Transfer Company shall be appointed
to
act as agent (the “Exchange Agent”) for purposes of mailing and receiving the
Election Forms, tabulating the results and distributing the Merger Consideration
pursuant to the terms and conditions of this Agreement.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF UCBC
On
or
prior to the date hereof, UCBC 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 IV or to one or more
of
its covenants contained in Article VI; provided that the mere inclusion of
an
item in the Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by UCBC 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 (as defined below).
For
the
purpose of this Agreement, and in relation to UCBC, a "Material Adverse Effect"
means any effect that (i) is material and adverse to the financial position,
results of operations or business of UCBC and its subsidiaries taken as a
whole,
or (ii) would materially impair the ability of UCBC to perform its obligations
under this Agreement or otherwise materially threaten or materially impede
the
consummation of the Mergers 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 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
11
the
Mergers or restructuring charges taken in connection with the Mergers, 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 UCBC’s or Union
Federal’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) reasonable and customary expenses incurred
in
connection with the Mergers and all expenses related to any employment or
severance contract as provided in Section 6.19 and 7.05 of this Agreement
and
any benefit or retirement plan disclosed on the 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 UCBC or Union Federal, and (h) the occurrence
of any
military or terrorist attack within the United States or any of its possessions
or offices.
For
the
purpose of this Agreement, and in relation to UCBC, "knowledge" means the
actual
knowledge of any officer or director of UCBC or any of its subsidiaries and
any
other person having supervisory or management responsibilities with respect
to
material aspects of the operation of the business of UCBC or its subsidiaries
of
a particular fact.
Accordingly,
UCBC and Union Federal hereby represent and warrant to MainSource as follows:
4.01. Organization
and Authority.
(a)
UCBC is a corporation duly organized and validly existing under the laws
of the
state of Indiana and is a registered savings and loan holding company under
the
HOLA. UCBC 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. Union Federal
is
UCBC’s only direct or indirect subsidiary and except as set forth on the
Disclosure Schedule, UCBC owns no voting stock or equity securities of any
corporation, partnership, association or other entity.
(b)
Union
Federal is a federal savings association duly incorporated and organized
and
existing pursuant to the laws of the United States. Union Federal 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, Union Federal has no subsidiaries and owns no voting stock or equity
securities of any corporation, partnership, association or other
entity.
4.02. Authorization.
(a)
UCBC 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 8.02(d), (e) and (f) hereof.
As of the date hereof, UCBC is not aware of any reason why the approvals
set
forth in Section 8.02(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 8.02(e). This Agreement and its execution and delivery by UCBC have
been
duly authorized and approved by the Board of Directors of UCBC and, assuming
due
execution and delivery by MainSource, constitutes a valid and binding obligation
of UCBC, subject to the fulfillment of the conditions precedent set forth
in
Section 8.02 hereof, and is enforceable in accordance with its terms, except
to
the extent limited by general principles
12
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 Mergers
contemplated hereby: (i) conflicts with or violates the Articles of
Incorporation or By-Laws of UCBC or the Charter or Bylaws of Union Federal;
(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 Mergers 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 UCBC or Union Federal
is a
party or by which UCBC or Union Federal 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
UCBC or Union Federal which would be material to UCBC; 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 UCBC or Union Federal is bound or with respect
to
which UCBC or Union Federal is to perform any duties or obligations or receive
any rights or benefits.
(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 Mergers
by UCBC
or Union Federal.
4.03. Capitalization.
(a) The
authorized capital stock of UCBC as of the date hereof consists, and at the
Effective Time will consist, of 5,000,000 shares of UCBC Common
Stock, 1,939,000 of which shares are issued and outstanding, and 2,000,000
shares of preferred stock, no par value, none of which preferred shares are
issued and outstanding. Such issued and outstanding shares of UCBC Common
Stock
have been duly and validly authorized by all necessary corporate action of
UCBC,
are validly issued, fully paid and nonassessable and have not been issued
in
violation of any pre-emptive rights of any present or former UCBC shareholder.
Except as set forth in the Disclosure Schedule, UCBC 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 UCBC Common Stock. Each share of
UCBC
Common Stock is entitled to one vote per share. A description of the UCBC
Common
Stock is contained in the Articles of Incorporation of UCBC, as set forth
in the
Disclosure Schedule pursuant to Section 4.04 hereof.
(b)
The
authorized capital stock of Union Federal as of the date hereof consists,
and at
the Effective Time will consist, of 1,000 shares of common stock, $.01 par
value
per share, all of
13
which
shares are validly issued and outstanding (such issued and outstanding shares
are referred to herein as "Union Federal Common Stock"). Such validly issued
and
outstanding shares of Union Federal Common Stock have been duly and validly
authorized by all necessary corporate action of Union Federal, are validly
issued, fully paid and nonassessable, and have not been issued in violation
of
any pre-emptive rights of any present or former Union Federal stockholder.
All
of the issued and outstanding shares of Union Federal Common Stock are owned
by
UCBC 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. Union Federal has no capital stock authorized, issued or outstanding
other than as described in this Section 4.03(b) and has no intention or
obligation to authorize or issue any other capital stock or any additional
shares of Union Federal 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 UCBC Common Stock or Union
Federal
Common Stock, or any securities convertible into or representing the right
to
purchase or otherwise acquire any common stock or debt securities of UCBC
or
Union Federal, by which UCBC is or may become bound. UCBC does not have any
outstanding contractual or other obligation to repurchase, redeem or otherwise
acquire any of the issued and outstanding shares of UCBC Common Stock. To
the
knowledge of UCBC and Union Federal, 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, UCBC has no knowledge of
any
person or entity which beneficially owns 5% or more of its outstanding shares
of
common stock.
4.04. Organizational
Documents.
The
Articles of Incorporation and By-Laws of UCBC and the Charter and By-Laws
of
Union Federal, 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.
4.05. Compliance
with Law.
(a)
Neither UCBC nor Union Federal has engaged in any activity or 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, and neither is 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.
UCBC and Union Federal possess and hold all licenses, franchises, permits,
certificates and other authorizations necessary for the continued conduct
of
their business without interference or interruption, and such licenses,
franchises, permits, certificates and authorizations are transferable (to
the
extent required) to MainSource or to Merger Corp 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)
All
agreements, understandings and commitments with, and all orders and directives
14
of,
all
government regulatory agencies or authorities with respect to the financial
condition, results of operations, business, assets or capital of UCBC or
Union
Federal 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, UCBC or Union Federal, including, without limitation, all correspondence,
written communications and written 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 UCBC or Union Federal as a result of an examination
by any
regulatory agency or body, or set forth in any accountant's or auditor's
report
to UCBC or Union Federal.
(c)
All
of the existing offices and branches of Union Federal 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. Union
Federal has no approved but unopened offices or branches.
4.06. Accuracy
of Statements Made and Materials Provided to MainSource.
No
representation, warranty or other statement made, or any information provided,
by UCBC or Union Federal in this Agreement or the Disclosure Schedule (and
any
update thereto) and no written information which has been or shall be supplied
by UCBC or Union Federal 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 Mergers, contains or shall
contain (in the case of information relating to the proxy statement-prospectus
at the time it is first mailed to UCBC'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 UCBC or Union Federal 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.
4.07. Litigation
and Pending Proceedings.
Except
as set forth in the Disclosure Schedule:
(a)
There
are no material claims, actions, suits, proceedings, mediations, arbitrations
or
investigations pending or, to the knowledge of UCBC or Union Federal, threatened
in any court or before any government agency or authority, arbitration panel
or
otherwise (nor does UCBC or Union Federal have any knowledge of a basis for
any
such claim, action, suit, proceeding, litigation, arbitration or investigation)
against UCBC or Union Federal.
(b)
Neither UCBC nor Union Federal is: (i) subject to any material 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 UCBC or Union Federal, under governmental investigation with
respect to any actual or alleged material violations of any law, statute,
rule,
regulation or ordinance; or (iii) the subject of any pending or, to the
knowledge of UCBC or Union Federal, threatened proceeding by any government
regulatory agency or
15
authority
having jurisdiction over their respective business, assets, capital, properties
or operations.
4.08. Financial
Statements and Reports.
(a)
UCBC has delivered to MainSource copies of the following financial statements
and reports of UCBC and Union Federal, including the notes thereto
(collectively, the "UCBC Financial Statements"):
(i)
Consolidated Balance Sheets and the related Consolidated Statements of Income
and Consolidated Statements of Changes in Shareholders' Equity of UCBC as
of and
for the fiscal years ended December 31, 2004 and 2003 and as of and for the
six
months ended June 30, 2005;
(ii)
Consolidated Statements of Cash Flows of UCBC for the fiscal years ended
December 31, 2004 and 2003 and for the six months ended June 30,
2005;
(iii)
Thrift financial Reports ("TFRs") for Union Federal as of the close of business
on December 31, 2004 and 2003 and for the six months ended June 30,
2005;
(b)
The
UCBC Financial Statements present fairly the consolidated financial position
of
UCBC as of and at the dates shown and the consolidated results of operations
for
the periods covered thereby and to the knowledge of UCBC and Union Federal
are
complete, correct, represent bona fide transactions, and have been prepared
from
the books and records of UCBC and its subsidiaries. The UCBC 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
June 30, 2005 on a consolidated basis UCBC and its subsidiaries have not
incurred any material liability other than in the ordinary course of business
consistent with past practice.
4.09. 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 UCBC or
Union
Federal (other than Other Real Estate Owned (“OREO”)) and the principal
buildings and structures located thereon, together with a legal description
of
such real property and, within forty-five (45) days of the date of this
Agreement, at MainSource’s expense, a title insurance policy insuring the same
and a survey drawing of each parcel of real property owned by UCBC or Union
Federal, and each lease of real property to which UCBC or Union Federal is
a
party, identifying the parties thereto, the annual rental payable, the
expiration date of the lease and a brief description of the property
covered;
(ii)
All
conditional sales contracts or other title retention agreements relating
to UCBC
or Union Federal and agreements for the purchase of federal funds;
16
(iii)
All
agreements, contracts, leases, licenses, lines of credit, understandings,
commitments or obligations of UCBC or Union Federal which individually or
in the
aggregate:
(A)
|
involve
payment or receipt by UCBC or Union Federal (other than as disbursements
of loan proceeds to customers, loan payments by customers or customer
deposits) of more than $25,000;
|
(B)
|
involve
payments based on profits of UCBC or Union Federal;
|
(C)
|
relate
to the purchase of goods, products, supplies or services in excess
of
$15,000;
|
(D)
|
were
not made in the ordinary course of business;
|
(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
UCBC; and
|
(iv)
The
name and current annual salary of each director, officer and employee of
UCBC or
Union Federal 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 UCBC or Union Federal to or for the benefit of each such person
for
the fiscal year ended December 31, 2004, and any employment, severance or
deferred compensation agreement or arrangement with respect to each such
person.
(b)
UCBC
has, prior to the date of this Agreement, provided or given access to MainSource
to the files and documentation of all borrowers of Union Federal, or persons
or
entities that are or may become obligated to Union Federal under an existing
letter of credit, line of credit, loan transaction, loan agreement, promissory
note or other commitment of Union Federal, in excess of $15,000 individually
or
in the aggregate, 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 4.09 is valid and
enforceable 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. UCBC and Union
Federal is, and to its knowledge, all other parties thereto are, in material
compliance with the provisions thereof, and neither UCBC nor Union Federal
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 Mergers
17
contemplated
by this Agreement. Other than as disclosed pursuant to this Section 4.09,
to the
knowledge of UCBC or Union Federal, no circumstances exist resulting from
transactions effected or to be effected, from events which have occurred
or may
occur or from any action taken or omitted to be taken which could reasonably
be
expected to result in the creation of any agreement, contract, obligation,
commitment, arrangement, lease or document described in or contemplated by
this
Section 4.09.
(d)
Neither UCBC nor Union Federal is in material default under or in material
breach of or, to the knowledge of UCBC or Union Federal, alleged to be in
material default under or in material breach of, any 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.
4.10. Absence
of Undisclosed Liabilities.
Except
as provided in the UCBC Financial Statements and in the Disclosure Schedule,
except for unfunded loan commitments and obligations on letters of credit
to
customers of Union Federal made in the ordinary course of business, except
for
trade payables incurred in the ordinary course of Union Federal’s business, and
except for the transactions contemplated by this Agreement and obligations
for
services rendered pursuant thereto, neither UCBC nor Union Federal has, nor
will
have at the Effective Time, any obligation, agreement, contract, commitment,
liability, lease or license which exceeds $25,000 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 UCBC nor Union Federal 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.
4.11. Title
to Assets.
Except
as described in this Section 4.11 or the Disclosure Schedule:
(a)
UCBC
or Union Federal, 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 UCBC Financial Statements as of June 30, 2005; good and
marketable title to all personal property reflected in the UCBC Financial
Statements as of June 30, 2005, other than personal property disposed of
in the
ordinary course of business since June 30, 2005; 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 UCBC or Union
Federal purports to own or which UCBC or Union Federal uses in 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; and good and marketable title to all property and assets acquired
and
not disposed of or leased since June 30, 2005. All of such properties and
assets
are owned by UCBC or Union Federal free and clear of all land or conditional
sales contracts, mortgages, liens, pledges, restrictions, security interests,
charges, claims, rights of third parties or encumbrances of any nature except:
(i) as set
18
forth
in
the Disclosure Schedule; (ii) as specifically noted in reasonable detail
in the
UCBC 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 UCBC on a consolidated
basis and which do not materially 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 leased by UCBC or Union Federal
is in
compliance with all applicable zoning and land use laws. All real property,
machinery, equipment, furniture and fixtures owned or leased by UCBC or Union
Federal is structurally sound, in good operating condition 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 UCBC
or Union Federal, UCBC and Union Federal and to UCBC’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 UCBC or Union Federal, threatened, claims, actions or proceedings by any
local municipality, sewage district or other governmental entity against
UCBC or
Union Federal with respect to the Environmental Laws, and to UCBC’s knowledge
there is no reasonable basis or grounds for any such claim, action or
proceeding. No environmental clearances or other governmental approvals are
required for the conduct of the business of UCBC or Union Federal or the
consummation of the Mergers contemplated hereby. To UCBC’s knowledge, neither
UCBC nor Union Federal 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 UCBC’s knowledge, neither UCBC nor Union Federal has any
liability for any clean-up or remediation under any of the Environmental
Laws
with respect to any real property.
19
4.12. Loans
and Investments.
(a)
Except as set forth in the Disclosure Schedule, there is no loan by Union
Federal in excess of $10,000 that has been classified by regulatory examiners
or
management as "Other Loans Specially Mentioned," "Substandard," "Doubtful"
or
"Loss" or in excess of $10,000 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 Union Federal and a
list of
all loans in excess of $10,000 which Union Federal 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 UCBC Financial Statements as of June 30, 2005, and
which
have been made, extended, renewed, restructured, approved, amended or acquired
since June 30, 2005: (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 Union
Federal has a security interest in collateral or a mortgage securing such
loans,
by perfected security interests or recorded mortgages naming Union Federal
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 UCBC Financial Statements
are, in the judgment of management of UCBC and Union Federal, 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 UCBC Financial Statements as of and for the period ended
June
30, 2005, and none of the investments made by Union Federal since June 30,
2005
are subject to any restriction, whether contractual or statutory, which
materially impairs the ability of Union Federal to dispose freely of such
investment at any time. Union Federal 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 Union Federal has any participation interest or which have
been
made with or through another financial institution on a recourse basis against
Union Federal.
(f)
Except as set forth in the Disclosure Schedule, and except for customer deposits
and ordinary trade payables, Union Federal has not, nor will it have at the
Effective Time, any indebtedness for borrowed money.
20
4.13. Shareholder
Rights Plan and Anti-takeover Mechanisms.
UCBC
has taken all actions required to exempt MainSource, the Agreement and the
Mergers 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 UCBC is
subject.
4.14.
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 UCBC or Union Federal, whether written or oral,
in
which UCBC or Union Federal participates as a participating employer, to
which
UCBC or Union Federal contributes, with respect to which UCBC or Union Federal
acts as administrator, trustee or fiduciary, 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
UCBC or
Union Federal, and including any such plans, to UCBC’s knowledge, which have
been terminated, merged into another plan, frozen or discontinued since January
1, 2000 (collectively, "UCBC Plans"), except as set forth in the Disclosure
Schedule:
(i)
all
such UCBC 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, the Code, and the Department of Labor
("Department") and Treasury Regulations promulgated thereunder;
(ii)
all
UCBC 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, and, to the extent available,
favorable determination and/or opinion letters have been timely received
from
the Internal Revenue Service ("Service") with respect to each such UCBC Plan
stating that each, in its current form (or at the time of its disposition
if it
has been terminated, merged, frozen or discontinued), is qualified under
and
satisfies all applicable provisions of the Code and Treasury
Regulations;
(iii)
all
UCBC Plans intended to constitute tax qualified plans under Section 401(a)
of
the Code have received any favorable opinion letters required from the Service
with respect to "GUST" (as defined in Section 2 of Rev. Proc. 2002-6), and
the
document has been amended by the adoption of a "good faith EGTRRA amendment"
as
that phrase is defined in IRS Notice 2001-42, as well as amendments
incorporating the final Treasury Regulations to Code Section 401(a)(9) and
the
mandatory distribution provisions of Code Section 401(a)(31), and UCBC is
not
aware of any circumstances likely to result in revocation of any such favorable
opinion letter;
(iv)
except for the UCBC Employee Stock Ownership Plan (the “UCBC ESOP”),
21
no
UCBC
Plan (or its related trust) holds any stock or other securities of UCBC or
any
related or affiliated person or entity;
(v)
Neither UCBC nor Union Federal has any liability to the Department or the
Service with respect to any UCBC Plan;
(vi)
Neither UCBC nor Union Federal has engaged in any transaction that may subject
UCBC or Union Federal, or any UCBC 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 or for a fine under Section 502 of
ERISA
with respect to any UCBC Plan;
(vii)
no
prohibited transaction (as defined in Section 406 of ERISA or as defined
in
Section 4975(c) of the Code) has occurred with respect to any UCBC
Plan;
(viii)
each UCBC Plan subject to ERISA or intended to be qualified under Section
401(a)
of the Code has been and, if applicable, is being operated in all material
respects in accordance with the applicable provisions of ERISA and the Code
and
the Department and Treasury Regulations promulgated thereunder;
(ix)
no
participant or beneficiary or non-participating employee has been denied
any
benefit due or to become due under any UCBC Plan or has been misled as to
his or
her rights under any UCBC Plan;
(x)
all
obligations required to be performed by UCBC or Union Federal under any
provision of any UCBC 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 UCBC
Plan;
(xi)
no
event has occurred which would constitute grounds for an enforcement action
by
any party under Part 5 of Title I of ERISA under any UCBC Plan;
(xii)
there are no actions, suits, proceedings or claims pending (other than routine
claims for benefits) or, to the knowledge of UCBC or Union Federal, threatened,
against UCBC or Union Federal, any UCBC Plan or the assets of any UCBC
Plan;
(xiii)
with respect to any UCBC Plan sponsored, participated in or contributed to
by
UCBC or Union Federal, or with respect to which UCBC or Union Federal is
responsible for complying with the reporting and disclosure requirements
of
ERISA or the Code, there has been no violation of the reporting and disclosure
requirements imposed either under ERISA or the Code for which a penalty has
been
or may be imposed;
(xiv)
with respect to any UCBC Plan there has been no breach of the fiduciary
provisions of ERISA and there is no known outstanding fiduciary liability;
and
(xv)
any
UCBC Plan may be terminated at any time and this right has always been
maintained by UCBC or Union Federal.
22
(b)
With
regard to any UCBC Plan intended to be qualified under Section 401(a) of
the
Code, no director, officer, employee or agent of UCBC or Union Federal has
engaged in any action or failed to act in such a manner that, as a result
of
such action or failure to act, the Service could revoke or deny that plan's
qualification under Section 401(a) of the Code or the exemption under Section
501(a) of the Code for any trust related to such Plan.
(c)
UCBC
has provided 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 (including all plans
and programs which have been terminated since January 1, 2000):
(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 UCBC for its current or former directors, officers or
employees;
(vi)
all
reports filed with the Service or Department of Labor within the preceding
three
years by UCBC or Union Federal with respect to any UCBC 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 for any defined benefit plan or defined contribution plan, including
the UCBC ESOP, as of the most recent date.
(d)
Except as set forth on the Disclosure Schedule, no current or former director,
officer or employee of UCBC or Union Federal (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 UCBC or Union Federal,
except that such individuals may be entitled to continue their group health
care
coverage pursuant to Section 4980B of the Code if they pay the cost of such
coverage pursuant to the applicable requirements of that plan or of the Code
with respect thereto, or (ii) is currently receiving, or entitled to receive,
a
disability benefit under a long term or short term disability plan maintained
by
UCBC or Union Federal.
23
(e)
The
UCBC Financial Institutions Retirement Fund (“Benefit Plan”) is the only defined
benefit pension plan maintained by UCBC or Union Federal which is subject
to
Title IV of ERISA. Other than the Benefit Plan, no UCBC Plan is, and neither
UCBC nor Union Federal 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).
(f)
With
respect to any group health plan (as defined in Section 607(1) of ERISA)
sponsored or maintained by UCBC or Union Federal, in which UCBC or Union
Federal
participates as a participating employer or to which UCBC or Union Federal
contributes, no director, officer, employee or agent of UCBC or Union Federal
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 UCBC or
Union
Federal under Code Section 4980B(a). With respect to all such plans, all
applicable provisions of Section 4980B of the Code and Section 601 of ERISA
have
been complied with in all material respects by UCBC or Union Federal.
(g)
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 UCBC or Union Federal 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.
(h)
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 UCBC or Union Federal.
(i)
Except as otherwise provided in the Disclosure Schedule, 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.
(j)
Except as may be disclosed in the Disclosure Schedule, UCBC and Union Federal
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 UCBC Plans have been funded on the basis of consistent
methods in accordance with sound actuarial assumptions and practices, and
no
UCBC Plan, at the end of any plan year, had or has had an accumulated funding
deficiency. No actuarial assumptions have been changed since the last written
report of actuaries on such UCBC Plans. All insurance premiums (including
premiums to the Pension Benefit Guaranty Corporation) have
24
been
paid
in full, subject only to normal retrospective adjustments in the ordinary
course. UCBC and Union Federal 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 UCBC Plans, whether or not waived, nor does UCBC or any of
its
affiliates have any liability or potential liability as a result of the
underfunding of, or termination of, or withdrawal from, any plan by UCBC
or by
any person which may be aggregated with UCBC for purposes of Section 412
of the
Code. No reportable event (as defined in Section 4043 of ERISA) has occurred
with respect to any of the UCBC Plans as to which a notice would be required
to
be filed with the Pension Benefit Guaranty Corporation. No claim is pending,
or
to the knowledge of UCBC threatened or imminent with respect to any UCBC
Plan
(other than a routine claim for benefits for which plan administrative review
procedures have not been exhausted) for which UCBC or Union Federal would
be
liable after June 30, 2005, except as is reflected on the UCBC Financial
Statements.
(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), UCBC,
Union
Federal, 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 3.01(b), 6.14, 6.15, 6.16, 6.18, 6.19,
7.03(b), 7.05, and 8.01(i) of the Agreement, as well as any other payments
made
under the UCBC Plans because of the transactions contemplated
herein.
4.15. Obligations
to Employees.
All
accrued obligations and liabilities of and all payments by UCBC or Union
Federal
and all UCBC 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 UCBC or Union Federal 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 UCBC or Union Federal for its current
or
former directors, officers, employees and agents, including, without limitation,
all liabilities and obligations to the UCBC Plans (as defined in Section
4.14(a)
hereof). All obligations and liabilities of UCBC or Union Federal, 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 UCBC 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 therefor have been
and
are being made by UCBC or Union Federal in accordance with generally accepted
accounting and actuarial principles applied on a consistent basis. All accruals
and reserves referred to in this Section 4.15 are correctly and accurately
reflected and accounted for in all material respects in the UCBC Financial
Statements and the books, statements and records of UCBC.
4.16. Taxes,
Returns and Reports.
Except
as set forth in the Disclosure Schedule, each of UCBC and Union Federal has
since January 1, 2000 (a) duly and timely filed all federal, state,
25
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). UCBC has established, and shall establish in the Subsequent
UCBC Financial Statements (as hereinafter defined), in accordance with generally
accepted accounting principles, a reserve for taxes in the UCBC Financial
Statements adequate to cover all of UCBC's and Union Federal’s tax liabilities
(including, without limitation, income taxes, payroll taxes and withholding,
and
franchise fees) for the periods then ending. Neither UCBC nor Union Federal
has,
nor will either have, any liability for 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 UCBC Financial
Statements (as hereinafter defined) or as accrued or reserved for on the
books
and records of UCBC or Union Federal. Neither UCBC nor Union Federal is
currently under audit by any state or federal taxing authority. No federal,
state or local tax returns of UCBC or Union Federal have been audited by
any
taxing authority during the past five (5) years.
4.17. Deposit
Insurance.
The
deposits of Union Federal 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 UCBC or Union Federal has
paid
or properly reserved or accrued for all current premiums and assessments
with
respect to such deposit insurance.
4.18. 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 UCBC or Union Federal on the date hereof or with respect
to
which UCBC or Union Federal 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.
4.19. Books
and Records.
The
books and records of UCBC are complete and correct and accurately reflect
the
basis for the financial condition, results of operations, business, assets
and
capital of UCBC on a consolidated basis set forth in the UCBC Financial
Statements.
4.20. Broker's,
Finder's or Other Fees.
Except
for reasonable fees and expenses of UCBC' attorneys, accountants and investment
bankers, all of which shall be paid by UCBC prior to the Effective Time,
except
as set forth in the Disclosure Schedule, no agent, broker or other person
acting
on behalf of UCBC or Union Federal or under any authority of UCBC or Union
Federal 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 Mergers contemplated hereby.
4.21. Disclosure
Schedule and Documents.
All
written data, documents, materials and
26
information
referred to in this Agreement and delivered by UCBC or Union Federal pursuant
to
or in connection with the Disclosure Schedule are true, accurate and complete
in
all material respects as of the date hereof and with respect to such items
delivered subsequent to the date hereof with any update to the Disclosure
Schedule, will be true, accurate and complete in all material respects on
the
date of delivery thereof.
4.22. Interim
Events.
Except
as otherwise permitted hereunder, since June 30, 2005, or as set forth in
the
Disclosure Schedule, neither UCBC nor Union Federal has:
(a)
Suffered any changes having an adverse impact on the financial condition,
results of operations, business, assets or capital of UCBC on a consolidated
basis in excess of $5,000 individually or in the aggregate;
(b)
Suffered any damage, destruction or loss to any of its properties, not fully
paid by insurance proceeds, in excess of $5,000 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
6.03(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
UCBC or
Union Federal except pursuant to the express terms thereof;
(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 Mergers 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;
27
(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 Union Federal 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 June 30, 2005.
4.23. UCBC
Securities and Exchange Commission Filings.
UCBC
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
UCBC’s
Annual Report on Form 10-K for the year ended December 31, 2004 and Quarterly
Report on Form 10-Q for the quarter ended June 30, 2005. 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.
4.24. No
Third Party Options.
Except
as set forth in the Disclosure Schedule, there are no agreements, options,
commitments or rights with, of or to any third party to acquire any shares
of
capital stock or assets of UCBC or Union Federal.
4.25. Indemnification
Agreements.
(a)
Other
than as set forth in the Disclosure Schedule, neither UCBC nor Union Federal
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 UCBC or the Charter or Bylaws of Union
Federal.
(b)
No
claims have been made against or filed with UCBC or Union Federal nor have,
to
the knowledge of UCBC, any claims been threatened against UCBC or Union Federal,
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 UCBC
or
Union Federal.
28
4.26. Shareholder
Approval.
The
affirmative vote of the holders of a majority of the UCBC 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
Company Merger.
4.27. Opinion
of Financial Advisor.
The
Board of Directors of UCBC, at a duly constituted and held meeting at which
a
quorum was present throughout, has been informed orally by a reputable financial
advisor that the terms of the Company Merger are fair to the shareholders
of
UCBC from a financial point of view.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF MAINSOURCE
On
or
prior to the date hereof, MainSource has delivered to UCBC 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 V or to one or more
of
its covenants contained in Article VII; provided that the mere inclusion
of an
item in the Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by MainSource 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 (as defined
below).
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
Mergers 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 Mergers or restructuring charges taken in connection
with
the Mergers, 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, (f) reasonable
and
customary expenses incurred in connection with the Mergers, (g) the impact
of
the announcement of this Agreement and the transactions contemplated hereby,
and
compliance with this Agreement or the business, financial condition or results
of operations of MainSource and its subsidiaries, and (h) the occurrence
of any
military or terrorist attack within the United States or any of its possessions
or offices.
29
For
the
purpose of this Agreement, and in relation to MainSource, "knowledge" means
(i)
the actual knowledge of any officer or director of MainSource or any of its
subsidiaries and any other person having supervisory or management
responsibilities with respect to material aspects of the operation of the
business of MainSource or its subsidiaries of a particular fact.
Accordingly,
MainSource represents and warrants to UCBC as follows:
5.01. 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.
5.02. Authorization.
(a)
MainSource has the requisite corporate power and authority to enter into
this
Agreement and to carry out its obligations hereunder, and following its
formation Merger Corp will have the requisite corporate power and authority
to
carry out its obligations hereunder, subject to the fulfillment of the
conditions precedent set forth in Section 8.01(d), (e) and (f) hereof. As
of the
date hereof, MainSource is not aware of any reason why the approvals set
forth
in Section 8.02(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 8.02(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 of UCBC, this Agreement constitutes a valid and binding
obligation of MainSource and, upon its formation, will constitute a valid
and
binding obligation of Merger Corp, subject in both cases to the conditions
precedent set forth in Section 8.01 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,
30
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.
5.03. 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, 13,471,128 of which shares are outstanding 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
5.03(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.
5.04. Litigation
and Pending Proceedings.
There
are no claims, actions, suits, proceedings, investigations, mediations or
arbitrations pending or, to the knowledge of MainSource by the officers of
MainSource, threatened in any court or before any government agency or
authority, arbitration panel or otherwise (nor does MainSource have any
knowledge of a basis for any claim, action, suit, proceeding, litigation,
investigation or arbitration) against, by or affecting MainSource which would
reasonably be expected to prevent the performance of this Agreement, declare
the
same unlawful or cause the rescission hereof.
5.05. 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 UCBC and are included in the Disclosure
Schedule.
5.06 Accuracy
of Statements Made and Materials Provided to UCBC.
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 UCBC through and including the Effective Time in connection
with
this Agreement or the Merger contemplated hereby, contains
31
or
shall
contain (in the case of information relating to the proxy statement at the
time
it is mailed to UCBC'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.
5.07 Financial
Statements and Reports.
(a)
MainSource has delivered to UCBC 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, 2004 and 2003 and as of and
for
the six months ended June 30, 2005; and
(ii)
Consolidated Statements of Cash Flows of MainSource for the fiscal years
ended
December 31, 2004 and 2003 and for the six months ended June 30,
2005;
(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 to the knowledge of MainSource
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.
5.08 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, 2004 and Quarterly Report on Form 10-Q for the quarter ended June 30,
2005.
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.
5.09 Shareholder
Approval.
Approval by MainSource's shareholders of the Merger or any other actions
contemplated by this Agreement is not required.
5.10 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.
32
(b)
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 five (5) years have been binding
upon
or have required action by, MainSource or its subsidiaries, 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)
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.
5.11 Absence
of Changes.
Since
June 30, 2005, there has not been any material change in the financial
condition, the results of operations or the business of MainSource or its
subsidiaries.
5.12 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.
ARTICLE
VI
COVENANTS
OF UCBC
UCBC
covenants and agrees with MainSource and covenants and agrees to cause Union
Federal to act as follows:
6.01. Shareholder
Approval.
(a)
UCBC 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 UCBC at the earliest possible
reasonable date. Subject to Section 6.06 hereof, the Board of Directors of
UCBC
shall recommend to UCBC's shareholders that such shareholders approve and
adopt
this Agreement and the Company Merger contemplated hereby and will solicit
proxies voting in favor of this Agreement from UCBC's shareholders.
(b)
Subject to Section 6.06 hereof, Union Federal shall submit this Agreement
to
UCBC, as its sole shareholder, for approval by unanimous written consent
without
a meeting in
33
accordance
with applicable law and the Charter and By-laws of Union Federal at a date
reasonably in advance of the Effective Time. The Board of Directors of Union
Federal shall recommend approval of this Agreement and the Subsidiary Merger
to
UCBC, as the sole shareholder of Union Federal, and UCBC as sole shareholder
of
Union Federal, shall approve this Agreement and the Subsidiary
Merger.
6.02. Other
Approvals.
(a)
UCBC and Union Federal shall proceed expeditiously, cooperate fully and use
their best 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
Mergers on the terms and conditions provided in this Agreement at the earliest
possible reasonable date.
(b)
UCBC
and Union Federal 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 designated
therein as material.
(c)
Any
materials or information provided by UCBC or Union Federal 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.
6.03. 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 UCBC nor Union Federal
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 4.03 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)
Union Federal may pay cash dividends to UCBC in the ordinary course of business
for payment of reasonable and necessary business and operating expenses of
UCBC
and to provide funds for UCBC's dividends to its shareholders in accordance
with
this Agreement, and (B) UCBC may pay to its shareholders its usual and customary
cash dividend of no greater than $.15 per share for any quarterly period,
provided that no dividend may be paid for the quarterly period in which the
Mergers are scheduled to be consummated or consummated if, during such period,
UCBC 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;
34
(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 $15,000 individually or $50,000 in the
aggregate;
(ix)
make
any investment subject to any restrictions, whether contractual or statutory,
which materially impairs the ability of UCBC or Union Federal 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 UCBC or Union Federal of government deposits
and
pledges or liens in connection with FHLB borrowings;
(x)
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 UCBC or Union Federal, 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 UCBC or Union Federal;
(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 UCBC or Union Federal; 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.
35
(xii)
amend, modify or restate UCBC's or Union Federal’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 UCBC or Union
Federal, or enter into any agreement or commitment relative to the
foregoing;
(xiv)
fail to maintain UCBC's reserve for loan losses at the greater of either
$1,020,000 or .45% of total gross loans outstanding unless doing so would
be
inconsistent with generally accepted accounting principles;
(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;
(xvi)
issue, or authorize the issuance of, any securities convertible into or
exchangeable for any shares of the capital stock of UCBC or Union Federal;
(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
UCBC Financial Statements or the Subsequent UCBC 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;
(xix)
pay
or commit to pay any management or consulting or other similar type of fees;
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 6.03(a)(vii) hereof and legal, accounting and fees
related to the Mergers) requiring payments by UCBC or Union Federal which
exceed
$25,000, 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 UCBC and Union Federal
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;
36
(iii)
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)
maintain a rating of at least two (2) from its latest safety and soundness
and
compliance examination; (vi) maintain a CRA rating of satisfactory; (vii)
timely
file all documents and reports required to be filed pursuant to the Securities
Exchange Act of 1934, as amended; and (viii) 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 the financial condition,
results of operations, business, assets, or capital of UCBC or Union
Federal.
6.04. Insurance.
UCBC
and Union Federal shall 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 UCBC or Union
Federal as of the date of this Agreement.
6.05. Affiliate
Agreements.
UCBC
shall, within thirty (30) days after the date of this Agreement and promptly
thereafter until the Effective Time to reflect any changes, provide MainSource
with a list identifying each person who may be deemed to be an affiliate
of UCBC
for purposes of Rule 145 under the Securities Act of 1933 (the "1933 Act").
On
or before the date on which such initial list of affiliates is provided to
MainSource, and thereafter as may be required for a person who may be deemed
an
affiliate of UCBC following such date, UCBC shall obtain from each director,
executive officer and other person who may be deemed to be such an affiliate
of
UCBC to deliver to MainSource on or prior to the Effective Time a written
agreement, substantially in the form as attached hereto as Exhibit
6.05.
6.06. 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 UCBC nor Union Federal shall permit or authorize
its 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 UCBC or Union Federal or to which UCBC or Union Federal
may become a party (all such transactions are hereinafter referred to as
"Acquisition Transactions").
(b)
UCBC
shall promptly communicate to MainSource the terms of any proposal or offer
which UCBC or Union Federal may receive with respect to an Acquisition
Transaction. Notwithstanding anything to the contrary elsewhere in this
Agreement, UCBC 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
37
with
such
third party, and enter into any such agreement, arrangement or understandings,
in each case, only if UCBC'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 the fiduciary
duties of UCBC's Board of Directors in connection with seeking an Acquisition
Transaction.
(c)
In
the event UCBC'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 its fiduciary duties under applicable law to recommend
this Agreement and the Company Merger to UCBC's shareholders for their approval,
then in submitting this Agreement to the shareholders at the meeting of
shareholders, UCBC 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 6.06 shall not authorize UCBC or Union Federal, or any of their
directors, officers, employees, agents or representatives, to initiate any
discussions or negotiations with respect to an Acquisition Transaction with
a
third party.
6.07. Press
Releases.
Neither
UCBC nor Union Federal nor MainSource will issue any press or news releases
or
make any other public announcements or disclosures relating to the Mergers
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.
6.08. Material
Changes to Disclosure Schedules.
UCBC
and Union Federal 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 UCBC or Union Federal 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.
6.09. Access;
Information.
(a)
MainSource and UCBC, 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 UCBC, 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 UCBC, Union Federal or MainSource. Upon request, UCBC
and
MainSource will furnish the other party or its representatives or agents,
their
attorneys' responses to external auditors requests for information,
38
management
letters received from their external auditors and such financial, loan and
operating data and other information reasonably requested by MainSource or
UCBC
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 UCBC or their representatives or agents to discuss
such information directly with any individual or firm performing auditing
or
accounting functions for UCBC 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 UCBC or its representatives or
agents,
as applicable. No investigation by MainSource or UCBC shall affect the
representations and warranties made by UCBC, Union Federal or MainSource
herein.
Any confidential information or trade secrets received by MainSource, UCBC
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
UCBC,
as applicable, or at MainSource’s or UCBC's request, returned to MainSource or
UCBC, as applicable, in the event this Agreement is terminated as provided
in
Article IX hereof. This Section 6.09 will not require the disclosure of any
information to MainSource or UCBC which would be prohibited by law. The ability
of MainSource or UCBC 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 6.09.
Notwithstanding anything herein to the contrary (other than the preceding
sentence), except as reasonably necessary to comply with applicable securities
laws, MainSource and UCBC (and each employee, representative or agent of
MainSource and UCBC) 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
UCBC 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 UCBC 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, Xxxxx X. Xxxxx, 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 UCBC and Union Federal, including, without limitation, the
loan
committee, investment committee, the executive committee, the personnel
committee, and any other committee of UCBC and Union Federal, except that
any
such person shall be excluded from the portion of any meeting where this
Agreement or the
39
transactions
contemplated by this Agreement are being discussed.
6.10. Financial
Statements.
As soon
as reasonably available after the date of this Agreement, UCBC 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 UCBC prepared
for its
internal use, Union Federal’s TFRs 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 UCBC Financial Statements"). The Subsequent UCBC
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.
The
Subsequent UCBC 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 UCBC
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. 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.
6.11. Environmental.
If
requested by MainSource, UCBC and Union Federal will cooperate with an
environmental consulting firm designated by MainSource in connection with
the
conduct, at MainSource's expense, by such firm of a phase one environmental
investigation on all real property owned or leased by UCBC or Union Federal
as
of the date of this Agreement, and any real property acquired or leased by
UCBC
or Union Federal after the date of this Agreement. In the event MainSource
requests a phase two environmental investigation on any real property owned
or
leased by UCBC or Union Federal as of the date of this Agreement or acquired
or
leased by UCBC or Union Federal after the date of this Agreement, UCBC and
Union
Federal will cooperate with the environmental firm designated by MainSource
in
connection with the conduct by such firm of a phase two environmental
investigation.
In
the
event that the cost of taking all remedial or other corrective actions and
measures (i) required by applicable law, or (ii) recommended or suggested
by
such report or reports or (iii) reasonably considered by MainSource to be
prudent in light of serious life, health or safety concerns, exceed the sum
of
$150,000, in the aggregate, as reasonably estimated by such environmental
firm,
or if the cost of such actions and measures cannot be so reasonably estimated
by
such environmental firm to be such amount or less with any reasonable degree
of
40
certainty,
then MainSource shall have the right pursuant to Section 9.01(b) hereof,
for a
period of 15 business days following receipt of such estimate or indication
that
the cost of such actions and measures cannot be so reasonably estimated,
to
terminate this Agreement, which shall be MainSource’s sole remedy in such event.
MainSource agrees to pay the costs of any phase two investigation prepared
or
conducted at MainSource’s request pursuant to this Section 6.11 which does not
recommend or suggest as being appropriate the taking of any remedial or
corrective actions. UCBC agrees to pay the costs of any phase two investigation
prepared or conducted at MainSource’s request pursuant to this section which
recommends or suggests as being appropriate the taking of any remedial or
corrective action.
6.12. Governmental
Reports.
Promptly upon its becoming available, UCBC shall furnish to MainSource one
(1)
copy of each financial statement, report, notice, or proxy statement sent
by
UCBC or Union Federal to any Governmental Authority or to UCBC’s shareholders
generally and of each regular or periodic report, registration statement
or
prospectus filed by UCBC with the SEC or any successor agency, and of any
order
issued by any Governmental Authority in any proceeding to which UCBC or Union
Federal is a party. Promptly upon its becoming publicly available, MainSource
shall furnish to UCBC 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.
6.13. Adverse
Actions.
Neither
UCBC nor Union Federal 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, (x) any of the conditions to the Mergers
set
forth in Article VIII not being satisfied, (y) a material violation of any
provision of this Agreement or (z) a delay in the consummation of the Mergers
except, in each case, as may be required by applicable law or
regulation.
6.14. ESOP.
UCBC
shall take any such actions as are necessary to ensure that (i) all UCBC
employees who are participants in the UCBC ESOP have the opportunity to complete
an Election Form and to vote with respect to the Company Merger, (ii) the
ESOP
trustee has the authority necessary to sell or exchange the UCBC stock held
by
the ESOP and to otherwise participate in the transactions contemplated by
this
Agreement, and (iii) no violation of ERISA or the Code occurs in the termination
of the ESOP, the ESOP’s sale or exchange of the UCBC stock held by the ESOP, or
the transactions contemplated by this Agreement, that cannot be cured to
the
satisfaction of the Service. Additionally, UCBC shall take any such actions
as
are necessary to ensure that, as
of the
Effective Time or as soon as practicable thereafter, subject to receipt of
a
favorable ruling of the Service with respect to the termination of the ESOP
and
conditioned upon consummation of the Mergers, the UCBC ESOP shall
be
terminated, all shares of UCBC Common Stock held by the UCBC ESOP shall be
converted into rights to receive the
41
Merger
Consideration in respect thereof, to the extent consistent with Section 8.7(j)
of the ESOP, all outstanding indebtedness of the UCBC ESOP shall be repaid
using: (i) unallocated UCBC shares held by the UCBC ESOP or the Cash
Consideration received for such unallocated shares, to the extent allowed
by
applicable law, (ii) all amounts held in the suspense account, and (iii)
finally
with such other payments as determined appropriate by UCBC and MainSource,
any
assets remaining in the suspense fund under the UCBC ESOP after payment of
all
outstanding indebtedness and other liabilities of the ESOP shall be allocated
to
the contribution accounts of the UCBC employees who are participants in the
ESOP, and the net assets of the UCBC ESOP shall be distributed to such
participants under the UCBC ESOP, subject to the receipt of a favorable
determination letter from the Service and except as otherwise required by
applicable law. UCBC shall file the notifications or applications with the
Service necessary to comply with the provisions of this Section 6.14, subject
to
MainSource’s prior review and approval of such notifications and applications.
If for any reason the Service will not permit the UCBC ESOP to be terminated
or
distributions to be made to employees of UCBC as provided above unless the
UCBC
ESOP is amended, UCBC may make such required amendments; provided, however,
that
(i) no such amendment shall require or have the effect of requiring MainSource
to make any contributions to the UCBC ESOP after the Effective Time; (ii)
no
such amendments shall require or have the effect of requiring UCBC to make
any
contributions to the UCBC ESOP 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 UCBC ESOP under Section 401(a) of the Code, and (iv) no such
amendment shall require or have the effect of requiring the continuation
of the
UCBC ESOP after the Effective Time except to the extent and for so long as
the
UCBC ESOP may be so continued without having an adverse effect on the qualified
status under Section 401(a) of the Code of any other employee pension benefit
plan of MainSource that is intended to be so qualified. UCBC shall make no
contributions to the UCBC ESOP between the date hereof and the Effective
Time
other than such as may be required to maintain the tax-qualified status of
the
UCBC ESOP or to enable the UCBC ESOP to make required payments on the loans
currently outstanding to it.
With
respect to UCBC stock allocated to the accounts of each ESOP participant,
said
participants shall be entitled to vote on the approval and adoption of this
Agreement and shall be entitled to select the Merger Consideration, similar
to
any other shareholder of UCBC. Unallocated UCBC stock held by the ESOP shall
be
voted by the ESOP Trustee as provided in the ESOP; however, only Cash
Consideration shall be paid for the unallocated UCBC stock held by the
ESOP.
Before
the adoption of any amendment of the ESOP, UCBC shall first submit the amendment
to MainSource for its review and approval. Throughout the ESOP termination
process, UCBC shall keep MainSource timely informed of the planning for and
occurrence of the transactions involved in the termination. Subsequent to
the
Effective Time, Merger Corp shall be the successor of UCBC with respect to
the
ESOP and Merger Corp shall hold all authority necessary to terminate the
ESOP as
otherwise provided herein.
6.15. UCBC
Stock Option Plan.
Within
forty-five (45) days of the date of this Agreement, UCBC shall use its best
efforts to obtain written consents from each holder to whom a UCBC Stock
Option
is outstanding consenting to the disposition of such option in accordance
42
with
the
provisions of Section 3.01 above, and agreeing not to exercise such option
on or
before the Effective Date unless (A) this Agreement is terminated and the
Company Merger is abandoned pursuant to Article IX or (B) such exercise is
made
not more than one week before the date on which the option otherwise would
cease
to be exercisable; provided, however, that UCBC shall obtain such consents
from
the members of the Board of Directors of UCBC who hold such UCBC Stock
Options.
6.16. Recognition
and Retention Plan.
Shares
of UCBC Common Stock held in the Union Federal Recognition and Retention
Plan
(the “RRP”) which vest at the Effective Time shall be converted into the Merger
Consideration to the extent provided in Article III and pursuant to Election
Forms properly completed by or on behalf of the recipients of awards of such
shares.
6.17. Defined
Contribution Plan.
On and
after the date of this Agreement, and until the plan is merged or disposed
of in
a legal manner, or participation in the plan is otherwise discontinued, and
at a
time to be determined by MainSource or until this Agreement shall be terminated
as herein provided:
(i)
UCBC
shall continue to participate in the Financial Institutions Thrift Plan (the
“UCBC 401(k) Plan” or “401(k) Plan”) 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 applicable law;
(ii)
UCBC
or Union Federal shall continue to fund all employee and employer contributions
to the 401(k) Plan which are required during this time period. However, UCBC
and
Union Federal 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 UCBC or Union
Federal
to the 401(k) Plan during the last Plan Year; and
(iii)
neither UCBC nor Union Federal shall amend, or cause an amendment of, the
401(k)
Plan without the prior written consent of MainSource, except for any amendment
which is necessary to maintain the qualification of the 401(k) Plan 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 of Labor.
(iv)
UCBC
and Union Federal shall not terminate or agree to the termination of the
appointment of any fiduciary as defined in ERISA with respect to the 401(k)
Plan
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 UCBC nor Union Federal shall terminate, agree to the termination
of, or
cause the termination of any agreement with any service provider providing
services to the 401(k) Plan as of the date of this Agreement without the
prior
written consent of MainSource,
43
which
consent shall not be unreasonably withheld, except for any termination
attributable to a breach by such service provider of its service
agreement.
6.18. Defined
Benefit Plan.
Prior
to the Effective Time, the Board of Directors of UCBC shall take the following
actions with respect to UCBC’s participation in the Financial Institutions
Retirement Fund (“Benefit Plan”): (a) amend UCBC’s participation in the Benefit
Plan to (i) discontinue any further accrual of benefit under the Benefit
Plan by
a UCBC director or employee participating in the Benefit Plan (“UCBC
Participant”) as of the date of execution of this Agreement and (ii) terminate
and otherwise discontinue UCBC’s participation in the Benefit Plan on or before
the Effective Time; (b) deposit funds sufficient to pay from the Benefit
Plan to
each UCBC Participant the present value of his accrued benefit; (c) calculate
the present value of each UCBC Participant’s accrued benefit based on the
mortality tables contained in the Benefit Plan and using the highest applicable
interest rate provided by the Benefit Plan and as permitted by applicable
law
and the Pension Benefit Guaranty Corporation; and (d) pay from the Benefit
Plan
the amount referred to in (c) to each UCBC Participant, in a single sum in
cash
or, if elected by the payee, a paid up annuity contract, on or before the
Effective Time. UCBC shall take any actions necessary to effectuate the
foregoing, including filing
appropriate applications with the Service necessary to comply with the
provisions of this Section 6.18, but otherwise subject to MainSource’s prior
review and approval of such actions and applications. In
addition, prior to the adoption of any amendment to the Benefit Plan, MainSource
shall be allowed to first review and approve such amendment, and MainSource
shall be promptly copied on any correspondence between the Benefit Plan and
UCBC
or UCBC’s counsel. Subsequent to the Effective Time, Merger Corp shall be the
successor of UCBC with respect to the Benefit Plan and Merger Corp shall
hold
all authority necessary to comply with the provisions of this Section
6.18.
6.19. Employment
Agreements.
(a)
Prior
to the Effective Time, Xxxxxx X. Xxxxxxx will continue to be paid the
compensation provided for in his employment agreement with Union Federal
dated
as of December 29, 1997, 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 Effective Date will be paid when due under those
plans.
At the Effective Time, Xx. Xxxxxxx’ employment agreement with Union Federal
shall terminate, and Union Federal shall pay to Xx. Xxxxxxx, in consideration
of
such termination, a cash sum equal to the amount payable to Xx. Xxxxxxx under
Section 8(B)(1) of the Agreement, subject to any reduction required by Section
15 of the Agreement. Union Federal will use its best efforts to obtain from
Xx.
Xxxxxxx within thirty (30) days after the date as of which this Agreement
is
dated, a binding written commitment, in the event the Company Merger is
consummated, to accept the amounts payable under this Section 6.19(a) in
lieu of
any amounts that otherwise would be payable, and benefits to which he would
be
entitled, under his employment agreement.
(b)
Prior
to the Effective Time, Xxxx X. Xxxxxxx will continue to be paid the compensation
provided for in his employment agreement with Union Federal dated as of July
1,
2001, and will continue participating in the employee benefit, retirement,
and
compensation plans and other perquisites provided for in such Agreement.
Any
benefits payable under
44
insurance,
health, retirement and bonus plans through the Effective Date will be paid
when
due under those plans. At the Effective Time, Xx. Xxxxxxx’x employment agreement
with Union Federal shall terminate, and Union Federal shall pay to Xx. Xxxxxxx,
in consideration of such termination, a cash sum equal to the amount payable
to
Xx. Xxxxxxx under Section 8(B)(1) of the Agreement, subject to any reduction
required by Section 15 of the Agreement. Union Federal will use its best
efforts
to obtain from Xx. Xxxxxxx within thirty (30) days after the date as of which
this Agreement is dated, a binding written commitment, in the event the Company
Merger is consummated, to accept the amounts payable under this Section 6.19(b)
in lieu of any amounts that otherwise would be payable, and benefits to which
he
would be entitled, under his employment agreement.
(c)
Prior
to the Effective Time, J. Xxx Xxxxxx will continue to be paid the compensation
provided for in his employment agreement with Union Federal dated as of August
2, 2002, 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
Effective Date will be paid when due under those plans. At the Effective
Time,
Xx. Xxxxxx’x employment agreement with Union Federal shall terminate, and Union
Federal shall pay to Xx. Xxxxxx, in consideration of such termination, a
cash
sum equal to the amount payable to Xx. Xxxxxx under Section 8(B)(1) of the
Agreement, subject to any reduction required by Section 15 of the Agreement.
Union Federal will use its best efforts to obtain from Xx. Xxxxxx within
thirty
(30) days after the date as of which this Agreement is dated, a binding written
commitment, in the event the Company Merger is consummated, to accept the
amounts payable under this Section 6.19(c) in lieu of any amounts that otherwise
would be payable, and benefits to which he would be entitled, under his
employment agreement.
6.20 Short-Swing
Trading Exception.
UCBC’s
board of directors shall adopt such resolutions as are necessary to cause
any
shares of UCBC Common Stock or UCBC Stock Options owned by executive officers
and directors of UCBC and canceled in the Company Merger to qualify for the
exemptions provided in Rule 16b-3(d) under the Securities Exchange Act of
1934,
as amended.
ARTICLE
VII
COVENANTS
OF MAINSOURCE
MainSource
covenants and agrees with UCBC and Union Federal as follows:
7.01. Approvals.
MainSource shall have primary responsibility for the preparation, filing
and
costs of all bank holding company and bank regulatory applications required
for
consummation of the Mergers, 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 UCBC'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,
45
to
complete all filings and applications and to satisfy all other requirements
prescribed by law which are necessary for consummation of the Mergers on
the
terms and conditions provided in this Agreement at the earliest possible
reasonable date.
7.02. 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 UCBC, prepared
for
use in connection with the meeting of shareholders of UCBC referred to in
Section 6.01 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.
7.03. Employee
Benefit Plans.
(a)
Following the Effective Time, at a time to be determined by MainSource in
its
sole discretion, MainSource will make available to the officers and employees
of
UCBC and Union Federal who continue as employees of Merger Corp or any
subsidiary of MainSource after the Effective Time, subject to Section 7.03(c)
hereof, substantially the same employee benefits on substantially the same
terms
and conditions as MainSource offers to similarly situated officers and
employees. UCBC’s and Union Federal’s employees will receive full credit for
prior service with UCBC or Union Federal or their predecessors, for purposes
of
eligibility, vesting and period of service requirements under these employee
benefit plans of MainSource and its subsidiaries. Those employees of UCBC
or
Union Federal who become employees of MainSource or its subsidiaries at the
Effective Time (“Former UCBC 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 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.
(b)
As
soon as reasonably practicable following 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 succeed UCBC as the
participating employer in the UCBC 401(k) Plan, thereafter discontinue
participation in the UCBC 401(k) Plan, as otherwise provided in the UCBC
401(k)
Plan document, and amend as necessary the MainSource 401(k) Plan so that,
(i)
from and after the Effective Time, employees of UCBC who become employees
of the
Surviving Corporation will accrue benefits pursuant to the MainSource 401(k)
Plan, and (ii) from and after the merger of those plans, former UCBC employees
participating in the MainSource 401(k) Plan shall receive credit for eligibility
and vesting purposes, for the service of such employees with UCBC and Union
Federal or their predecessors prior to the Effective Time as if
46
such
service were with MainSource or its subsidiaries; provided, however, that
the
benefit of any such former UCBC employee in respect of service prior to the
Effective Time shall be determined under the contribution formulae under
the
UCBC 401(k) Plan as in effect from time to time prior to the Effective Time
and
the benefit of any such former UCBC employee in respect of service from and
after the Effective Time shall be determined under the contribution formulae
under the MainSource 401(k) Plan as in effect from time to time from and
after
the Effective Time.
(c)
Neither the terms of this Section 7.03 nor the provision of any employee
benefits by MainSource or any of its subsidiaries to employees of UCBC or
Union
Federal 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 UCBC or Union Federal; 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.
7.04. Adverse
Actions.
MainSource shall not knowingly take any action that is intended or is reasonably
likely to result in (i) 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, (ii) any of the conditions to the Merger set forth
in
Article VIII not being satisfied, (iii) a material violation of any provision
of
this Agreement or (iv) a delay in the consummation of the Mergers except,
in
each case, as may be required by applicable law or regulation.
7.05. Severance.
With
the exception of Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx and J. Xxx Xxxxxx, those
employees of UCBC 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 within one year after the Effective Date
or
voluntarily resign within one year after the Effective Date after being notified
that, as a condition of employment, they must work at a location more than
30
miles from their former location of employment or that their salary will
be
materially decreased, shall be entitled to severance benefits equal to those
described in Exhibit
7.05
hereto
(to the extent not inconsistent with the foregoing). Nothing in this Section
7.05 shall be deemed to limit or modify MainSource’s at will employment
policy.
7.06. D
&O Insurance/Indemnification.
(a)
For a
period of three (3) years from the Effective Time, MainSource shall use its
reasonable best efforts to obtain an endorsement to its director’s and officer’s
liability insurance policy to cover the present and former officers and
directors of UCBC and Union Federal (determined as of the Effective Time)
with
respect to claims against such directors and officers arising from facts
or
events which occurred before the Effective Time, which insurance shall contain
at least the same coverage and amounts, and contain terms and conditions
no less
advantageous, as that coverage currently provided by UCBC; provided, however,
that if
47
MainSource
is unable to obtain such endorsement, then UCBC may purchase tail coverage
under
its existing director and officer liability insurance policy for such claims;
provide, further that in no event shall MainSource be required to expend
in the
aggregate during such three-year period more than three (3) times the current
annual amount spent by UCBC (the “Insurance Amount”) to maintain or procure its
current directors’ and officers’ insurance coverage; provided, further, that if
MainSource is unable to maintain or obtain the insurance called for by this
Section 7.06, MainSource shall use its reasonable best efforts to obtain
as much
comparable insurance as is available for the Insurance Amount; provided,
further, that officers and directors of UCBC or Union Federal may be required
to
make application and provide customary representations and warranties to
MainSource’s insurance carrier for the purpose of obtaining such insurance.
(b)
For
six (6) years after the Effective Time, MainSource shall indemnify, defend
and
hold harmless the present and former officers and directors of UCBC and Union
Federal against all losses, expenses (including attorneys’ fees), claims,
damages or liabilities arising out of actions or omission occurring on or
prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement) to the full extent then permitted under the
IBCL
and by MainSource’s Articles of Incorporation as in effect on the date hereto,
including provisions relating to advances of expenses incurred in the defense
of
any action or suit.
(c)
If
MainSource shall consolidate with or merge into any other entity and shall
not
be the continuing or surviving entity of such consolidation or merger or
shall
transfer all or substantially all of its assets to any entity, then and in
each
case, proper provision shall be made so that the successors and assigns of
MainSource shall assume the obligations set forth in this Section
7.06.
7.07 Short-Swing
Trading Exemption.
Prior
to the Effective 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 UCBC 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.
7.08 Formation
of MergerCorp and Execution of Agreement and Plan of Merger.
MainSource agrees to file the necessary regulatory applications to organize
MergerCorp promptly after the execution of this Agreement. MainSource shall
cause MergerCorp to execute the Agreement for Subsidiary Merger attached
as
Exhibit
2.01(e)(ii)
as soon
as practicable after it has been organized.
ARTICLE
VIII
CONDITIONS
PRECEDENT TO THE MERGERS
8.01. MainSource.
The
obligation of MainSource to consummate the Mergers 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:
48
(a)
Representations
and Warranties at Effective Time.
Each of
the representations and warranties of UCBC and Union Federal 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 UCBC or Union Federal 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 UCBC or Union Federal, has had or would result
in
a Material Adverse Effect on UCBC.
(b)
Covenants.
Each of
the covenants and agreements of UCBC and Union Federal 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 UCBC at the Closing the items and documents,
in form and content reasonably satisfactory to MainSource, set forth in Section
11.02(b) hereof.
(d)
Registration
Statement Effective.
MainSource shall have registered its shares of MainSource Common Stock to
be
issued to shareholders of UCBC 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 MainSource
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 UCBC shall have approved and adopted this Agreement as required
by applicable law and its Articles of Incorporation.
(g)
Officers'
Certificate.
UCBC
shall have delivered to MainSource a certificate signed by its President
and its
Secretary, dated as of the Effective Time, certifying that: (i) to the effect
set out in Section 8.01(a), the representations and warranties of UCBC and
Union
Federal contained in Article IV are true, accurate and correct in all material
respects on and as of the Effective Time; (ii) all the covenants of UCBC
and
Union Federal have been complied with in all material respects from the date
of
this Agreement through and as of the Effective Time; and
49
(iii)
UCBC and Union Federal have satisfied and fully complied with all conditions
necessary to make this Agreement effective as to it.
(h)
Fairness
Opinion.
UCBC'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 UCBC) its fairness opinion stating that the Merger
Consideration relating to the Company Merger is fair to the shareholders
of UCBC
from a financial point of view.
(i)
Employment
Agreements.
Xxxx
Xxxxxxx shall have entered into an employment agreement with the Surviving
Corporation, effective as of the Effective Time, in substantially the form
attached hereto as Exhibit
8.01(i)(1).
J. Xxx
Xxxxxx shall have entered into an employment agreement with the Surviving
Corporation, effective as of the Effective Time, in substantially the form
attached hereto as Exhibit
8.01(i)(2).
(j)
Financing.
MainSource shall have obtained financing sufficient to pay the cash portion
of
the Total Purchase Price on such terms as are acceptable to MainSource and
enable MainSource to satisfy the capital adequacy guidelines and requirements
of
the Federal Reserve and any other applicable federal or state regulator or
agency as those guidelines are applied to MainSource.
(k)
Tax
Opinion of MainSource’s Counsel.
MainSource shall have received an opinion of Bose XxXxxxxx & Xxxxx LLP,
counsel to MainSource, dated the Effective Date, to the effect that the Company
Merger constitutes a “reorganization” within the meaning of Section 368 of the
Code.
(l)
Opinion
of UCBC’s Counsel.
MainSource shall have received an opinion of Xxxxxx & Xxxxxxxxx LLP, counsel
to UCBC, dated the Effective Time, in substantially the form of the opinion
attached hereto as Exhibit
8.01(l).
(m)
MainSource
Average Stock Price.
The
MainSource Average Stock Price is no lower than $14.00 and no higher than
$24.00.
(n)
280G
Opinion.
MainSource shall have received a letter of tax advice, in a form satisfactory
to
MainSource, from UCBC’s outside, independent certified public accountants to the
effect that any amounts that are paid by UCBC or Union Federal before the
Effective Time, or required under UCBC’s Plans or this Agreement to be paid at
or after the Effective Time, to persons who are disqualified individuals
in
respect of UCBC, Union Federal 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 3.01(b), 6.14, 6.15, 6.16, 6.18, 6.19,
7.03(b), 7.05, and 8.01(i) of the Agreement, as well as any other payments
made
under the UCBC Plans because of the transactions contemplated herein. For
purposes of this letter, the basic compensation payable to Messrs. Grimble
and
Xxxxxx under the employment agreements referred to in Section 8.01(i) may
be
deemed to be reasonable compensation for services rendered by those individuals
after the Effective Time; however, such payments shall still be considered
for
purposes of the excess parachute payment determination defined in Section
280G
of the Code.
8.02. UCBC.
The
obligation of UCBC to consummate the Mergers 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 UCBC:
(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
50
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.
UCBC
shall have received from MainSource at the Closing the items and documents,
in
form and content reasonably satisfactory to UCBC, listed in Section 11.02(a)
hereof.
(d)
Registration
Statement Effective.
MainSource shall have registered its shares of MainSource Common Stock to
be
issued to shareholders of UCBC 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 UCBC reasonably determines in good faith would (i)
following the Effective Time, have a Material Adverse Effect or (ii) reduce
the
benefits of the transactions contemplated hereby to such a degree that UCBC
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 UCBC shall have approved and adopted this Agreement as required
by applicable law and UCBC's Articles of Incorporation.
(g)
Officers'
Certificate.
MainSource shall have delivered to UCBC a certificate signed by its Chairman
or
President and its Secretary, dated as of the Effective Time, certifying that:
(i) to the effect set out in Section 8.02(a) that the representations and
warranties of MainSource contained in Article V are true, accurate and correct
in all material respects on and as of the Effective Time; (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.
UCBC's
investment banker shall have issued (as of a date not later than the mailing
date of the proxy statement-prospectus relating to the Company Merger to
be
mailed to the shareholders of UCBC) its fairness opinion stating that the
Merger
Consideration relating to the Merger is fair to the shareholders of UCBC
from a
financial point of view.
(i)
Tax
Opinion of MainSource’s Counsel.
UCBC
shall have received an opinion of Bose XxXxxxxx & Xxxxx LLP, counsel to
MainSource, to the effect that (1) the Company Merger constitutes a
“reorganization” within the meaning of Section 368 of the Code and (2) no
51
gain
or
loss will be recognized by shareholders of UCBC to the extent they receive
shares of MainSource Common Stock as part of the Merger
Consideration.
(j)
Listing.
The
shares of MainSource Common Stock to be issued in the Company Merger shall
have
been approved for listing on the National Market System of NASDAQ, subject
to
official notice of issuance.
(k)
Payments
Required by Section 6.19.
The
payments to Messrs. Grimble, Xxxxxxx and Xxxxxx required by Section 6.19
shall
have been made.
(l)
Opinion
of MainSource’s Counsel.
UCBC
shall have received an opinion of Bose XxXxxxxx & Xxxxx LLP, counsel to
MainSource, dated the Effective Time, in substantially the form of the opinion
attached hereto as Exhibit
8.02(l).
(m)
MainSource
Average Stock Price.
The
MainSource Average Stock Price is no lower than $14.00 and no higher than
$24.00.
ARTICLE
IX
TERMINATION
OF MERGERS
9.01. Manner
of Termination.
This
Agreement and the Mergers may be terminated at any time prior to the Effective
Time by written notice delivered by MainSource to UCBC, or by UCBC to
MainSource, as follows:
(a)
By
MainSource or UCBC, if:
(i)
the
Mergers contemplated by this Agreement have not been consummated by June
30,
2006; 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 9.01(a)(i); or
(ii)
the
Agreement and the Company Merger are not approved by the requisite vote of
the
shareholders of UCBC at the Special Meeting of Shareholders of UCBC;
or
(iii)
the
respective Boards of Directors of MainSource and UCBC 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 UCBC 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 UCBC of
such breach and the same does not
|
52
result
in
a Material Adverse Effect; or
(B)
|
a
breach by UCBC 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 UCBC of
such breach and the same does not result in a Material Adverse
Effect;
or
|
(ii)
it
shall reasonably determine that the Mergers contemplated by this Agreement
have
become impracticable by reason of commencement or threat of any material
claim,
litigation or proceeding against MainSource, UCBC, Union Federal, or any
subsidiary of MainSource, or any director or officer of any of such entities
relating to this Agreement or the Mergers; or
(iii)
there has been a Material Adverse Effect in the business, assets,
capitalization, financial condition or results of operations of UCBC or Union
Federal as of the Effective Time, as compared to that in existence as of
the
date of this Agreement; or
(iv)
UCBC's Board of Directors submits, or intends to submit, this Agreement to
the
shareholders without recommending the approval of this Agreement or fails
to
solicit proxies for approval of this Agreement; or
(v)
UCBC
fulfills the requirements of Section 6.01 hereof but the shareholders of
UCBC do
not approve and adopt the Company Merger and this Agreement; or
(vi)
in
the event that UCBC fails to maintain a composite rating of at least two
(2)
from its latest safety and soundness and compliance examination, or fails
to
maintain a CRA rating of satisfactory or better; or
(vii)
MainSource elects to exercise its right of termination pursuant to Section
6.11
hereof;
(c)
By
UCBC, if:
(i)
at
any time prior to the Effective Time, UCBC'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, unless the
breach
is cured within thirty (30) days from the giving of written notice
to UCBC
of such breach and the cure does not result in a Material Adverse
Effect;
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
|
53
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;
or
(ii)
there has been a change constituting a Material Adverse Effect 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 on June 30, 2005; or
(iii)
it
shall reasonably determine that the Mergers contemplated by this Agreement
have
become impracticable by reason of commencement or threat of any material
claim,
litigation or proceeding against MainSource, UCBC or Union Federal or any
subsidiary of MainSource or any director or officer of any such entities
(A)
relating to this Agreement or the Mergers or (B) which is likely to have
a
Material Adverse Effect on MainSource; or
(iv)
UCBC
fulfills the requirements of Section 6.01 hereof but the shareholders of
UCBC do
not approve and adopt the Company Merger and this Agreement.
9.02. 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 UCBC 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
6.09 hereof; and (ii) the payment of expenses set forth in Section 12.11
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 9.03 hereof. The obligation to pay the Termination Fee in accordance
with Section 9.03 hereof will survive any termination of this
Agreement.
9.03 Termination
Fee.
In
recognition of the efforts, expenses and other opportunities foregone by
MainSource and UCBC while structuring and pursuing the Mergers, the parties
agree that a termination fee of $1,000,000 plus out-of-pocket expenses up
to an
amount of $200,000 (collectively, the “Termination
Fee”)
shall
be paid by the applicable party if this Agreement is terminated:
(i)
by
MainSource pursuant to Section 9.01 (b)(i) or (iv) above and MainSource
is
not in breach of this Agreement, in which case UCBC shall pay the Termination
Fee to MainSource.
(ii)
by
UCBC pursuant to Section 9.01 (c)(i) above and UCBC is not in breach
of
this Agreement, in which case MainSource shall pay the Termination Fee to
UCBC.
Each
party acknowledges that the agreements contained in this Section 9.03
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 9.03, 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
54
(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.
ARTICLE
X
EFFECTIVE
TIME OF THE MERGERS
Upon
the
terms and subject to the conditions specified in this Agreement, the Mergers
will become effective on the day and at the time (the “Closing Date”) specified
in the Articles of Merger of Merger Corp and Union Federal filed with the
Indiana Department of Financial Institutions, and the Articles of Merger
of
MainSource and UCBC 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 VIII (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 Mergers
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 Mergers, and in no event will the Effective Time occur
any
earlier than January 2, 2006 or later than June 30, 2006; provided, however,
that at MainSource's option, the Effective Time may occur prior to March
10,
2006, if MainSource agrees to waive any adjustment to the Purchase Price
required by Section 3.02(b).
ARTICLE
XI
CLOSING
11.01. Closing
Date and Place.
So long
as all conditions precedent set forth in Article VIII hereof have been satisfied
and fulfilled, the closing of the Mergers (the "Closing") will take place
at the
Effective Time at a location to be reasonably determined by MainSource.
11.02. Deliveries.
(a) At
the Closing, MainSource will deliver to UCBC the following:
(i)
the
officers' certificate contemplated by Section 8.02(g) hereof;
(ii)
copies of all approvals by government regulatory agencies necessary to
consummate the Mergers;
(iii)
copies of (A) 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 Company Merger; and (b) the resolution adopted by the Board
of
Directors and sole shareholder of Merger Corp certified by the Secretary
of
Merger Corp relative to the approval of this Agreement and the Subsidiary
Merger;
(iv)
the
tax opinion required by Section 8.01(k) hereof;
(v)
the
opinion required by Section 8.02(l) hereof ; and
55
(iv)
such
other documents as UCBC or its legal counsel may reasonably
request.
(b)
At
the Closing, UCBC will deliver to MainSource the following:
(i)
the
officers' certificate contemplated by Section 8.01(g) hereof;
(ii)
copies of (A) the resolutions adopted by the Board of Directors and shareholders
of UCBC certified by the Secretary of UCBC relative to the approval of this
Agreement and the Company Merger; and (B) the resolutions adopted by the
Board
of Directors and sole shareholder of Union Federal certified by the Secretary
of
Union Federal relative to the adoption of this Agreement and Subsidiary
Merger;
(iii)
such other documents as MainSource or its legal counsel may reasonably
request;
(iv)
the
fairness opinion required by Sections 8.01(h) and 8.02(h) hereof;
(v)
the
affiliate agreements required by Section 6.05 hereof;
(vi)
the
opinion required by Section 8.01(l) hereof; and
(vii)
the
employment agreements required by Section 8.01(i) hereof.
(c)
As
soon as possible after the Closing, UCBC will deliver to MainSource a list
of
UCBC’s shareholders as of the Effective Time certified by the President and
Secretary of UCBC.
ARTICLE
XII
MISCELLANEOUS
12.01. 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 not 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 6.14, 6.18, 7.03, 7.05
and
7.06 hereof (which are intended for the benefit of those present and former
officers and directors of UCBC and Union Federal affected thereby and may
be
enforced by such persons).
12.02. 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
56
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 Mergers. 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.
12.03. 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, 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 as follows:
If
to MainSource or Merger Corp:
|
with
a copy to (which will not constitute notice):
|
MainSource
Financial Group, Inc.
|
Bose
XxXxxxxx & Xxxxx LLP
|
000
Xxxxx Xxxxxxxx
|
0000
Xxxxx Xxxxxxx Xxxxx
|
Xxxxxxxxxx,
Xxxxxxx 00000
|
000
Xxxxx Xxxxxxxxxxxx Xxxxxx
|
ATTN:
Xxxxx X. Xxxxx, Xx.,
|
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 UCBC:
|
with
a copy to (which will not constitute notice):
|
Xxxxxx
& Xxxxxxxxx LLP
|
|
000
X. Xxxx
|
000
Xxxxx Xxxxxxxx Xxxxxx
|
Xxxxxxxxxxxxxx,
Xxxxxxx 00000
|
Xxxxxxxxxxxx,
Xxxxxxx 00000
|
ATTN:
Xxxx X. Xxxxxxx
|
ATTN:
Xxxxxxx X. Xxxxxx, Esq.
|
Chief
Executive Officer
|
Telephone:
(000) 000-0000
|
Telephone:
(000) 000-0000
|
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 will 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
57
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.
12.04. 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.
12.05. Severability.
In case
any one or more of the provisions contained herein will, for any reason,
be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability will not affect any other provision of this
Agreement, but this Agreement will be construed as if such invalid, illegal
or
unenforceable provision or provisions had never been contained
herein.
12.06. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which will
be
an original, but such counterparts will together constitute one and the same
instrument.
12.07. Governing
Law.
This
Agreement will 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.
12.08. 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 UCBC or Union Federal as provided in either
of their charters or by-laws (or comparable organizational documents) and
any
existing indemnification agreements or arrangements of UCBC or Union Federal,
all of which indemnification agreements or arrangements are 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 three
(3)
years after the Effective Time in any manner that would adversely affect
the
rights thereunder of such individuals for acts or omissions occurring 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
UCBC or Union Federal (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 UCBC or Union Federal 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
58
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.
12.09. 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 Mergers, 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.
12.10. 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, Merger Corp, UCBC,
Union Federal, and all the respective directors, officers and employees of
MainSource, Merger Corp, UCBC and Union Federal will have no further liability
with respect thereto. The covenants contained in Sections 6.09 (regarding
confidentiality), 9.02, 9.03, 12.07, 12.09, 12.10 and 12.11 shall survive
termination of this Agreement. The covenants contained in Sections 6.09
(regarding confidentiality), 6.14, 6.18, 7.03, 7.05, 7.06, 12.07, 12.08,
12.09,
12.10 and 12.11 shall survive the Effective Time.
12.11. Expenses.
Except
as provided in Section 6.11 hereof, each party to this Agreement shall pay
its
own expenses incidental to the Mergers contemplated hereby.
12.12. 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.
59
IN
WITNESS WHEREOF, MainSource, UCBC and Union Federal 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/ Xxxxx X. Xxxxx, Xx. | |
Xxxxx
X. Xxxxx, Xx., President
|
||
By:
|
/s/ Xxxx X. Xxxxxxx | |
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
||
UNION
FEDERAL SAVINGS AND LOAN ASSOCIATION
|
||
By:
|
/s/ Xxxx X. Xxxxxxx | |
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
60
Exhibit
1.01(e)(i)
ARTICLES
OF MERGER OF
INTO
MAINSOURCE FINANCIAL GROUP, INC.
In
accordance with the requirements of the Indiana Business Corporation Law, as
amended, the undersigned corporation, desiring to effect a merger, sets forth
the following facts:
ARTICLE
I
SURVIVING
CORPORATION
The
name
of the entity surviving the merger is MainSource Financial Group, Inc. It was
organized as an Indiana corporation on March 30, 1983.
ARTICLE
II
MERGING
CORPORATION
The
merging entity is Union Community Bancorp, which was organized as an Indiana
corporation on September 11, 1997.
ARTICLE
III
PLAN
OF MERGER
The
Plan
of Merger, which contains the information required by Indiana Code 23-1-40-1(b),
is set forth in Exhibit A
which is
attached hereto and made a part hereof.
ARTICLE
IV
MANNER
OF ADOPTION
The
merger was approved by the board of directors of MainSource Financial
Group, Inc.
at a
meeting duly called and held on August 15, 2005. Shareholder approval of the
merger was not required.
The
merger was also approved by the board of directors of Union Community Bancorp
at
a meeting duly called and held on August 17, 2005.
The
merger was submitted to the shareholders of Union Community Bancorp for approval
at a special meeting thereof duly called and held _______________, at which
a
quorum was present throughout.
The
designation, number of outstanding shares, number of votes entitled to be cast
by each voting group entitled to vote separately on the merger, the number
of
votes of each voting group represented at the meeting of shareholders and the
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, without par value
|
Number
of Outstanding Shares
|
|
Number
of Votes Entitled to be Cast
|
|
Number
of Votes Represented at the Meeting
|
|
Shares
Voted in Favor
|
|
Shares
Voted Against
|
|
Shares
Abstained
|
The
number of votes cast for approval of the merger by the shareholders of the
Merging Corporation was sufficient for approval thereof.
ARTICLE
V
EFFECTIVE
DATE
THE
MERGER TO BE EFFECTED BY THESE ARTICLES OF MERGER SHALL BE EFFECTIVE AT
_____________________, 2006.
IN
WITNESS WHEREOF, the undersigned, being the President of the Surviving
Corporation, executes these Articles of Merger and verifies, subject to
penalties of perjury, that the statements contained herein are true, as of
this
___ day of ___________, 2006.
MAINSOURCE
FINANCIAL GROUP, INC.
|
||
By:
|
||
Xxxxx
X. Xxxxx, Xx., President
|
||
(Surviving
Corporation)
|
2
Exhibit
1.01(e)(ii)
PLAN
OF MERGER
of
MAINSOURCE
FINANCIAL GROUP, INC.,
an
Indiana corporation
and
an
Indiana corporation
1. The
names
of the corporations proposing to merge (the “Company Merger”) are MainSource
Financial Group, Inc., an Indiana corporation (the “Surviving Corporation”), and
Union Community Bancorp, an Indiana corporation (the “Merging Corporation”),
pursuant to an Agreement and Plan of Merger dated as of August __, 2005 (the
“Merger Agreement”).
2. The
Merging Corporation has 5,000,000 authorized shares of common stock, no par
value (“UCBC Common Stock”), and 2,000,000 authorized shares of preferred stock,
no par value, of which _________ shares of UCBC Common Stock and no shares
of
preferred stock are presently issued and outstanding.
3. The
Surviving Corporation has 25,000,000 authorized shares of common stock, no
par
value (“MainSource Common Stock”), and 400,000 authorized shares of preferred
stock, no par value, of which ________________ shares of MainSource Common
Stock
and no shares of preferred stock are presently issued and
outstanding.
4. The
effective date of the Company Merger, as that phrase is used herein, shall
mean
________________, 2006 (the “Effective Date”). The date and time at which the
Company Merger becomes effective shall be the Effective Time.
5. (a)
Each
share of UCBC Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares held as treasury stock of Merging Corporation
and shares held directly or indirectly by Surviving Corporation, except shares
held in a fiduciary capacity or in satisfaction of a debt previously contracted,
if any) shall become and be converted into the right to receive, subject to
adjustment as provided in paragraph 6 below:
(i)
An
amount of cash equal to the Purchase Price (as such amount is determined and
adjusted in accordance with Section 6 below) divided by the number of shares
of
UCBC Common Stock outstanding as of the Effective Time (such amount is the
“Cash
Consideration”), or
(ii)
Such
number of shares of common stock, without par value, of MainSource (“MainSource
Common Stock”) equal to the quotient (the “Exchange Ratio”) arrived at by
dividing:
A.
|
the
Cash Consideration, by
|
B.
|
the
average of the 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
“MainSource Average Stock Price”), subject to adjustment, if any, pursuant
to Section 6 hereof (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, at the Effective Time, each outstanding
option to purchase UCBC Common Stock (“UCBC 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 excess
of
the Cash Consideration over the per share exercise price for each share of
UCBC
Common Stock subject to such UCBC Stock Option; provided, however, that the
payer shall withhold from such cash payment those taxes required to be withheld
by applicable law, if any. Each UCBC Stock Option to which this paragraph
applies will be cancelled and shall cease to exist by virtue of such
payment.
(c) Each
share of UCBC Common Stock that, immediately prior to the Effective Time, is
held as treasury stock of Merging Corporation 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 Company Merger be canceled
and retired and shall cease to exist, and no exchange or payment shall be made
therefor.
6. (a)
Subject to the adjustments in this Section 6, the Purchase Price shall be equal
to $52,993,000.
(b) (i)
If as
of the last business day of the month preceding the month in which the Effective
Time occurs (the “Computation Date”)
the UCBC
Consolidated Shareholders’ Equity, as determined in accordance with Section
6(b)(ii), is less than $30,600,000, the Purchase Price shall be reduced on
a
dollar-for-dollar basis by an amount equal to the difference between $30,600,000
and the actual UCBC Consolidated Shareholders’ Equity as of the
Computation Date determined in accordance with Section 6(b)(ii). If at the
Computation Date UCBC’s Consolidated Shareholders’ Equity is greater than
$31,100,000, the Purchase Price shall be increased on a dollar-for-dollar basis
by an amount equal to the difference between $31,100,000 and the actual UCBC
Consolidated Shareholders’ Equity as of the
Computation Date determined in accordance with Section 6(b)(ii).
(ii)
The
UCBC Consolidated Shareholders’ Equity shall be determined based upon the
balance sheet of UCBC as of the
Computation Date, prepared in accordance with generally accepted accounting
principles consistently applied, after making adjustments for the following
items and tax effecting those adjustments, where appropriate:
(A)
|
earnings
or
losses
of UCBC through the
Computation Date;
|
2
(B)
|
normal
dividends paid to holders of UCBC Common Stock through the Computation
Date;
|
(C)
|
the
accrual of any fees payable to a broker or investment advisor by
UCBC as a
result of the consummation of the transactions contemplated
herein;
|
(D)
|
the
accrual of change in control
payments;
|
(E)
|
the
accrual or payment of a penalty in the amount of $___________ for
the
termination of UCBC’s data processing
contract;
|
(F)
|
the
funding in full of the UCBC Financial Institutions Retirement Fund
upon
its termination;
|
(G)
|
the
accounting for all accrued and prepaid expenses as of the Computation
Date;
|
(H)
|
the
accrual of all compensable vacation and sick days for employees of
UCBC as
of the Computation Date; and
|
(I)
|
the
accrual of an additional loan loss provision in the amount of $500,000
above the amount of that provision as of June 30,
2005;
|
(c)
(i)
If
the MainSource Average Stock Price is less than $16.50 per share, the Exchange
Ratio shall be equal to the Cash Consideration divided by $16.50 (as further
adjusted pursuant to Section 3.06 of the Merger Agreement, as
necessary).
(ii)
If
the MainSource Average Stock Price is greater than $21.50 per share, the
Exchange Ratio shall be equal to the Cash Consideration divided by $21.50 (as
further adjusted pursuant to Section 3.06 of the Merger Agreement, as
necessary).
7. Each
share of MainSource Common Stock which is issued and outstanding immediately
prior to the Effective Time shall continue to be an issued and outstanding
share
of MainSource Common Stock at and after the Effective Time.
8. Subject
to the allocation procedures set forth in paragraph 9, each record holder of
UCBC Common Stock will be entitled to (1) elect to receive Cash Consideration
for all of such holder’s shares (“Cash Election Shares”), (2) elect to receive
Stock Consideration for all of such holder’s shares (“Stock Election Shares”),
(3) elect to receive the Cash Consideration with respect to some of such
holder’s shares and the Stock Consideration with respect to such holder’s
remaining shares, or (4) make no election or indicate that such holder has
no
preference as to the receipt of the Cash Consideration or the Stock
Consideration (“Non-Election Shares”). All such elections (each, an “Election”)
shall be made on a form designed for that purpose by Surviving Corporation
and
reasonably acceptable to Merging Corporation (an “Election Form”). Any shares of
UCBC Common Stock with respect to which the record holder thereof shall not,
as
of the election deadline established by the Surviving Corporation (the “Election
Deadline”), have properly submitted to the Registrar and Transfer Company, or
other exchange agent as shall be appointed by Surviving Corporation and Merging
Corporation (the “Exchange Agent”) a properly completed Election Form shall be
deemed to be Non-Election Shares. A record holder
3
acting
in
different capacities or acting on behalf of other persons in any way shall
be
entitled to submit an Election Form for each capacity in which such record
holder so acts with respect to each person for which it so acts.
Notwithstanding
any other provision contained in this Plan of Merger, fifty-five percent (55%)
of the total number of shares of UCBC Common Stock outstanding at the Effective
Time (the "Stock Conversion Number") shall be converted into the Stock
Consideration and the remaining outstanding shares of UCBC Common Stock shall
be
converted into the Cash Consideration; provided, however, that for federal
income tax purposes, it is intended that the Merger will qualify as an
integrated plan of reorganization under the provisions of Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended (the "Code") and,
notwithstanding anything to the contrary contained herein, in order that the
aforementioned integrated plan of reorganization will not fail to satisfy
continuity of interest requirements under applicable federal income tax
principles relating to reorganizations under Section 368(a)(1)(A) of the Code,
the Surviving Corporation reserves the right to increase the number of shares
of
UCBC Common Stock that will be converted into Stock Consideration and reduce
the
number of shares of UCBC Common Stock that will be converted into the right
to
receive the Cash Consideration to ensure that the Stock Consideration will
represent at least fifty percent (50%) of the value of the total of the
aggregate Merger Consideration plus any amount treated as merger consideration
for federal income tax purposes.
9. Within
five (5) business days after the Effective Time, Surviving Corporation shall
effect the allocation among the holders of UCBC Common Stock of rights to
receive the Cash Consideration and the Stock Consideration and to distribute
such consideration as follows:
(i)
if
the Stock Election Number equals the Stock Conversion Number, then (A) all
Cash
Election Shares shall be converted into the right to receive the Cash
Consideration, and (B) all Stock Election Shares and Non-Election Shares shall
be converted into the right to receive the Stock Consideration;
(ii)
if
the Stock Election Number is less than the Stock Conversion Number, the Cash
Elections shall be eliminated (each in its entirety) and converted to Stock
Elections (each in its entirety) by first eliminating and converting the Cash
Election which covers the smallest number of shares of UCBC Common Stock, and
then eliminating and converting the Cash Election which covers the next smallest
number of shares and continuing this process until the total remaining number
of
outstanding UCBC shares covered by Cash Elections is such that fifty-five
percent (55%) of the total number of shares of UCBC Common Stock outstanding
at
the Effective Time shall be converted into the Stock Consideration, subject
to
MainSource’s reserved right to increase the number of shares of UCBC Common
Stock that will be converted into Stock Consideration to ensure that the Company
Merger is a tax-free reorganization; and
(iii)
if
the Stock Election Number exceeds the Stock Conversion Number, the Non-Elections
shall be eliminated (each in its entirety) and converted to Cash Elections
(each
in its entirety) by first eliminating and converting the Non-Election which
covers the smallest number of shares of UCBC Common Stock, and then eliminating
and converting the Non-Election which covers the next smallest number of shares
and
4
continuing
this process until either all Non-Elections are converted into the Cash
Consideration or the total remaining number of outstanding UCBC shares covered
by Non-Elections (when added to all Stock Elections) is such that 55% of the
total number of shares of UCBC Common Stock outstanding at the Effective Time
shall be converted into the Stock Consideration, subject to MainSource’s
reserved right in Section 3.04(d) to increase the number of shares of UCBC
Common Stock that will be converted into Stock Consideration to ensure that
the
Company Merger is a tax-free reorganization. In the event that, following the
elimination and conversion of all Non-Elections to Cash Elections, the Stock
Election Number still exceeds the Stock Conversion Number, the Stock Elections
will be eliminated (each in its entirety) and converted to Cash Elections (each
in its entirety) in the same manner as the Non-Elections in this Section 9(iii),
until such time as the total remaining number of UCBC Common Shares covered
by
Stock Elections is such that 55% of the total number of shares of UCBC Common
Stock outstanding at the Effective Time shall be converted into the Stock
Consideration, subject to MainSource’s reserved right to increase the number of
shares of UCBC Common Stock that will be converted into Stock Consideration
to
ensure that the Company Merger is a tax-free reorganization.
For
purposes of this Section 9, if MainSource is obligated to increase the number
of
shares of UCBC Common Stock to be converted into shares of MainSource Common
Stock as a result of MainSource’s reserved right to increase the number of
shares of UCBC Common Stock that will be converted into Stock Consideration
to
ensure that the Company Merger is a tax-free reorganization, then the higher
number shall be substituted for the Stock Conversion Number in the calculations
set forth in this Section 9.
10. At
the
Effective Time, (a) holders of UCBC Common Stock shall cease to be, and shall
have no rights as, shareholders of UCBC, other than the right to receive (1)
any
dividend or other distribution with respect to such UCBC Common Stock with
a
record date occurring prior to the Effective Time, and (2) the Consideration
provided under this Plan of Merger. After the Effective Time, there shall be
no
transfers on the stock transfer books of Merging Corporation or the Surviving
Corporation of shares of UCBC Common Stock.
11. Notwithstanding
any other provision in this Plan of Merger, no fractional shares of MainSource
Common Stock and no certificates or scrip therefor, or other evidence of
ownership thereof, will be issued in the Company Merger; instead, Surviving
Corporation shall pay to each holder of UCBC 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 MainSource
Average Stock Price.
12. Upon
the
Effective Date, the Merging Corporation shall merge into and with the Surviving
Corporation, which shall survive the Company Merger and the separate existence
of the Merging Corporation shall thereupon cease.
13. Upon
and
after the Effective Date, the Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, powers and franchises, of a
public, as well as a private nature, of each of the parties hereto; and all
property, real, personal and mixed, all debts due on whatever account and all
other choses in action and all and every other interests of or
5
belonging
to or due to each of the parties hereto shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act
or
deed; and the title to any real estate, or any interest therein, shall not
revert or be in any way impaired by reason of the Company Merger.
14. Upon
and
after the Effective Date, the Surviving Corporation shall be responsible and
liable for all the liabilities and obligations of both of the parties hereto
in
the same manner and to the same extent as if the Surviving Corporation had
itself incurred the same or contracted therefor; and any claim existing or
action or proceeding by or against either of the parties hereto may be
prosecuted to judgment as if the Company Merger had not taken place or the
Surviving Corporation may be substituted in its place. Neither the rights of
creditors nor liens upon the property of either of the parties hereto shall
be
impaired by such Company Merger; but any such lien shall be limited to the
property upon which there were liens immediately prior to the time of the
Company Merger.
15. The
Articles of Incorporation and By-Laws of the Surviving Corporation 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.
16. The
directors of the Surviving Corporation following the Effective Time shall be
those individuals of the Surviving Corporation serving as directors of the
Surviving Corporation at the Effective Time until such time as their successors
have been duly elected and qualified or until their earlier resignation, death,
or removal as a director. The officers of the Surviving Corporation following
the Effective Time shall be those individuals of the Surviving Corporation
serving as officers of the Surviving Corporation at the Effective Time until
such time as their successors have been duly elected and qualified or until
their earlier resignation, death, or removal as an officer.
6
Exhibit
2.01(e)(i)
ARTICLES
OF MERGER OF
UNION
FEDERAL SAVINGS AND LOAN ASSOCIATION
INTO
MAINSOURCE BANK-CRAWFORDSVILLE
In
accordance with the requirements of Section 28-1-7-9 of the Indiana Code, as
amended, the undersigned corporation, desiring to effect a merger, sets forth
the following facts:
ARTICLE
I
AGREEMENT
OF MERGER
The
Agreement and Plan of Merger (the “Merger Agreement”) is attached hereto as
Annex
A
and is
incorporated into this document by reference.
ARTICLE
II
DFI
APPROVAL
The
merger contemplated by the Merger Agreement was approved by the Indiana
Department of Financial Institutions on __________, 2005.
ARTICLE
III
MANNER
OF ADOPTION AND VOTE
The
Merger Agreement was approved by the board of directors of MainSource
Bank-Crawfordsville
by
unanimous written consent in lieu of a meeting effective __________, 2005,
and
by the sole shareholder of MainSource
Bank-Crawfordsville
by
unanimous written consent in lieu of a meeting effective __________, 2005.
The
Merger Agreement was also approved by the board of directors of Union
Federal Savings and Loan Association
by
unanimous written consent in lieu of a meeting effective August ____, 2005,
and
by the sole shareholder of Union
Federal Savings and Loan Association
by
unanimous written consent in lieu of a meeting effective August _____,
2005.
THE
MERGER TO BE EFFECTED BY THESE ARTICLES OF MERGER
SHALL
BE EFFECTIVE AT ________________, 2006.
EXECUTED
as of ___________, 2006.
UNION
FEDERAL SAVINGS AND LOAN ASSOCIATION
|
||
By:
|
||
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
||
(Merging
Entity)
|
||
MAINSOURCE
BANK-CRAWFORDSVILLE
|
||
By
|
||
_______________,
President
|
||
(Surviving
Entity)
|
STATE
OF INDIANA
|
)
|
)SS:
|
|
COUNTY
OF ______________
|
)
|
Before
me, a Notary Public in and for said County and State, personally appeared Xxxx
X. Xxxxxxx, known to me to be the Chief Executive Officer of Union Federal
Savings and Loan Association, and acknowledged the execution of the foregoing
for and on behalf of said corporation.
Witness
my hand and Notarial Seal, this ____day of ___________, 2006.
Notary
Public - Signature
|
|
Notary
Public - Printed
|
My
Commission Expires:
|
My
County of Residence:
|
|
STATE
OF INDIANA
|
)
|
)SS:
|
|
COUNTY
OF ______________
|
)
|
Before
me, a Notary Public in and for said County and State, personally appeared
____________, known to me to be the President of MainSource Bank-Crawfordsville,
and acknowledged the execution of the foregoing for and on behalf of said
corporation.
2
Witness
my hand and Notarial Seal, this ____day of _____________, 2006.
Notary
Public - Signature
|
|
Notary
Public - Printed
|
My
Commission Expires:
|
My
County of Residence:
|
|
3
Exhibit
2.01(e)(ii)
This
AGREEMENT AND PLAN OF MERGER (this “Agreement”) dated as of ________________,
2006, by and between MainSource Bank- Crawfordsville (“Merger Corp”), an interim
Indiana commercial bank with its principal office located in Greensburg, Decatur
County, Indiana and wholly-owned subsidiary of MainSource Financial Group,
Inc.,
an Indiana corporation (“MainSource”), and Union Federal Savings and Loan
Association (“Union Federal”), a federal savings association with its principal
office located in Crawfordsville, Xxxxxxxxxx County, Indiana and wholly-owned
subsidiary of Union Community Bancorp, an Indiana corporation
(“UCBC”).
WITNESSETH:
WHEREAS,
MainSource, UCBC and Union Federal have entered into an Agreement and Plan
of
Merger dated as of August __, 2005 (the “Merger Agreement”) providing for the
acquisition by MainSource of all of the outstanding shares of common stock,
no
par value, of UCBC in a merger pursuant to the provisions of the Indiana
Business Corporation Law (the “IBCL”), and providing for the merger of Union
Federal with and into Merger Corp (the “Merger”), in accordance with the
provisions of applicable state and federal law; and
WHEREAS,
the Boards of Directors of Merger Corp and Union Federal have each adopted
a
resolution approving this Agreement and Plan of Merger and the Boards of
Directors of Merger Corp and Union Federal have directed that this Agreement
and
Plan of Merger and the Merger contemplated thereby be submitted to the sole
shareholders of Merger Corp and Union Federal for adoption and
approval;
NOW,
THEREFORE, the parties hereto, in consideration of amounts to be paid pursuant
hereto and subject to the terms and conditions of the Merger Agreement, agree
as
follows:
ARTICLE
I.
Constituent
Corporations
Merger
Corp and Union Federal shall be the constituent corporations with respect to
the
Merger.
ARTICLE
II.
Merger
Effective
as of the time of the filing of appropriate articles of merger with the Indiana
Department of Financial Institutions or such later time as may be specified
in
such articles of merger (the “Effective Time of the Merger”), Union Federal
shall be merged with and into Merger Corp, and Merger Corp shall be the
surviving institution (the “Surviving Bank”).
ARTICLE
III.
Articles
of Incorporation, By-Laws, Etc.
1. Articles
of Incorporation and By-Laws. The Articles of Incorporation and By-Laws of
Merger Corp in existence at the Effective Time shall remain the Articles of
Incorporation and By-Laws of the Surviving Bank following the Effective Time,
until such Articles of Incorporation and By-Laws shall be further amended as
provided by applicable law.
2. Name,
Offices, Officers and Directors. The name of the Surviving Bank shall be
“MainSource Bank - Crawfordsville.” Its principal office shall be located at 000
Xxxx Xxxx Xxxxxx, Xxxxxxxxxxxxxx, Xxxxxxxxxx Xxxxxx, Indiana, and its branches
shall consist of the branch offices of Union Federal as of the Effective Time.
The
officers of Merger Corp at the Effective Time shall continue to serve as the
officers of the Surviving Bank until such time as their successors shall have
been duly elected and have qualified or until their earlier resignation, death
or removal from office. In addition, immediately following the Effective Time,
Xxxx X. Xxxxxxx shall be appointed the Chairman of the Board, President, and
Chief Executive Officer and J. Xxx Xxxxxx shall be appointed as an executive
officer of the Surviving Bank. The directors of the Surviving Bank following
the
Effective Time shall consist of Xxxx X. Xxxxxxx _________, __________,
__________ and __________, until such time as their successors have been duly
elected and have qualified or until their earlier resignation, death, or removal
as a director.
ARTICLE
IV.
Manner
of Converting and Exchanging Stock
1. Subject
to the provisions of this Article IV, the manner of converting and exchanging
the shares of the constituent corporations’ stock at the Effective Time of the
Merger shall be as follows:
(a) Each
of
the _____ shares of common stock, no par value, of Merger Corp (“Merger Corp
Common Stock”), outstanding immediately prior to the Effective Time of the
Merger shall remain outstanding immediately after the Effective Time of the
Merger.
(b) Each
of
the 1,000 shares of the common stock, $.01 par value per share, of Union Federal
(the “Union Federal Common Stock”) outstanding immediately prior to the
Effective Time of the Merger shall, at the Effective Time of the Merger, be
cancelled without consideration therefor.
2. After
the
Effective Time of the Merger, there shall be no transfers on the stock transfer
books of Union Federal or the Surviving Bank of any shares of Union Federal
Common Stock.
2
ARTICLE
V.
Effect
of Merger
From
and
after the Effective Time of the Merger, the Surviving Bank shall have all of
the
rights, privileges, powers, immunities and franchises (public and private)
of
each of the constituent corporations, and all property (real, personal, and
mixed), all debts due on whatever account, and all other choses in action,
of
each of the constituent corporations. All interests of or belonging to or due
to
either of the constituent corporations shall thereupon be deemed to be
transferred to and vested in the Surviving Bank without act or deed and no
title
to any real estate or any interest therein vested in either of the constituent
corporations shall revert or be in any way impaired because of the
Merger.
ARTICLE
VI.
Surviving
Bank
From
and
after the Effective Time of the Merger, the Surviving Bank shall be responsible
for all obligations of each of the constituent corporations and each claim
existing and each action or proceeding pending by or against either of the
constituent corporations may be prosecuted as if the Merger had not taken place,
and the Surviving Bank may be substituted in the place of such constituent
corporation. Such obligations shall include all of Union Federal’s obligations
with respect to the liquidation account which was established at the time Union
Federal or any of its savings association predecessors converted from mutual
to
stock form of organization. No right of any creditor of either constituent
corporation and no lien upon the property of either constituent corporation
shall be impaired by the Merger.
ARTICLE
VII.
Further
Documents
If
at any
time the Surviving Bank shall consider or be advised that any further
assignments, conveyances or assurances in law are necessary or desirable to
vest, perfect or confirm of record in the Surviving Bank the title to any
property or rights of the constituent corporations, or otherwise to carry out
the provisions hereof, the persons who were the proper officers and directors
of
the constituent corporations immediately prior to the Effective Time of the
Merger (or their successors in office) shall execute and deliver any and all
proper deeds, assignments and assurances in law, and do all things necessary
or
proper, to vest, perfect or confirm title to such property or rights in the
Surviving Bank and otherwise to carry out the provisions hereof.
3
ARTICLE
VIII.
Effect
of Termination
In
the
event that this Agreement is terminated pursuant to Article IX of the Merger
Agreement, the Merger provided for herein shall be abandoned automatically
and
without any further act or deed by the parties hereto.
IN
WITNESS WHEREOF, the parties hereto have caused this Merger Agreement for
Subsidiary Merger to be executed and attested to on their behalf by their
officers thereunto duly authorized as of the day and year first written
above.
MAINSOURCE
BANK - CRAWFORDSVILLE
|
||
By:
|
||
Its:
|
||
“Merger
Corp”
|
||
UNION
FEDERAL SAVINGS AND LOAN ASSOCIATION
|
||
By:
|
||
Xxxx
X. Xxxxxxx
|
||
Chief
Executive Officer
|
Exhibit
6.05
[DATE]
MainSource
Financial Group, Inc.
000
Xxxxx
Xxxxxxxx
Xxxxxxxxxx,
Xxxxxxx 00000
Ladies
and Gentlemen:
I
have
been advised that as of the date hereof I may be deemed to be an “affiliate” of
Union Community Bancorp, an Indiana corporation (“UCBC”), as that term is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the “Rules and Regulations”) of the Securities and Exchange
Commission (the “Commission”) under the Securities Act of 1933, as amended (the
“Act”). Neither my entering into this letter agreement, nor anything contained
herein, shall be deemed an admission on my part that I am such an
“affiliate.”
Pursuant
to the terms of the Agreement and Plan of Merger dated as of August __, 2005,
(the “Merger Agreement”), among MainSource Financial Group, Inc., an Indiana
corporation (“MainSource”), UCBC and Union Federal Savings and Loan Association,
providing for the merger of UCBC with and into MainSource (the “Merger”), and as
a result of the Merger, I may receive shares of common stock, no par value,
of
MainSource (the “MainSource Securities”) and/or cash in exchange for the shares
of common stock, no par value, of UCBC owned by me at the effective time of
the
Merger.
I
represent and warrant to MainSource that in such event:
A.
|
I
shall not make any sale, transfer or other disposition of the MainSource
Securities in violation of the Act and the Rules and
Regulations.
|
B.
|
I
have carefully read this letter and the Merger Agreement and discussed
its
requirements and other applicable limitations upon my ability to
sell,
transfer or otherwise dispose of MainSource Securities, to the extent
I
felt necessary, with my counsel and counsel for
UCBC.
|
C.
|
I
have been advised that the issuance of MainSource Securities to me
pursuant to the Merger has been registered with the Commission under
the
Act on a Registration Statement on Form S-4. However, I have also
been
advised that, since at the time the Merger was submitted for a vote
of the
shareholders of UCBC, I may have been deemed to have been an affiliate
of
UCBC and a distribution by me of MainSource Securities has not been
registered under the Act, the MainSource Securities must be held
by me
indefinitely unless (i) a
|
MainSource
Financial Group, Inc.
[DATE]
Page
2 of
3
distribution
of MainSource Securities by me has been registered under the Act, (ii) a
sale of
MainSource Securities by me is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act, or (iii)
in
the opinion of counsel reasonably acceptable to MainSource, some other exemption
from registration is available with respect to a proposed sale, transfer
or
other disposition of the MainSource Securities by me.
D.
|
I
understand that MainSource is under no obligation to register the
sale,
transfer or other disposition of MainSource Securities by me or
on my
behalf or to take any other action necessary in order to make compliance
with an exemption from registration
available.
|
E.
|
I
also understand that stop
transfer instructions will be given to MainSource’s transfer agent with
respect to MainSource Securities and that there will be placed
on the
certificates for the MainSource Securities, or any substitutes
therefor, a legend stating in
substance:
|
“The
shares represented by this certificate were issued in a transaction to which
Rule 145 promulgated under the Securities Act of 1933 applies. The shares
represented by this certificate may only be transferred in accordance with
the
terms of an agreement dated [DATE] between the registered holder hereof and
MainSource Financial Group, Inc., a copy of which is on file with MainSource
Financial Group, Inc.”
F.
|
I
also understand that unless the transfer by me of my MainSource
Securities
has been registered under the Act or is a sale made in conformity
with the
provisions of Rule 145, MainSource reserves the right to put the
following
legend on the certificates issued to my
transferee:
|
“The
shares represented by this certificate have not been registered under the
Securities Act of 1933 and were acquired from a person who received such
shares
in a transaction to which Rule 145 promulgated under the Securities Act of
1933
applies. The shares have been acquired by the holder not with a view to,
or for
resale in connection with, any distribution thereof within the meaning of
the
Securities Act of 1933 and may not be sold, pledged or otherwise transferred
except in accordance with an exemption from the registration requirements
of the
Securities Act of 1933.”
It
is
understood and agreed that the legends set forth in paragraphs E and F above
shall be removed by delivery of substitute certificates without such legend
if
the undersigned shall have
MainSource
Financial Group, Inc.
[DATE]
Page
3 of
3
delivered
to MainSource a copy of a letter from the staff of the Commission, or an opinion
of counsel reasonably acceptable to MainSource, to the effect that such legend
is not required for purposes of the Act and, in any event, may be removed after
one year following the Effective Time (as defined in the Merger Agreement)
as
long as MainSource is then current in its filings under the Securities Exchange
Act of 1934.
Very
truly yours,
|
|
Printed:
____________________________
|
Accepted
this ____ day of ___________, ____ by:
MAINSOURCE
FINANCIAL GROUP, INC.
By:
|
||
Xxxxx
X. Xxxxx, Xx.
|
||
President
and Chief Executive Officer
|
Exhibit
7.05
Separation
Pay Guidelines
1. Eligibility: Any
employee of the MainSource Financial Group, Inc. and/or its subsidiaries
(collectively, “MainSource”), who meets the following requirements shall be
eligible for consideration for Severance Benefits:
A.
|
The
employee is actively employed in a Full Time, regular, non-seasonal
MainSource position;
|
B.
|
The
employee is not covered by an enforceable written employment agreement
that provides for separation pay;
|
C.
|
The
employee’s termination is a Qualifying Event (as defined below);
and
|
D.
|
The
employee’s termination is not due to any issue related to the integrity
or
honesty of the employee, or the employee’s Gross Misconduct (as defined
below) or criminal conviction.
|
Notwithstanding
the foregoing, any employee who executes any document or agreement, which
MainSource in its discretion may require as a condition for payment of
separation pay, including but not limited to a resignation of employee or
officer, transfer of a license, or a consulting, release, or
confidentiality agreement, is eligible for separation pay.
2. Exclusion: Any
employee in any of the following categories shall not be eligible for separation
pay:
A.
|
The
employee is terminated for Gross
Misconduct;
|
B.
|
The
employee voluntarily resigns or abandons
job;
|
C.
|
The
employee is subject to recall;
|
D.
|
The
employee is on any type of leave other than FMLA;
|
E.
|
The
employee is covered under an individual employment agreement that
addresses separation pay;
|
F.
|
The
employee is terminated because of circumstances beyond the control
of
MainSource, or is offered another position with MainSource or an
acquiring
entity and the employee declines such position;
or
|
G.
|
The
employee does not otherwise meet the Eligibility requirements set
forth in
Section 1 above.
|
3.
|
Schedule
of Benefits:
Separation Benefits shall be applied according to the following
schedule:
|
A.
|
Less
than 12 months service - Service
of less than 12 months does not qualify for separation
pay.
|
B.
|
Nonexempt
employee - Separation
pay equal to one week’s salary for each year of service, subject to a
maximum of eight weeks.
|
C.
|
Exempt/Officer
employee (below VP status) - Separation
pay equal to one week’s salary for each year of service, subject to a
minimum of 2 weeks and a maximum of 12
weeks.
|
D.
|
Senior
Management employee (VP and above) - Separation
pay equal to one week’s salary for each year of service, subject to a
minimum of 4 weeks and a maximum of 26
weeks.
|
E.
|
Executive
Officers (CEO, CFO, COO) - Separation
pay equal to two week’s salary for each year of service in an executive
capacity and equal to one week’s salary for each year of service prior to
attaining such executive position, subject to a minimum of 6 weeks
and a
maximum of 52 weeks.
|
4. Payment
Terms:
Separation
payments may be made in a single lump sum payment within the next normal
payroll
cycle, at a later date or in periodic installments.
5. Payment
Offsets:
The
separation pay benefits received shall be reduced by any amounts owed by
the
employee to MainSource or any amounts earned by the employee after termination
of employment under individual employment and/or consulting agreements between
the employee and MainSource. Separation pay will be reduced by any amounts
paid
to an employee pursuant to the Worker Adjustment and Retraining Notification
Act
(WARN).
6. Effect
of Acceptance of Benefits:
Upon
acceptance of separation pay benefits, the individual agrees to fully release
MainSource, its employees, agents, and related entities from any and all
claims
arising out of or related to the individual’s employment or termination of
employment, to the extent permitted by applicable law. In the event an
individual sues MainSource on the basis of any of the released claims, the
individual is obligated to return to MainSource all of the separation
pay.
7. Rehired
Employees:
Employees who are rehired by MainSource within the time period covered by
the
separation pay will be required to repay a pro rata portion of the separation
pay. For example, an employee who is paid 12 months’ separation pay and is
rehired ten months later will be required to repay one-sixth of the separation
pay.
8. Recovery
of Excess Payments:
Whenever
payments have been made in excess of the amount necessary to satisfy the
separation pay benefits, MainSource has the right to recover these excess
payments from any individual or entity to which the excess payments were
made.
The employee has an obligation to reimburse MainSource for excess benefits,
and
excess payments to the employee will be treated as an advance against wages,
which may be deducted from wages or amounts owed by MainSource to the employee
subject to employee execution of the appropriate wage assignment and other
documentation. Whenever payments have been made on the basis of false
information provided by the employee, MainSource has the right to withhold
payments on certain compensation or other amounts owed by MainSource to the
employee, until the overpayment is recovered.
9. Benefits
Not Guaranteed: MainSource
does not guarantee the payment of separation pay benefits and these separation
pay guidelines do not constitute an “offer” of any kind to any employee working
for MainSource. Separation pay is not a form of wages and is not earned during
employment.
2
10.
|
Additional
Provisions:
The following provisions also apply to the separation pay
policy:
|
A.
|
Upon
approval of the Chief Executive Officer of MainSource Financial
Group,
Inc., separation pay may be increased to compensate for individual
situations.
|
B.
|
Outplacement
services may be offered upon approval of the Chief Executive Officer
of
MainSource Financial Group, Inc.
|
C.
|
Employees
on leave pursuant to the Family and Medical Leave Act (“FMLA”) will be
treated in accordance with the statute.
|
D.
|
Accrued
but unused Paid Time Off (“PTO”) and any other amounts owed to an employee
(except bonuses) will be included with the separation payment in
accordance with MainSource’s Paid Time Off plan. Any bonus or other
incentive pay will be paid in accordance with the applicable
plan.
|
E.
|
These
separation pay guidelines are to be applied to all MainSource-originated
separations affecting employees as described. As with all others,
these
guidelines do not create a contract for employment or any benefit.
Further, they are subject to modification at any
time.
|
11. Definitions:
The
following definitions apply to the separation pay policy:
A.
|
“Base
Salary” - means the employee’s annual base salary. Base salary does not
include bonus, car allowance, incentives, commissions, overtime
pay, or
any other remuneration.
|
B.
|
“Full
Time” - means the employee is regularly scheduled to work forty (40)
hours
each week.
|
C.
|
“Gross
Misconduct” - means dishonesty, extreme insubordination, conflict of
interest, violence, or violations under the drug-free workplace
or alcohol
policy, violation of the code of ethics or confidentiality agreement,
misappropriation of funds, criminal conviction, arrest, immoral
conduct,
or other actions which result in loss of bonding eligibility, violation
of
non-discrimination, harassment and/or sexual harassment policies,
violation of other MainSource written rules and policies, falsification
of
time records or other documents, and other violations listed in
the
employee manual under reasons for immediate
dismissal.
|
D.
|
“Qualifying
Event” - means an employee loses employment because of unacceptable job
performance through no fault of their own, reorganization, elimination
of
a position, reduction in workforce or departmental cutback, and
is not
placed on laid off, recall, or other leave
status.
|
E.
|
“Week’s
Salary” - means the employee’s Base Salary divided by 52.
|
3
Exhibit
8.01(i)(1)
EMPLOYMENT
AGREEMENT
This
Employment Agreement, effective as of _________________, 20___ (the “Effective
Date”), among MainSource Bank-Crawfordsville, an Indiana commercial bank
(“Bank”), Xxxx X. Xxxxxxx (“Employee”) and MainSource Financial Group, Inc., an
Indiana corporation (“Parent”).
RECITALS
A. The
Bank
is engaged in the business of commercial banking, including but not limited
to
the promotion of savings through the solicitation of deposits from the general
public, the promotion of home ownership through the origination of mortgage
loans primarily to finance the purchase, construction or improvement of
residential real estate and the origination of loans for automobile purchases,
commercial and personal purposes (“Business”).
B. The
Bank
desires to retain, by contract, a qualified individual to serve as President,
Chief Executive Officer and Chairman of the Board of the Bank (“Management
Position”).
C. Employee
has knowledge and experience to serve in such capacity and the parties wish
to
confirm their employment relationship pursuant to the terms and conditions
of
this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants contained
herein, and other good and valuable consideration, the parties agree as
follows:
1. Employment.
The Bank
hereby employs Employee in a Management Position and Employee hereby accepts
employment, upon the terms and conditions hereinafter set forth.
2. Term.
Subject
to the provisions for termination as provided in paragraphs 10 and 12 hereof,
the term of this Agreement shall commence on the Effective Date hereof and
continue for a period of one (1) year from such Effective Date. The term of
the
Agreement may not be extended by election of Employee.
3. Duties.
During
the term hereof, Employee shall serve in a Management Position of the Bank
and
shall to the best of his efforts manage, direct and administer the operations
of
the Bank including, but not limited to, such matters as budgeted net income,
asset quality, employee involvement in the community, growth of loans and
deposits, and various other functions as assigned from time to time. Employee
shall report to the President of Parent. The precise services, duties and
authority of Employee may be further defined, extended or curtailed from time
to
time at the discretion of the President of Parent; provided, however, that
such
services, duties and authority shall always be consistent with those which
are
customary for his position with the Bank. The Employee shall exercise his duties
of employment in a manner consistent with and in compliance with the
requirements of all applicable statutes of the United States of
1
America
and the State of Indiana and of the administrative rules and regulations issued
thereunder and of the procedures, rules and regulations of the applicable
regulatory agencies of the United States of America and the State of Indiana.
Similarly, Employee shall exercise his supervision and control over the
employees of the Bank that report to him in such a manner as to encourage them
to exercise their duties of employment so as to meet the standards provided
by
the previous sentence of this paragraph.
4. Extent
of Services.
Employee, subject to the control of the President of Parent, shall have the
power and authority commensurate and necessary to his position with the Bank.
Employee shall devote his entire employable time, attention and best efforts
to
the Business of the Bank and shall not, without the consent of the President
of
Parent, which consent shall not be unreasonably withheld, during the term of
this Agreement, be actively engaged in any other business activity, whether
or
not such business activity is pursued for gain, profit or other pecuniary
advantage; but this shall not be construed as preventing Employee from investing
his personal assets in such form or manner as will not require any services
on
the part of Employee in the operation of the affairs of the enterprise in which
such investments are made. Employee shall be a full-time employee of the Bank
and shall devote at least forty (40) hours per week (excused absences and
vacation periods counted as hours worked for this purpose) to the affairs of
the
Bank, unless the President of Parent consents to a shorter work period. During
the term of his employment hereunder, the Employee shall not provide any banking
or bank-related services or solicit or engage in any banking or bank-related
business otherwise than on behalf of the Bank or an affiliate of the
Bank.
5. Board
Member.
So long
as the Bank exists as a separate entity and is not merged or consolidated into
another entity, and so long as Employee remains employed by the Bank pursuant
to
the terms of this Agreement, including any extensions hereof, the Parent shall
cause Employee to be elected as a member of the Bank’s Board of Directors and in
accordance with the By-Laws of the Bank. While serving as a director of the
Bank, Employee shall be entitled to receive director fees at any time that
it is
the policy of the Parent or any of its subsidiaries to pay directors who are
also employees such fees. Upon the termination of this Agreement, unless
the Parent otherwise consents to his retention on the Board, Employee
shall
take any actions necessary to remove himself from the Board of Directors of
the
Bank.
6. Compensation.
Employee
shall be compensated for services rendered hereinunder during the term hereof
as
follows:
(a) As
an
incentive for Employee to enter into this Agreement for the term hereof,
if this
Agreement is not earlier terminated and Employee remains employed by the
Bank on
the date six (6) months following the Effective Date of this Agreement and
provided Employee is employed on the date of payment, the Bank shall pay
Employee in a lump sum, Twenty-Five Thousand Dollars ($25,000.00) subject
to
withholding of taxes and other customary amounts. Additionally, as further
incentive for Employee to enter into this Agreement for the term hereof,
if this
Agreement is not earlier terminated and Employee remains employed by the
Bank on
the date twelve (12) months following the Effective Date of this Agreement
and
provided Employee is employed on the date of payment, the Bank shall pay
Employee in a lump sum, Twenty-Five Thousand Dollars ($25,000.00) subject
to
withholding of taxes and other customary amounts.
(b) Employee
shall receive an annualized base salary of One Hundred Twenty-Five Thousand
Dollars ($125,000.00). Base salary hereunder shall be payable in equal periodic
2
installments
consistent with the Bank’s payroll practices and subject to withholding of taxes
and other customary amounts.
(c) Employee
shall be eligible to participate in the Bank’s Executive Performance Bonus Plan
for calendar year 2006 (payable in 2007) in accordance with the terms and
conditions of such program, which Bank may adopt and amend from time to time,
for its executive management personnel.
7. Fringe
Benefits.
(a)
Subject to Employee’s payment of the employee portion of the costs of coverage,
Employee shall be entitled to participate in the employee benefit and welfare
plans, retirement plans and insurance programs offered by the Bank, or which
it
may adopt from time to time, in accordance with the terms and conditions of
any such plans and programs, for its management or supervisory personnel
generally. Nothing herein shall be construed so as to prevent the Bank from
modifying or terminating any employee benefit or welfare plans or programs
or
employee fringe benefits it may adopt from time to time.
(b) Employee
shall be entitled to at least two hundred and seventy-six (276) hours of paid
time off for each year during the term hereof administered in accordance with
the Bank’s policies.
(c) The
Bank
shall reimburse Employee for all reasonable expenses he may incur for promoting
the Business, including expenses for entertainment, travel, and similar items,
subject to such limits and conditions as the Bank or Parent may reasonably
establish. The Bank shall also pay for Employee’s membership in the
Crawfordsville Country Club during the term of this Agreement.
(d) During
the term of this Agreement, the Bank shall furnish Employee a non-luxury
automobile made by an American manufacturer suitable to the nature of his
position and adequate for the performance of his employment. The Bank will
maintain, insure and provide fuel for operation of such automobile in accordance
with policies or practice established from time to time by the
Parent.
8. Disability.
If
Employee shall become physically or mentally disabled during the term of this
Agreement to the extent that he shall be unable to perform his duties and
services for and on behalf of the Bank, the Bank shall continue to make payment
of a portion of Employee’s base salary in the amount and for the duration as set
forth in Parent’s policies or practices established from time to time by Parent
for executive managers of its bank subsidiaries. A copy of Parent’s disability
policy has been provided to Employee.
9. Confidentiality.
(a) The
Bank
possesses and will continue to possess information which has been created,
discovered, developed by or otherwise become known to the Bank (including
information discovered or made available by subsidiaries, affiliates or joint
ventures of the Bank or in which property rights have been assigned or otherwise
conveyed to the Bank) which information (whether in print or electronic format)
has commercial value to the Bank, including
3
but
not
limited to trade secrets, innovations, processes, computer codes, data, know
how, improvements, discoveries, developments, techniques, marketing plans,
strategies, costs, customers, and client lists, or any information Employee
has
reason to know the Bank would like to treat as confidential for any purpose,
such as maintaining a competitive advantage or avoiding undesired publicity,
whether or not developed by Employee (“Confidential Information”). Unless
previously authorized in writing or instructed in writing by the Bank, Employee
will not, at any time, disclose to others, or use, or allow anyone else to
disclose or use any Confidential Information (except as may be necessary in
the
performance of Employee’s employment with the Bank), unless and until and then
only to the extent that, such Confidential Information has become ascertainable
or obtained from public or published sources or was available to the Bank on
a
non-confidential basis prior to any disclosure, provided that the source of
such
material is or was not bound by any obligation of confidentiality to the
Bank.
(b) Upon
termination of employment to the extent he has not already done so, the Employee
will deliver to the Bank any and all Information and Property (as herein
defined) then in his possession or subject to his control. For purposes of
this
sub-section, the term “Information and Property” means and includes (i) all
files, records, reports, memoranda and other documents, whether written or
electronic, that the Employee received, prepared, helped prepare, directed
the
preparation of, maintained or kept in connection with his services as a
director, officer or employee of the Bank or any of its affiliates; (ii) all
door and file keys, identification cards or badges, credit cards, computer
hardware, computer software, computer printers, computer access codes and
similar items issued or made available to the Employee in connection with his
service as a director, officer or employee of the Bank or any of its affiliates;
(iii) all documents, whether written or electronic, containing any trade secrets
(as defined in Indiana Code §24-2-3-2) of the Bank or any of its affiliates; and
(iv) all documents, whether written or electronic, containing non-public
information regarding the Bank or any of its affiliates or its customers or
employees, the use or disclosure of which might be adverse to the best interests
of such entity or its business. The Employee expressly agrees and promises
that
he will not retain any copies, duplicates, reproductions, or excerpts of any
Information and Property. The Employee acknowledges that this obligation is
continuing and agrees promptly to deliver to the Bank any subsequently
discovered Information and Property and any subsequently discovered copies,
duplicates or reproductions of, or excerpts from, Information and Property.
In
the case of electronic data contained in files residing on the Employee’s
personally-owned computers, the Employee shall permit access to such computers
to Bank representatives to delete all such files (including any drives or disks
associated therewith) that can be located easily and delete all other such
files
(including any drives or disks associated therewith) as and when they are
discovered. Notwithstanding anything else in this subparagraph (i), the Employee
may retain documents concerning any benefit plans or employment policies from
which he may be or become entitled to benefits and documents concerning his
rights under this Agreement.
10. Termination.
(a) The
Bank
may terminate this Agreement during the term hereof for just cause upon written
notice to Employee.
(b) This
Agreement may also be terminated (i) whenever the Bank and Employee shall
mutually agree to a termination in writing, (ii) upon the resignation or death
of
4
Employee,
(iii) pursuant to paragraph 12, or (iv) upon expiration of the term
hereof.
(c) Upon
the
termination of this Agreement by the Bank for just cause as defined in
subparagraph (d), or pursuant to paragraph 12, or upon the resignation or death
of Employee, Employee or his personal representative shall be entitled to
receive only the compensation accrued but unpaid as of the date of the
termination hereof and shall not be entitled to any compensation following
the
termination date or additional compensation except as expressly provided in
this
Agreement.
(d) Just
cause shall include, but not be limited to:
(i) Employee’s
misuse or conviction of embezzlement of funds belonging to the Bank, conviction
of, or plea by Employee of nolo contendre to, any felony or crime involving
fraud or moral turpitude, or use of alcohol or drugs or other conduct in such
a
manner as will injure or adversely effect the Bank or its employees, customers,
agents, officers or directors;
(ii) Employee’s
absence from his employment for a period in excess of paid time off as provided
in paragraph 7(b) for any reasons other than family and medical leave under
the
Bank’s policies;
(iii) Employee’s
absence from employment or inability to perform his duties hereunder as a result
of physical or mental disability for a period in excess of the period for which
salary is continued pursuant to paragraph 8 or in excess of family and medical
leave under the Bank’s policies;
(iv) Employee’s
failure to perform substantially his duties with the Bank, his intentional
breach of the provisions of this Agreement, his gross negligence or willful
malfeasance in discharging his obligations hereunder and such acts and their
consequences are not remedied within ten (10) days (or such longer reasonable
period of time designated by the Bank) after written notice hereof has been
given to Employee.
11. Non-Competition.
Employee
acknowledges that the services he will render to the Bank under this Agreement
will be of a special and unusual character, with a unique value to the Bank.
Employee has served in an executive management position with and was a
shareholder of the banking entity merged into the Bank and has acquired unique
and invaluable information about and developed relationships with customers
who
will continue to use the services of Bank and for which he will continue to
receive benefit. Employee further acknowledges the scope of the Bank’s Business
and that any limitations on his post employment activities are necessary to
protect the Bank’s Business because of its scope. In view of the unique value to
the Bank of the services of Employee, his prior relationship with the
predecessor of the Bank, because of the confidential information of the Bank
obtained by or disclosed to Employee, and as a material inducement to the Bank
to enter into this Agreement and to provide Employee the compensation and
benefits stated herein, including the signing bonus, and other good and valuable
consideration, Employee covenants and agrees that for the period of two (2)
years following the date of termination of employment with Bank for any reason,
Employee will not, directly or indirectly, either as a principal, agent,
manager, partner, director, officer, consultant or
5
shareholder,
on his behalf or on behalf of any other entity:
(a) in
Xxxxxxxxxx County Indiana, or the counties in the State of Indiana which are
contiguous to Xxxxxxxxxx Indiana, own, manage, operate, control, be employed
by,
participate in, render assistance to or be connected in any manner with the
ownership, management, representation, operation or control of any entity which
competes with the Business of the Bank at the time of termination of employment
with Bank;
(b) solicit,
entice or encourage any employee of the Bank to leave employment with the Bank
and to not hire or employ (or cause and/or assist, whether directly or
indirectly any third party to hire or employ) any such employee;
and
(c) contact,
solicit, encourage or induce any customers of the Bank to obtain business and/or
services from any entity (other than the Bank) which is engaged in any activity
competitive with the Business of the Bank.
The
term
“customer” shall mean any person or entity to which the Bank has provided
services during the one (1) year period prior to the date of termination or
persons or entities targeted by the Bank or contacted for the purpose of selling
such goods or services during such one (1) year period.
12. Regulatory
Provisions.
(a) If
the
Employee is suspended and/or temporarily prohibited from participating in the
conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)), the
Bank’s obligations under this Agreement shall be suspended as of the date of
service unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Bank may in its discretion (i) pay the Employee all or part
of the compensation withheld while its contract obligations were suspended,
and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(b) If
the
Employee is removed and/or permanently prohibited from participation in the
conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) or (g)(1)), the
employment of Employee and all obligations of the Bank under this Agreement
shall terminate as of the effective date of the order.
(c) If
the
Bank is in default (as defined in Section 3(x)(1) of the Federal Deposit
Insurance Act), the employment of Employee and all obligations of the Bank
under
this Agreement shall terminate as of the date of default.
(d) The
employment of Employee and all obligations of the Bank under this Agreement
shall be terminated, except to the extent it is determined that continuation
of
this Agreement is necessary for the continued operation of the Bank: (i) by
the
Director of the Federal Deposit Insurance Corporation (the “Director”) or his or
her designee, at the time the Federal Deposit Insurance Corporation enters
into
an agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the Federal Deposit
6
Insurance
Act; or (ii) by the Director or his or her designee at the time the Director
or
his or her designee approves a supervisory merger to resolve problems related
to
operation of the Bank or when the Bank is determined by the Director to be
in an
unsafe or unsound condition.
13. Remedies.
Given
the important nature of the services Employee will provide to the Bank, the
scope and nature of the Bank’s business and the sensitive nature of the
information and functions Employee will have with the Bank, Employee
acknowledges that the limitations contained herein in paragraphs 9 and 11 are
reasonable. In the event of an actual or threatened breach by Employee of the
provisions of paragraphs 9 and 11, the Bank shall be entitled to an injunction
restraining Employee from such breach in addition to recovery of monetary
damages together with the costs and expenses and reasonable attorney’s fees and
expenses incurred by Bank in seeking and enforcement such provisions in
paragraphs 9 and 11. If Employee violates any covenants contained in paragraphs
9 and 11, the terms and the covenants violated shall be automatically extended
to a like period of time from the date on which Employee ceases such violation
or from the date of entry by a court of competent jurisdiction of any order
or
judgment enforcing such covenant, whichever period is later.
14. Tax
Liability.
It is
the intention of Bank and Employee that any and all payments Employee receives
pursuant to this Agreement are reasonable compensation for services provided
by
Employee to Bank during the term hereof, and together with any other payments
due to Employee from Bank or its successor (“other payments”), shall not
constitute “excess parachute payments” within the meaning of Sections 280G and
4999 of the Internal Revenue Code of 1986, as amended. If the Internal Revenue
Service or the independent accountants acting as auditors for Bank or its
successor determine that the compensation by itself or together with other
payments constitute “excess parachute payments, “ the payments hereunder shall
be reduced to the maximum amount which may be paid without constituting the
payments as “excess parachute payments.” If, regardless of the aforesaid
adjustment, the Internal Revenue Service determines that the payments constitute
“excess parachute payments” under Sections 280G and 4999 of the Code, Bank shall
assume responsibility for the loss of any tax deductions, and Employee shall
assume responsibility for payment of any income and excise taxes attributable
to
the excess parachute payment.
15. Successors
and Assigns.
The Bank
may assign this Agreement or any part hereof; but Employee shall not assign
this
Agreement or any part hereof. This Agreement shall be binding upon and inure
to
the benefit of any successor, assign, heir or personal representative of either
party hereto.
16. Covenants
and Promises Survive Termination of Employment.
The
Employee agrees that the obligations, duties and covenants contained in
paragraphs 9, 11 and 14 shall survive termination of this Agreement and
employment.
17. Severability.
The
parties agree that each and every paragraph, sentence, clause, term, word and
provisions of this Agreement is severable and that, in the event any portion
of
this Agreement is adjudged to be invalid or unenforceable, the remaining
portions thereof shall remain in full force and effect to the fullest extent
permitted by law. If any part of paragraph 11 of this Agreement is for any
reason excessively broad as to time duration or geographic scope, activity
or
subject, it will be construed by a court by limiting or reducing it so as to
be
7
enforceable
to the extent compatible with applicable law as it then exists.
18. Miscellaneous.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, and all of such together shall constitute one and
the
same instrument. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. Governing
Law.
This
Agreement shall be interpreted in accordance with and be governed exclusively
by
the laws of the State of Indiana. The parties expressly agree that any and
all
actions concerning any dispute arising from this Agreement shall be filed and
maintained only in a state court of competent jurisdiction sitting in the Xxxxxx
County State of Indiana or the federal U.S. District Court, Southern District
of
Indiana and each party consents to such jurisdiction.
20. Waiver.
No
waiver by the Bank, of any breach hereunder by the Employee shall be deemed
or
construed as a waiver of any other breach or of any subsequent breach. The
Employee acknowledges that the Bank for business reasons or otherwise, may
waive
a breach by another individual of provisions similar to the provisions agreed
to
by the Employee in this Agreement. The Employee acknowledges that no waiver
by
the Bank, of any other individuals’ breach of provisions similar to the
provisions in this Agreement shall be construed as a waiver of any breach by
the
Employee of this Agreement.
21. Notices.
All
notices required to be given under the terms of this Agreement shall be in
writing and shall be deemed to be given when delivered personally or sent by
registered or certified mail, facsimile transmission, or electronic mail to
the
last known residence address Employee has on file with the Bank, or in case
of
Bank, to the business address of the Bank.
22. Entire
Agreement.
This
Agreement constitutes the complete agreement between the parties with regard
to
the subject matter addressed herein, shall supersede any and all previous
agreements and/or commitments, whether oral or written, between the parties
and
shall not be amended or modified absent an agreement signed by both parties.
The
parties further agree that no verbal or other statements, discussions, or
impressions, other than those provisions contained in this Agreement, have
been
relied upon by either party in executing this Agreement.
8
IN
WITNESS WHEREOF, the parties have signed, or caused a duly authorized agent
thereof to sign, this Agreement on their behalf and thereby acknowledge their
intent to be bound by its terms and conditions.
MainSource
Bank-Crawfordsville
|
||||
By:
|
By:
|
|||
Xxxx
X. Xxxxxxx
|
Name:
|
|||
Title:
|
||||
Date:
|
Date:
|
|||
“Employee”
|
“Bank”
|
MainSource
Financial Group, Inc.
|
||||
|
By:
|
|||
|
|
Xxxxx X. Xxxxx, Xx., President | ||
|
Date:
|
|||
|
“Parent”
|
9
Exhibit
8.01(i)(2)
EMPLOYMENT
AGREEMENT
This
Employment Agreement, effective as of _________________, 20___ (the “Effective
Date”), among MainSource Bank-Crawfordsville, an Indiana commercial bank
(“Bank”), J. Xxx Xxxxxx (“Employee”) and MainSource Financial Group, Inc., an
Indiana corporation (“Parent”).
RECITALS
A. The
Bank
is engaged in the business of commercial banking, including but not limited
to
the promotion of savings through the solicitation of deposits from the general
public, the promotion of home ownership through the origination of mortgage
loans primarily to finance the purchase, construction or improvement of
residential real estate and the origination of loans for automobile purchases,
commercial and personal purposes (“Business”).
B. The
Bank
desires to retain, by contract, a qualified individual to serve in an executive
management position with the Bank (“Management Position”).
C. Employee
has knowledge and experience to serve in such capacity and the parties wish
to
confirm their employment relationship pursuant to the terms and conditions
of
this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants contained
herein, and other good and valuable consideration, the parties agree as
follows:
1. Employment.
The Bank
hereby employs Employee in a Management Position and Employee hereby accepts
employment, upon the terms and conditions hereinafter set forth.
2. Term.
Subject
to the provisions for termination as provided in paragraphs 10 and 12 hereof,
the term of this Agreement shall commence on the Effective Date hereof and
continue for a period of one (1) year from such Effective Date. The term of
the
Agreement may not be extended by election of Employee.
3. Duties.
During
the term hereof, Employee shall serve in a Management Position of the Bank
and
shall to the best of his efforts manage, direct and administer the operations
of
the Bank including, but not limited to, such matters as accounting, operations,
conversion to a commercial bank, business development, and various other
functions as assigned from time to time. Employee shall report to the President
of the Bank. The precise services, duties and authority of Employee may be
further defined, extended or curtailed from time to time at the discretion
of
the President of the Bank; provided, however, that such services, duties and
authority shall always be consistent with those which are customary for his
position with the Bank. The Employee shall exercise his duties of employment
in
a manner consistent with and in compliance with the requirements of all
applicable statutes of the United States of America and the State of Indiana
and
of the administrative rules and regulations issued thereunder and of the
procedures, rules and
1
regulations
of the applicable regulatory agencies of the United States of America and the
State of Indiana. Similarly, Employee shall exercise his supervision and control
over the employees of the Bank that report to him in such a manner as to
encourage them to exercise their duties of employment so as to meet the
standards provided by the previous sentence of this paragraph.
4. Extent
of Services.
Employee, subject to the control of the President of the Bank, shall have the
power and authority commensurate and necessary to his position with the Bank.
Employee shall devote his entire employable time, attention and best efforts
to
the Business of the Bank and shall not, without the consent of the President
of
the Bank, which consent shall not be unreasonably withheld, during the term
of
this Agreement, be actively engaged in any other business activity, whether
or
not such business activity is pursued for gain, profit or other pecuniary
advantage; but this shall not be construed as preventing Employee from investing
his personal assets in such form or manner as will not require any services
on
the part of Employee in the operation of the affairs of the enterprise in which
such investments are made. Employee shall be a full-time employee of the Bank
and shall devote at least forty (40) hours per week (excused absences and
vacation periods counted as hours worked for this purpose) to the affairs of
the
Bank, unless the President of the Bank consents to a shorter
work
period. During the term of his employment hereunder, the Employee shall not
provide any banking or bank-related services or solicit or engage in any banking
or bank-related business otherwise than on behalf of the Bank or an affiliate
of
the Bank.
5. Compensation.
Employee
shall be compensated for services rendered hereinunder during the term hereof
as
follows:
(a) As
an
incentive for Employee to enter into this Agreement for the term hereof, the
Bank, within sixty (60) days following the execution of this Agreement, shall
pay Employee, in a lump sum Ten Thousand Dollars ($10,000.00), subject to
withholding of taxes and other customary amounts.
(b) Employee
shall receive an annualized base salary of One Hundred Thousand Dollars
($100,000.00). Base salary hereunder shall be payable in equal periodic
installments consistent with Bank’s payroll practices and subject to withholding
of taxes and other customary amounts.
6. Fringe
Benefits.
(a)
Subject to Employee’s payment of the employee portion of the costs of coverage,
Employee shall be entitled to participate in the employee benefit and welfare
plans, retirement plans and insurance programs offered by the Bank, or which
it
may adopt from time to time, in accordance with the terms and conditions of
any such plans and programs, for its management or supervisory personnel
generally. Nothing herein shall be construed so as to prevent the Bank from
modifying or terminating any employee benefit or welfare plans or programs
or
employee fringe benefits it may adopt from time to time.
(b) Employee
shall be entitled to at least two hundred seventy-six (276) hours of paid time
off for each year during the term hereof administered in accordance with the
Bank’s policies.
2
(c) The
Bank
shall reimburse Employee for all reasonable expenses he may incur for promoting
the Business, including expenses for entertainment, travel, and similar items,
subject to such limits and conditions as the Bank or Parent may reasonably
establish. The Bank shall also pay for Employee’s membership in the
Crawfordsville Country Club during the term of this Agreement.
7. Confidentiality.
(a) The
Bank
possesses and will continue to possess information which has been created,
discovered, developed by or otherwise become known to the Bank (including
information discovered or made available by subsidiaries, affiliates or joint
ventures of the Bank or in which property rights have been assigned or otherwise
conveyed to the Bank) which information (whether in print or electronic format)
has commercial value to the Bank, including but not limited to trade secrets,
innovations, processes, computer codes, data, know how, improvements,
discoveries, developments, techniques, marketing plans, strategies, costs,
customers, and client lists, or any information Employee has reason to know
the
Bank would like to treat as confidential for any purpose, such as maintaining
a
competitive advantage or avoiding undesired publicity, whether or not developed
by Employee (“Confidential Information”). Unless previously authorized in
writing or instructed in writing by the Bank, Employee will not, at any time,
disclose to others, or use, or allow anyone else to disclose or use any
Confidential Information (except as may be necessary in the performance of
Employee’s employment with the Bank), unless and until and then only to the
extent that, such Confidential Information has become ascertainable or obtained
from public or published sources or was available to the Bank on a
non-confidential basis prior to any disclosure, provided that the source of
such
material is or was not bound by any obligation of confidentiality to the
Bank.
(b) Upon
termination of employment to the extent he has not already done so, the Employee
will deliver to the Bank any and all Information and Property (as herein
defined) then in his possession or subject to his control. For purposes of
this
sub-section, the term “Information and Property” means and includes (i) all
files, records, reports, memoranda and other documents, whether written or
electronic, that the Employee received, prepared, helped prepare, directed
the
preparation of, maintained or kept in connection with his services as a
director, officer or employee of the Bank or any of its affiliates; (ii) all
door and file keys, identification cards or badges, credit cards, computer
hardware, computer software, computer printers, computer access codes and
similar items issued or made available to the Employee in connection with his
service as a director, officer or employee of the Bank or any of its affiliates;
(iii) all documents, whether written or electronic, containing any trade secrets
(as defined in Indiana Code §24-2-3-2) of the Bank or any of its affiliates; and
(iv) all documents, whether written or electronic, containing non-public
information regarding the Bank or any of its affiliates or its customers or
employees, the use or disclosure of which might be adverse to the
3
best
interests of such entity or its business. The Employee expressly agrees and
promises that he will not retain any copies, duplicates, reproductions, or
excerpts of any Information and Property. The Employee acknowledges that this
obligation is continuing and agrees promptly to deliver to the Bank any
subsequently discovered Information and Property and any subsequently discovered
copies, duplicates or reproductions of, or excerpts from, Information and
Property. In the case of electronic data contained in files residing on the
Employee’s personally-owned computers, the Employee shall permit access to such
computers to Bank representatives to delete all such files (including any drives
or disks associated therewith) that can be located easily and delete all other
such files (including any drives or disks associated therewith) as and when
they
are discovered. Notwithstanding anything else in this subparagraph (i), the
Employee may retain documents concerning any benefit plans or employment
policies from which he may be or become entitled to benefits and documents
concerning his rights under this Agreement.
8. Termination.
(a) The
Bank
may terminate this Agreement during the term hereof for just cause upon written
notice to Employee.
(b) This
Agreement may also be terminated (i) whenever the Bank and Employee shall
mutually agree to a termination in writing, (ii) upon the resignation or death
of Employee, (iii) pursuant to paragraph 10, or (iv) upon expiration of the
term
hereof.
(c) Upon
the
termination of this Agreement by the Bank for just cause as defined in
subparagraph (d), or pursuant to paragraph 10, or upon the resignation or death
of Employee, Employee or his personal representative shall be entitled to
receive only the compensation accrued but unpaid as of the date of the
termination hereof and shall not be entitled to any compensation following
the
termination date or additional compensation except as expressly provided in
this
Agreement.
(d) Just
cause shall include, but not be limited to:
(i) Employee’s
misuse or conviction of embezzlement of funds belonging to the Bank, conviction
of, or plea by Employee of nolo contendre to, any felony or crime involving
fraud or moral turpitude, or use of alcohol or drugs or other conduct in such
a
manner as will injure or adversely effect the Bank or its employees, customers,
agents, officers or directors;
(ii) Employee’s
absence from his employment for a period in excess of paid time off as provided
in paragraph 6(b) for any reasons other than family and medical leave under
the
Bank’s policies;
(iii) Employee’s
absence from employment or inability to perform his duties hereunder as a result
of physical or mental disability for a period in excess of family and medical
leave under the Bank’s policies;
(iv) Employee’s
failure to perform substantially his duties with the Bank, his intentional
breach of the provisions of this Agreement, his gross negligence or willful
4
malfeasance
in discharging his obligations hereunder and such acts and their consequences
are not remedied within ten (10) days (or such longer reasonable period of
time
designated by the Bank) after written notice hereof has been given to
Employee.
9. Non-Competition.
Employee
acknowledges that the services he will render to the Bank under this Agreement
will be of a special and unusual character, with a unique value to the Bank.
Employee has served in an executive management position with and was a
shareholder of the banking entity merged into the Bank and has acquired unique
and invaluable information about and developed relationships with customers
who
will continue to use the services of Bank and for which he will continue to
receive benefit. Employee further acknowledges the scope of the Bank’s Business
and that any limitations on his post employment activities are necessary to
protect the Bank’s Business because of its scope. In view of the unique value to
the Bank of the services of Employee, his prior relationship with the
predecessor of the Bank, because of the confidential information of the Bank
obtained by or disclosed to Employee, and as a material inducement to the Bank
to enter into this Agreement and to provide Employee the compensation and
benefits stated herein, including the signing bonus, and other good and valuable
consideration, Employee covenants and agrees that for the period of two (2)
years following the date of termination of employment with Bank for any reason,
Employee will not, directly or indirectly, either as a principal, agent,
manager, partner, director, officer, consultant or shareholder, on his behalf
or
on behalf of any other entity:
(a) in
Xxxxxxxxxx County Indiana, or the counties in the State of Indiana which are
contiguous to Xxxxxxxxxx Indiana, own, manage, operate, control, be employed
by,
participate in, render assistance to or be connected in any manner with the
ownership, management, representation, operation or control of any entity which
competes with the Business of the Bank at the time of termination of employment
with Bank;
(b) solicit,
entice or encourage any employee of the Bank to leave employment with the Bank
and to not hire or employ (or cause and/or assist, whether directly or
indirectly any third party to hire or employ) any such employee;
and
(c) contact,
solicit, encourage or induce any customers of the Bank to obtain business and/or
services from any entity (other than the Bank) which is engaged in any activity
competitive with the Business of the Bank.
The
term
“customer” shall mean any person or entity to which the Bank has provided
services during the one (1) year period prior to the date of termination or
persons or entities targeted by the Bank or contacted for the purpose of selling
such goods or services during such one (1) year period.
10. Regulatory
Provisions.
(a) If
the
Employee is suspended and/or temporarily prohibited from participating in the
conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)), the
Bank’s obligations under this Agreement shall be suspended as of the date of
service unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Bank may in its
5
discretion
(i) pay the Employee all or part of the compensation withheld while its contract
obligations were suspended, and (ii) reinstate (in whole or in part) any of
its
obligations which were suspended.
(b) If
the
Employee is removed and/or permanently prohibited from participation in the
conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) or (g)(1)), the
employment of Employee and all obligations of the Bank under this Agreement
shall terminate as of the effective date of the order.
(c) If
the
Bank is in default (as defined in Section 3(x)(1) of the Federal Deposit
Insurance Act), the employment of Employee and all obligations of the Bank
under
this Agreement shall terminate as of the date of default.
(d) The
employment of Employee and all obligations of the Bank under this Agreement
shall be terminated, except to the extent it is determined that continuation
of
this Agreement is necessary for the continued operation of the Bank: (i) by
the
Director of the Federal Deposit Insurance Corporation (the “Director”) or his or
her designee, at the time the Federal Deposit Insurance Corporation enters
into
an agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the Federal Deposit Insurance Act;
or
(ii) by the Director or his or her designee at the time the Director or his
or
her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director to be
in an
unsafe or unsound condition.
11. Remedies.
Given
the important nature of the services Employee will provide to the Bank, the
scope and nature of the Bank’s business and the sensitive nature of the
information and functions Employee will have with the Bank, Employee
acknowledges that the limitations contained herein in paragraphs 7
and 9 are reasonable. In the event of an actual or threatened breach
by
Employee of the provisions of paragraphs 7 and 9, the Bank shall be
entitled to an injunction restraining Employee from such breach in addition
to
recovery of monetary damages together with the costs and expenses and reasonable
attorney’s fees and expenses incurred by Bank in seeking and enforcement such
provisions in paragraphs 7 and 9. If Employee violates any covenants contained
in paragraphs 7 and 9, the terms and the covenants violated shall be
automatically extended to a like period of time from the date on which Employee
ceases such violation or from the date of entry by a court of competent
jurisdiction of any order or judgment enforcing such covenant, whichever period
is later.
12. Tax
Liability.
It is
the intention of Bank and Employee that any and all payments Employee receives
pursuant to this Agreement are reasonable compensation for services provided
by
Employee to Bank during the term hereof, and together with any other payments
due to Employee from Bank or its successor (“other payments”), shall not
constitute “excess parachute payments” within the meaning of Sections 280G and
4999 of the Internal Revenue Code of 1986, as amended. If the Internal Revenue
Service or the independent accountants acting as auditors for Bank or its
successor determine that the compensation by itself or together with other
payments constitute “excess parachute payments, “ the payments hereunder shall
be reduced to the maximum amount which may be paid without constituting the
payments as “excess parachute payments.” If, regardless of the aforesaid
adjustment, the
6
Internal
Revenue Service determines that the payments constitute “excess parachute
payments” under Sections 280G and 4999 of the Code, Bank shall assume
responsibility for the loss of any tax deductions, and Employee shall assume
responsibility for payment of any income and excise taxes attributable to the
excess parachute payment.
13. Successors
and Assigns.
The Bank
may assign this Agreement or any part hereof; but Employee shall not assign
this
Agreement or any part hereof. This Agreement shall be binding upon and inure
to
the benefit of any successor, assign, heir or personal representative of either
party hereto.
14. Covenants
and Promises Survive Termination of Employment.
The
Employee agrees that the obligations, duties and covenants contained in
paragraphs 7, 9 and 12 shall survive termination of this Agreement and
employment.
15. Severability.
The
parties agree that each and every paragraph, sentence, clause, term, word and
provisions of this Agreement is severable and that, in the event any portion
of
this Agreement is adjudged to be invalid or unenforceable, the remaining
portions thereof shall remain in full force and effect to the fullest extent
permitted by law. If any part of paragraph 9 of this Agreement is for
any
reason excessively broad as to time duration or geographic scope, activity
or
subject, it will be construed by a court by limiting or reducing it so as to
be
enforceable to the extent compatible with applicable law as it then
exists.
16. Miscellaneous.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, and all of such together shall constitute one and
the
same instrument. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Governing
Law.
This
Agreement shall be interpreted in accordance with and be governed exclusively
by
the laws of the State of Indiana. The parties expressly agree that any and
all
actions concerning any dispute arising from this Agreement shall be filed and
maintained only in a state court of competent jurisdiction sitting in the Xxxxxx
County State of Indiana or the federal U.S. District Court, Southern District
of
Indiana and each party consents to such jurisdiction.
18. Waiver.
No
waiver by the Bank, of any breach hereunder by the Employee shall be deemed
or
construed as a waiver of any other breach or of any subsequent breach. The
Employee acknowledges that the Bank for business reasons or otherwise, may
waive
a breach by another individual of provisions similar to the provisions agreed
to
by the Employee in this Agreement. The Employee acknowledges that no waiver
by
the Bank, of any other individuals’ breach of provisions similar to the
provisions in this Agreement shall be construed as a waiver of any breach by
the
Employee of this Agreement.
19. Notices.
All
notices required to be given under the terms of this Agreement shall be in
writing and shall be deemed to be given when delivered personally or sent by
registered or certified mail, facsimile transmission, or electronic mail to
the
last known residence address Employee has on file with the Bank, or in case
of
Bank, to the business address of the Bank.
20. Entire
Agreement.
This
Agreement constitutes the complete agreement between
7
the
parties with regard to the subject matter addressed herein, shall supersede
any
and all previous agreements and/or commitments, whether oral or written, between
the parties and shall not be amended or modified absent an agreement signed
by
both parties. The parties further agree that no verbal or other statements,
discussions, or impressions, other than those provisions contained in this
Agreement, have been relied upon by either party in executing this
Agreement.
IN
WITNESS WHEREOF, the parties have signed, or caused a duly authorized agent
thereof to sign, this Agreement on their behalf and thereby acknowledge their
intent to be bound by its terms and conditions.
MainSource
Bank-Crawfordsville
|
||||
By:
|
By:
|
|||
J.
Xxx Xxxxxx
|
Name:
|
|||
Title:
|
||||
Date:
|
Date:
|
|||
“Employee”
|
“Bank”
|
MainSource
Financial Group, Inc.
|
||||
|
By:
|
|||
|
|
Xxxxx X. Xxxxx, Xx., President | ||
|
Date:
|
|||
|
“Parent”
|
8
Exhibit
8.01(l)
[B&T
Letterhead]
_________________
MainSource
Financial Group, Inc.
000
Xxxxx
Xxxxxxxx
Xxxxxxxxxx,
XX 00000
Re:
|
Merger
of Union Community Bancorp with and into MainSource Financial Group,
Inc.
|
Gentlemen:
We
have
acted as counsel to Union Community Bancorp, an Indiana corporation (“UCBC”),
and Union Federal Savings and Loan Association, a federal savings association
and wholly-owned subsidiary of UCBC (“Union Federal”, and together with UCBC,
the “UCBC Entities”) in connection with the preparation, execution, and delivery
of that certain Agreement and Plan of Merger dated ________________ (the “Merger
Agreement”), by and between MainSource Financial Group, Inc., an Indiana
corporation (“MainSource”), UCBC and Union Federal, pursuant to which UCBC will
be merged with and into MainSource effective as of __________________ (the
“Effective Date”), and pursuant to which Union Federal will be merged with and
into MSBC effective as of the Effective Date. We have been asked to
furnish this opinion to you on behalf of UCBC in connection with the Merger
Agreement and pursuant to Section 8.01(l) of the Merger Agreement.
Unless
separately defined herein, the capitalized words and phrases used herein shall
have the meanings ascribed to them in the Merger Agreement.
In
connection with the foregoing, we have been provided with and have reviewed
originals or copies, certified or otherwise identified to our satisfaction,
of
the following documents:
A.
|
The
Merger Agreement.
|
B.
|
The
Articles of Merger, with related Plan of Merger, respecting the merger
of
UCBC with and into MainSource.
|
C.
|
The
Articles of Merger respecting the merger of Union Federal with and
into
MainSource Bank-Crawfordsville
(“MSBC”).
|
D.
|
The
Agreement and Plan of Merger between Union Federal and MSBC dated
_______________.
|
E.
|
The
Employment Agreements between MSBC and each of Xxxx X. Xxxxxxx and
J. Xxx
Xxxxxx.
|
F.
|
The
Articles of Incorporation and By-laws of UCBC and all amendments
thereto.
|
G.
|
The
Charter and Bylaws of Union Federal and all amendments thereto (together
with the Articles of Incorporation and By-laws of UCBC, the “UCBC Entities
Organizational Documents”).
|
H.
|
A
Certificate of Existence from the Office of the Indiana Secretary
of State
for UCBC dated ___________.
|
I.
|
A
Certificate of Good Standing respecting Union Federal issued by the
Office
of Thrift Supervision.
|
J.
|
Resolutions
adopted by the Board of Directors of each of UCBC and Union Federal,
shareholders of UCBC and by the sole shareholder of Union Federal,
each
authorizing the transactions contemplated by the Merger
Agreement.
|
K.
|
Such
other documents and instruments as we have deemed necessary or appropriate
for the purposes of rendering the opinions set forth
herein.
|
The
documents referred to in Paragraphs A through D above are sometimes
referred to collectively herein as the “Transaction Documents.”
For
purposes of this opinion, we have examined the above documents and have made
such examination of Indiana law and the laws of the United States as we have
deemed necessary and appropriate. We have relied upon the above documents
as to matters of fact. We have not independently checked or verified
the
accuracy or completeness of the information set forth or certified in such
documents.
In
connection with this opinion, we advise you that we have not made any special
examination of and are not expressing any opinion regarding the affairs or
financial condition of the UCBC Entities except as otherwise expressly stated
herein.
Except
as
otherwise expressly stated herein, this opinion should in no way be construed
as
passing upon the accuracy or completeness of any of the representations or
warranties which may be or have been made to you in connection with the
Transaction Documents or any other instrument and agreement contemplated by
the
Transaction Documents or on any other matters, legal or otherwise, not
specifically covered herein. In examining the above listed items, we have
assumed with respect to all documents examined
by
us the
genuineness of all signatures, the authenticity of all documents submitted
to us
as originals, and the conformity to the originals of all documents submitted
to
us as certified, conformed, photostatic or telefacsimile copies. In
addition, in making our examination of the documents described herein which
have
been executed by parties other than directors and officers of the UCBC Entities,
we have assumed that all such other parties had the power to enter into and
perform all obligations thereunder, that all such other parties were duly
authorized by all requisite action to execute, deliver and perform their
respective obligations thereunder, that all signatories on all such documents
were duly qualified and incumbent parties with the proper authority to execute
all such documents, and the due execution and delivery of all such documents
and
the validity and binding effect of all such documents on such other
parties.
As
to
certain facts material to our opinion which we did not independently establish
or verify, we have been furnished with, and have relied upon (i) certificates
of
officers and other representatives of the UCBC Entities delivered to us in
connection with this opinion (the “Officer’s Certificates”), and (ii) the
representations and warranties of UCBC set forth in the Merger Agreement.
With respect to matters relating to the organization and existence of UCBC
addressed in the first paragraph below, we have obtained and relied upon a
Certificate of Existence from the Office of the Indiana Secretary of State
for
UCBC, and with respect to matters relating to the organization and existence
of
Union Federal addressed in the second paragraph below, we have obtained and
relied upon a Certificate of Good Standing issued by the Office of Thrift
Supervision. Other than as specifically set forth herein, it is understood
that we have not undertaken any independent investigation to determine the
existence or absence of such facts.
As
used
herein, “to our knowledge” or words or phrases of similar import shall mean (i)
we have relied, without any independent investigation or inquiry, solely upon
the Officer’s Certificates, and (ii) during the course of our representation of
the UCBC Entities, no information that would give us current actual knowledge
of
the inaccuracy of such statement has come within the conscious awareness of
lawyers in our office who are actively involved in negotiating the Transaction
Documents or preparing documents in furtherance of the transaction which is
the
subject of the Transaction Documents. Information shall not be deemed
to
be within our knowledge if such information might have been revealed if there
had been undertaken a canvass of all lawyers within this firm or a general
search of the firm’s files.
We
are
qualified to practice law in the State of Indiana and for purposes of this
letter and this transaction, we do not purport to be experts on, or to express
an opinion herein concerning, the laws of any jurisdiction other than the State
of Indiana and the laws of the United States of general application to
transactions in the State of Indiana. For purposes of rendering this
opinion, we have assumed that all matters of law relevant to the Transaction
Documents and the transactions contemplated thereby will be governed by the
laws
of the State of Indiana and the federal laws of the United States.
We
express no opinion as to state or federal securities or tax laws.
For
purposes of this opinion, we also have assumed the following: (i) the
legal capacity of natural persons; (ii) that MainSource and MSBC are duly
organized and validly
existing;
(iii) that the conduct of all of the parties to the Transaction Documents and
the other instruments and agreements contemplated by the Transaction Documents
has complied with any requirement of good faith, fair dealing, and
conscionability; (iv) that there has been no mutual mistake of fact or
misunderstanding, fraud, duress, or undue influence; and (v) that the execution,
delivery, and performance of the Transaction Documents and the other instruments
and agreements contemplated by the Transaction Documents will not violate,
contravene, conflict with or result in a breach of (A) any statute, rule,
regulation, ordinance or other law of any jurisdiction other than the State
of
Indiana or the federal government of the United States, or (B) any license,
judgment, order, writ, injunction or decree of any court, arbitrator or
governmental agency or body or any indenture agreement or instrument to which
either of the UCBC Entities is a party or by which either of the UCBC Entities
or its properties are bound, the existence of which is not known to
us.
Based
solely on the foregoing examination, and subject to and relying on the
assumptions and other matters referred to above and subject to the limitations
and qualifications contained herein, we are of the opinion that:
1.
|
UCBC
is a corporation duly organized and validly existing under the laws
of the
State of Indiana and has all requisite corporate power and authority
(including all licenses, franchises, permits and other governmental
authorizations which are legally required) to engage in the business
and
activities now conducted by it.
|
2.
|
Union
Federal is a federal savings association duly organized and validly
existing under the laws of the United States, and has full power
and
authority (including all licenses, franchises, permits and other
governmental authorizations which are legally required) to engage
in the
business activities now conducted by
it.
|
3.
|
Each
of the UCBC Entities has full right, legal power, and authority to
execute
and deliver the Transaction Documents to which it is a party, to
perform
its obligations under the Transaction Documents, and to consummate
the
transactions contemplated thereby and to be consummated thereby.
The
Transaction Documents and the transactions contemplated thereby have
been
duly authorized by each of the UCBC Entities, as applicable and as
necessary. The Transaction Documents to which they are party
have
been duly executed and delivered by the UCBC Entities, respectively,
and
constitute valid and binding agreements of the UCBC Entities, enforceable
against the UCBC Entities in accordance with their
terms.
|
4.
|
The
execution, delivery, and performance of the Transaction Documents
by the
UCBC Entities and the consummation by the UCBC Entities of the
transactions therein contemplated will not, directly or indirectly,
(i)
violate, conflict with or result in the breach of any provision of
the
UCBC Entities Organizational Documents or (ii) violate any law, rule
or
regulation applicable to, or, to our knowledge, any judgment, order,
or
decree which is binding upon, the UCBC
Entities.
|
The
opinions expressed above are subject to the following
qualifications:
A.
|
Our
opinions with respect to the legality, validity, binding effect,
and
enforceability of any document or agreement referenced above and
any
rights granted to MainSource or MSBC pursuant to any such document
or
agreement are subject to the effect of any applicable state and/or
federal
bankruptcy, insolvency, readjustment of debt, receivership, fraudulent
conveyance and equitable subordination, reorganization, moratorium,
equity
of redemption, or similar laws now or hereafter in effect governing
or
affecting debtors’ and creditors’ rights or remedies generally and to the
effect of general principles of equity and matters of public policy
(regardless of whether considered in a proceeding in equity or at
law),
including (without limitation) concepts of materiality, reasonableness,
good faith, and fair dealing. Without limiting the generality
of the
foregoing exceptions, we express no opinion with respect to the
availability of the remedies of specific performance, injunctive
relief or
of any other equitable remedy.
|
B.
|
We
have assumed that the execution, delivery, and performance of the
Transaction Documents by MainSource and MSBC do not and will not
contravene, conflict with, violate or result in breach of (i) any
law,
statute or ordinance of any jurisdiction applicable solely to MainSource
and MSBC and not to the UCBC Entities, (ii) any provision of the
constituent documents of MainSource or MSBC, or (iii) any approvals,
consents, licenses, orders, writs, judgments, injunctions or decrees
of
any court, arbitrator, administrative agency or other governmental
authority, or any indenture, mortgage, deed of trust, agreement,
lease or
other instrument to which MainSource or MSBC are
parties.
|
C.
|
We
express no opinion that the structure of the transaction or the
performance of the Transaction Documents is or is not in compliance
with
professional accounting statutes (state or federal), and all rules,
regulations, interpretations, statements, ethical codes, professional
standards, and licensing requirements relating to accountancy, whether
promulgated by any agency of the State of Indiana or any local or
national
accounting organization or
association.
|
D.
|
We
wish to advise you that, under Indiana law, contractual indemnification
and hold harmless provisions may not be enforceable to the extent
the
contract does not clearly and unequivocally specify that the indemnity
or
exculpation covers claims, losses, expenses or other liabilities
arising
or alleged to arise, in whole or in part, from the negligence, strict
liability or other acts or omissions of the indemnified party.
Moreover, indemnification (and presumably exculpation) clauses generally
are strictly construed and the terms must be set forth clearly and
unequivocally. Further, indemnification or exculpation as
against
certain claims, losses, expenses or other liabilities arising as
the
result of the indemnified party’s violation of federal or state statutes,
or the indemnified party’s own tort liability when performing a public or
quasi-public duty, or other acts or omissions, may be considered
contrary
to the public policy and, therefore, invalid and/or
unenforceable.
|
E.
|
We
express no opinion as to the enforceability of provisions of the
Transaction Documents relating to (i) consents or waivers as to
jurisdiction, (ii) consents or waivers of service of process, (iii)
the
validity or enforceability of any purported waiver or purported consent
relating to any rights of the UCBC Entities or duties owed thereto,
existing as a matter of law, (iv) self-help provisions, and (v) waiver
of
Constitutional rights.
|
F.
|
We
express no opinion as to any provisions in the Transaction Documents
insofar as they purport to provide that any party (i) may have rights
to
the payment or reimbursement of attorneys’ fees and litigation expenses,
except to the extent that a court determines that such fees are reasonable
and such provision is enforceable, (ii) may have rights to the payment
of
any sum of liquidated damages, or (iii) waives any right or
defense.
|
G.
|
This
opinion is limited to matters expressly stated herein and no opinion
is
inferred or may be implied beyond the matters expressly stated.
This
opinion does not constitute a guarantee of, or security for, the
obligations created pursuant to the Transaction Documents or any
of the
other matters referred to or opined upon herein, and by rendering
this
opinion, we are not guaranteeing or insuring payment or performance
of
said transaction.
|
H.
|
This
opinion is based on and relies upon the current facts and the current
status of the law, and is subject in all respects to, and may be
limited
by, after the date hereof, changes in the facts, further rules,
regulations and legislation, as well as developing caselaw.
We
assume no obligation to notify any person of changes in facts or
law
occurring or coming to our attention after the delivery of this opinion
letter, whether or not deemed
material.
|
I.
|
The
opinions expressed herein represent our reasonable judgment as to
certain
matters of law based upon the facts presented or assumed and should
not be
considered or construed as a guarantee. Actions and reliance
hereon
are subject to the final business judgment of the parties acting
in
reliance.
|
This
letter is solely for your information in connection with the transaction
specified in the first paragraph of this letter and may be relied upon only
by
you in connection with such transaction. This letter may not be quoted
in
whole or in part by any entity, nor is it to be filed with any governmental
agency or any other person or institution without the prior written consent
of
this firm.
Sincerely,
XXXXXX
& XXXXXXXXX LLP
Exhibit
8.02(l)
[BM&E
Letterhead]
_________________
Union
Community Bancorp
000
Xxxx
Xxxx Xxxxxx
Xxxxxxxxxxxxxx,
XX 00000
Re:
|
Merger
of Union Community Bancorp with and into MainSource Financial Group,
Inc.
|
Gentlemen:
We
have
acted as counsel to MainSource Financial Group, Inc., an Indiana corporation
(“MainSource”), and MainSource Bank - Crawfordsville, an Indiana commercial bank
and wholly-owned subsidiary of MainSource (“MSBC”, and together with MainSource,
the “MainSource Entities”) in connection with the preparation, execution, and
delivery of that certain Agreement and Plan of Merger dated ________________
(the “Merger Agreement”), by and between MainSource, Union Community Bancorp, an
Indiana corporation (“UCBC”), and Union Federal Savings and Loan Association, a
federal savings association (“Union Federal”), pursuant to which UCBC will be
merged with and into MainSource effective as of __________________ (the
“Effective Date”), and pursuant to which Union Federal will be merged with and
into MSBC effective as of the Effective Date. We have been asked to
furnish this opinion to you on behalf of MainSource in connection with the
Merger Agreement and pursuant to Section 8.02(l) of the Merger
Agreement.
Unless
separately defined herein, the capitalized words and phrases used herein shall
have the meanings ascribed to them in the Merger Agreement.
In
connection with the foregoing, we have been provided with and have reviewed
originals or copies, certified or otherwise identified to our satisfaction,
of
the following documents:
A.
|
The
Merger Agreement.
|
B.
|
The
Articles of Merger, with related Plan of Merger, respecting the merger
of
UCBC with and into MainSource.
|
C.
|
The
Articles of Merger respecting the merger of Union Federal with and
into
MSBC.
|
D.
|
The
Merger Agreement for the Subsidiary Merger between Union Federal
and MSBC
dated _______________.
|
E.
|
The
Employment Agreements between MSBC and each of Xxxx X. Xxxxxxx and
J. Xxx
Xxxxxx.
|
F.
|
The
Articles of Incorporation and By-laws of MainSource and all amendments
thereto.
|
G.
|
The
Articles of Incorporation and Bylaws of MSBC and all amendments thereto
(together with the Articles of Incorporation and By-laws of MainSource,
the “MainSource Entities Organizational
Documents”).
|
H.
|
A
Certificate of Existence from the Office of the Indiana Secretary
of State
for MainSource dated ___________.
|
I.
|
A
Certificate of Existence respecting MSBC issued by the Indiana
Department of Financial Institutions and the Indiana Secretary of
State.
|
J.
|
Resolutions
adopted by the Board of Directors of MainSource and MSBC, and by
the sole
shareholder of MSBC, each authorizing the transactions contemplated
by the
Merger Agreement.
|
K.
|
Such
other documents and instruments as we have deemed necessary or appropriate
for the purposes of rendering the opinions set forth
herein.
|
The
documents referred to in Paragraphs A through D above are sometimes
referred to collectively herein as the “Transaction Documents.”
For
purposes of this opinion, we have examined the above documents and have made
such examination of Indiana law and the laws of the United States as we have
deemed necessary and appropriate. We have relied upon the above documents
as to matters of fact. We have not independently checked or verified
the
accuracy or completeness of the information set forth or certified in such
documents.
In
connection with this opinion, we advise you that we have not made any special
examination of and are not expressing any opinion regarding the affairs or
financial condition of the MainSource Entities except as otherwise expressly
stated herein.
Except
as
otherwise expressly stated herein, this opinion should in no way be construed
as
passing upon the accuracy or completeness of any of the representations or
warranties which may be or have been made to you in connection with the
Transaction Documents or any other instrument and agreement contemplated by
the
Transaction Documents or on any other matters, legal or otherwise, not
specifically covered herein. In examining the above listed items, we
have
assumed with respect to all documents examined by us the genuineness of all
signatures, the authenticity of all documents submitted to us as originals,
and
the conformity to the originals of all documents submitted to us as certified,
conformed, photostatic or telefacsimile copies. In addition, in making
our
examination of the documents described herein which have been executed by
parties other than directors and officers of the MainSource Entities, we have
assumed that all such other parties had the power
to
enter
into and perform all obligations thereunder, that all such other parties were
duly authorized by all requisite action to execute, deliver and perform their
respective obligations thereunder, that all signatories on all such documents
were duly qualified and incumbent parties with the proper authority to execute
all such documents, and the due execution and delivery of all such documents
and
the validity and binding effect of all such documents on such other
parties.
As
to
certain facts material to our opinion which we did not independently establish
or verify, we have been furnished with, and have relied upon (i) certificates
of
officers and other representatives of the MainSource Entities delivered to
us in
connection with this opinion (the “Officer’s Certificates”), and (ii) the
representations and warranties of MainSource set forth in the Merger
Agreement. With respect to matters relating to the organization and
existence of MainSource addressed in the first paragraph below, we have obtained
and relied upon a Certificate of Existence from the Office of the Indiana
Secretary of State for MainSource, and with respect to matters relating to
the
organization and existence of MSBC addressed in the second paragraph below,
we
have obtained and relied upon Certificates of Existence respecting MSBC issued
by the Indiana Department of Financial Institutions and the Indiana Secretary
of
State. Other than as specifically set forth herein, it is understood
that
we have not undertaken any independent investigation to determine the existence
or absence of such facts.
As
used
herein, “to our knowledge” or words or phrases of similar import shall mean (i)
we have relied, without any independent investigation or inquiry, solely upon
the Officer’s Certificates, and (ii) during the course of our representation of
the MainSource Entities, no information that would give us current actual
knowledge of the inaccuracy of such statement has come within the conscious
awareness of lawyers in our office who are actively involved in negotiating
the
Transaction Documents or preparing documents in furtherance of the transaction
which is the subject of the Transaction Documents. Information shall
not
be deemed to be within our knowledge if such information might have been
revealed if there had been undertaken a canvass of all lawyers within this
Firm
or a general search of the Firm’s files.
We
are
qualified to practice law only in the State of Indiana and we do not purport
to
be experts on, or to express an opinion herein concerning, the laws of any
jurisdiction other than the State of Indiana and the laws of the United States
of general application to transactions in the State of Indiana. For
purposes of rendering this opinion, we have assumed that all matters of law
relevant to the Transaction Documents and the transactions contemplated thereby
will be governed by the laws of the State of Indiana and the federal laws of
the
United States. We express no opinion as to state or federal securities
or
tax laws.
For
purposes of this opinion, we also have assumed the following: (i) the
legal capacity of natural persons; (ii) that UCBC and Union Federal are duly
organized and validly existing; (iii) that the conduct of all of the parties
to
the Transaction Documents and the other instruments and agreements contemplated
by the Transaction Documents has complied with any requirement of good faith,
fair dealing, and conscionability; (iv) that there has been no mutual mistake
of
fact or misunderstanding, fraud, duress, or undue influence; and (v) that the
execution, delivery, and performance of the Transaction Documents and the other
instruments and agreements contemplated by the Transaction Documents will not
violate, contravene, conflict with or result in a breach of (A) any statute,
rule, regulation, ordinance or other law of
any
jurisdiction other than the State of Indiana or the federal government of the
United States, or (B) any license, judgment, order, writ, injunction or decree
of any court, arbitrator or governmental agency or body or any indenture
agreement or instrument to which either of the MainSource Entities is a party
or
by which either of the MainSource Entities or its properties are bound, the
existence of which is not known to us.
Based
solely on the foregoing examination, and subject to and relying on the
assumptions and other matters referred to above and subject to the limitations
and qualifications contained herein, we are of the opinion that:
1.
|
MainSource
is a corporation duly organized and validly existing under the laws
of the
State of Indiana and has all requisite corporate power and authority
(including all licenses, franchises, permits and other governmental
authorizations which are legally required) to engage in the business
and
activities now conducted by it.
|
2.
|
MSBC
is a commercial banking association duly organized and validly existing
under the laws of the State of Indiana, and has full power and authority
(including all licenses, franchises, permits and other governmental
authorizations which are legally required) to engage in the business
activities now conducted by it.
|
3.
|
Each
of the MainSource Entities has full right, legal power, and authority
to
execute and deliver the Transaction Documents to which it is a party,
to
perform its obligations under the Transaction Documents, and to consummate
the transactions contemplated thereby and to be consummated thereby.
The Transaction Documents and the transactions contemplated thereby
have
been duly authorized by each of the MainSource Entities, as applicable
and
as necessary. The Transaction Documents to which they are
party have
been duly executed and delivered by the MainSource Entities, respectively,
and constitute valid and binding agreements of the MainSource Entities,
enforceable against the MainSource Entities in accordance with their
terms.
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4.
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The
execution, delivery, and performance of the Transaction Documents
by the
MainSource Entities and the consummation by the MainSource Entities
of the
transactions therein contemplated will not, directly or indirectly,
(i)
violate, conflict with or result in the breach of any provision of
the
MainSource Entities Organizational Documents or (ii) violate any
law, rule
or regulation applicable to, or, to our knowledge, any judgment,
order, or
decree which is binding upon, the MainSource
Entities.
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The
opinions expressed above are subject to the following
qualifications:
A.
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Our
opinions with respect to the legality, validity, binding effect,
and
enforceability of any document or agreement referenced above and
any
rights granted to UCBC or Union Federal pursuant to any such document
or
agreement are subject to the effect of any applicable state and/or
federal
bankruptcy, insolvency, readjustment of debt, receivership, fraudulent
conveyance and equitable subordination, reorganization, moratorium,
equity
of redemption, or similar laws now or hereafter in effect governing
or
affecting debtors’ and creditors’ rights or remedies generally and to the
effect of general
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principles
of equity and matters of public policy (regardless of whether considered in
a
proceeding in equity or at law), including (without limitation) concepts of
materiality, reasonableness, good faith, and fair dealing. Without limiting
the
generality of the foregoing exceptions, we express no opinion with respect
to
the availability of the remedies of specific performance, injunctive relief
or
of any other equitable remedy.
B.
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We
have assumed that the execution, delivery, and performance of the
Transaction Documents by UCBC and Union Federal do not and will not
contravene, conflict with, violate or result in breach of (i) any
law,
statute or ordinance of any jurisdiction applicable solely to UCBC
and
Union Federal and not to the MainSource Entities, (ii) any provision
of
the constituent documents of UCBC or Union Federal, or (iii) any
approvals, consents, licenses, orders, writs, judgments, injunctions
or
decrees of any court, arbitrator, administrative agency or other
governmental authority, or any indenture, mortgage, deed of trust,
agreement, lease or other instrument to which UCBC or Union Federal
are
parties.
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C.
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We
express no opinion that the structure of the transaction or the
performance of the Transaction Documents is or is not in compliance
with
professional accounting statutes (state or federal), and all rules,
regulations, interpretations, statements, ethical codes, professional
standards, and licensing requirements relating to accountancy, whether
promulgated by any agency of the State of Indiana or any local or
national
accounting organization or
association.
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D.
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We
wish to advise you that, under Indiana law, contractual indemnification
and hold harmless provisions may not be enforceable to the extent
the
contract does not clearly and unequivocally specify that the indemnity
or
exculpation covers claims, losses, expenses or other liabilities
arising
or alleged to arise, in whole or in part, from the negligence, strict
liability or other acts or omissions of the indemnified party.
Moreover, indemnification (and presumably exculpation) clauses generally
are strictly construed and the terms must be set forth clearly and
unequivocally. Further, indemnification or exculpation as
against
certain claims, losses, expenses or other liabilities arising as
the
result of the indemnified party’s violation of federal or state statutes,
or the indemnified party’s own tort liability when performing a public or
quasi-public duty, or other acts or omissions, may be considered
contrary
to the public policy and, therefore, invalid and/or
unenforceable.
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E.
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We
express no opinion as to the enforceability of provisions of the
Transaction Documents relating to (i) consents or waivers as to
jurisdiction, (ii) consents or waivers of service of process, (iii)
the
validity or enforceability of any purported waiver or purported consent
relating to any rights of the MainSource Entities or duties owed
thereto,
existing as a matter of law, (iv) self-help provisions, and (v) waiver
of
Constitutional rights.
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F.
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We
express no opinion as to any provisions in the Transaction Documents
insofar as they purport to provide that any party (i) may have rights
to
the payment or reimbursement of attorneys’ fees and litigation expenses,
except to
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the
extent that a court determines that such fees are reasonable and such provision
is enforceable, (ii) may have rights to the payment of any sum of liquidated
damages, or (iii) waives any right or defense.
G.
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This
opinion is limited to matters expressly stated herein and no opinion
is
inferred or may be implied beyond the matters expressly stated.
This
opinion does not constitute a guarantee of, or security for, the
obligations created pursuant to the Transaction Documents or any
of the
other matters referred to or opined upon herein, and by rendering
this
opinion, we are not guaranteeing or insuring payment or performance
of
said transaction.
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H.
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This
opinion is based on and relies upon the current facts and the current
status of the law, and is subject in all respects to, and may be
limited
by, after the date hereof, changes in the facts, further rules,
regulations and legislation, as well as developing caselaw.
We
assume no obligation to notify any person of changes in facts or
law
occurring or coming to our attention after the delivery of this opinion
letter, whether or not deemed
material.
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I.
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The
opinions expressed herein represent our reasonable judgment as to
certain
matters of law based upon the facts presented or assumed and should
not be
considered or construed as a guarantee. Actions and reliance
hereon
are subject to the final business judgment of the parties acting
in
reliance.
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This
letter is solely for your information in connection with the transaction
specified in the first paragraph of this letter and may be relied upon only
by
you in connection with such transaction. This letter may not be quoted
in
whole or in part by any entity, nor is it to be filed with any governmental
agency or any other person or institution without the prior written consent
of
this firm.
Sincerely,
BOSE
XXXXXXXX & XXXXX LLP