SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
METROBANCORP
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
2,553,425
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
$40,727,723
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(5) Total fee paid:
$3,746.95
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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METROBANCORP
10333 N. Meridian Street, Suite 111
Indianapolis, Indiana 46290
(317) 573-2400
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on _____________ ___, 2002
To Our Shareholders:
We will hold a special meeting of shareholders of MetroBanCorp on:
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The purposes of the special meeting are:
1. To consider and vote upon the Agreement and Plan of Merger, dated as of
September 4, 2002, by and among MetroBanCorp, MetroBank, First Indiana
Corporation, First Indiana Acquisition Corporation, and First Indiana Bank.
Under the terms of the merger agreement, First Indiana Acquisition Corp. will
merge into MetroBanCorp and each outstanding share of MetroBanCorp common stock
will be converted into the right to receive a cash amount equal to seventeen
dollars ($17.00). In addition, each outstanding option to purchase MetroBanCorp
common stock will be converted into the right to receive a cash amount equal to
seventeen dollars ($17.00) less the exercise price of the option.
2. To transact such other business as may properly be presented at the
special meeting or any adjournment thereof.
We have fixed the close of business on _________________, 2002, as the
record date for determining those shareholders who are entitled to notice of,
and to vote at, the special meeting and any adjournment or postponement of it.
Approval and adoption of the merger agreement requires the affirmative vote of
the holders of at least the majority of the outstanding shares of MetroBanCorp
common stock.
Please do not send your stock certificates at this time. If the merger is
completed, you will be sent instructions regarding the surrender of your stock
certificates.
BY ORDER OF THE BOARD OF DIRECTORS
Charles V. Turean, Secretary
Dissenting shareholders who comply with the procedures required by the Indiana
Business Corporation Law will be entitled to receive payment of the fair value
of their shares. We have attached a copy of this law as an appendix to the
accompanying proxy statement. MetroBanCorp shareholders considering the exercise
of their dissenters' rights should carefully review these materials and
information before voting at the special meeting.
The Board of Directors unanimously recommends that shareholders vote "FOR"
approval of the merger agreement.
Whether or not you plan to attend the special meeting in person, please
complete, date, sign and return the enclosed proxy card in the enclosed
envelope, which requires no postage if mailed in the United States. If you
attend the special meeting, you may vote in person if you wish, even if you have
previously returned your proxy card.
The date of this Proxy Statement is ______________, 2002
and it is being mailed to MetroBanCorp shareholders on that same date.
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TABLE OF CONTENTS
Page
Questions and Answers About the Merger......................................iv
Summary......................................................................1
The Parties to the Merger and the Bank Merger.............................1
The Merger................................................................2
Interests of Certain Persons in the Merger................................3
Break-Up Fee..............................................................4
Special Meeting...........................................................4
Special Meeting..............................................................4
General...................................................................4
Matters to be Considered..................................................5
Proxies...................................................................5
Solicitation of Proxies...................................................5
Record Date and Voting Rights.............................................5
Recommendation of MetroBanCorp Board of Directors.........................6
Proposed Merger..............................................................6
General...................................................................6
Description of the Merger.................................................6
Background of the Merger..................................................7
Reasons for the Merger....................................................7
Fairness Opinion of MetroBanCorp's Financial Advisor......................8
Opinion of MetroBanCorp's Financial Advisor...............................8
Recommendation of the MetroBanCorp Board of Directors....................13
Conversion of MetroBanCorp Common Stock..................................13
Treatment of MetroBanCorp Stock Options..................................13
Exchange of Certificates.................................................14
Security Ownership of Management and Certain Beneficial Owners...........14
Dissenters' Rights.......................................................14
Conditions to the Completion of the Merger...............................15
Interests of Certain Persons in the Merger...............................16
Break-Up Fee.............................................................17
Termination of the Merger Agreement......................................17
Restrictions Affecting MetroBanCorp......................................18
Regulatory Approvals Required for the Merger.............................19
Effective Time...........................................................20
Management, Personnel and Employee Benefits after the Merger.............20
Termination of Employment Agreements.....................................22
Indemnification; Directors' and Officers' Liability Insurance............22
Federal Income Tax Consequences.............................................23
Description of First Indiana................................................24
Description of MetroBanCorp.................................................24
Other Matters...............................................................24
Forward-Looking Statements..................................................25
Where You Can Find More Information.........................................25
APPENDIX A.................................................................A-1
APPENDIX B.................................................................B-1
APPENDIX C.................................................................C-1
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What do I need to do now?
A: After you carefully read this document, indicate on your proxy card how you
want to vote, sign it and mail it in the enclosed envelope as soon as
possible. The instructions on the accompanying proxy card will give you
more information on how to vote by mail. This will enable your shares to be
represented at the special meeting.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will not be able to vote your shares without instructions from
you. You should instruct your broker to vote your shares by following the
directions your broker provides. Your failure to instruct your broker to
vote your shares will result in your shares not being voted. If you fail to
return a proxy card or abstain from voting, the effect will be a vote
against the merger.
Q: Can I change my vote after I submit my proxy with voting instructions?
A: Yes. There are three ways you can change your vote. First, you may send a
written notice to the person to whom you submitted your proxy stating that
you would like to revoke your proxy. Second, you may complete and submit a
new proxy card by mail or submit your proxy with new voting instructions.
Your shares will be voted in accordance with the latest proxy actually
received by MetroBanCorp prior to the special meeting of the shareholders
of MetroBanCorp. Any earlier proxies will be revoked. Third, you may attend
the special meeting. Any earlier proxies will be revoked. Simply attending
the meeting without voting, however, will not revoke your proxy. If you
have instructed a broker to vote your shares, you must follow directions
you will receive from your broker to change or revoke your proxy.
Q: Should I send in my stock certificates now?
A: No. You should not send in your stock certificates at this time.
First Indiana will send you instructions for exchanging your MetroBanCorp
common stock certificates for the conversion price promptly after the
merger is completed.
Q: How much will I receive for each share of MetroBanCorp common stock that I
own?
A: Following the effective time of the merger you will receive a cash payment
equal to seventeen dollars ($17.00) per share of MetroBanCorp common stock
for each share of MetroBanCorp common stock that you properly deliver to
First Indiana. This amount is referred to in the merger agreement as the
Conversion Price.
Q: What are the Federal income tax consequences of the merger?
A: The cash that you receive in the merger in exchange for your shares of
MetroBanCorp common stock and any cash you may receive from exercising
statutory dissenters' rights will be subject to United States federal
income tax and also may be taxed under applicable state, local and foreign
tax laws. In general, you may recognize gain or loss equal to the
difference between the amount of cash you receive and your adjusted tax
basis in your shares of MetroBanCorp common stock. It is recommended that
you read the section entitled "Federal Income Tax Consequences" in the
proxy statement for a more detailed explanation of the tax consequences of
the merger. You should consult your tax advisor regarding the specific tax
consequences of the merger applicable to you.
Q: What other matters will be voted on at the meeting?
A: MetroBanCorp does not expect that any matter other than the merger will be
voted on at the meeting.
Q: Whom should I call with questions?
A: You should call Charles V. Turean, Secretary of MetroBanCorp, at (317)
573-2400.
iv
SUMMARY
This summary highlights some of the information contained in this
document. Because this is a summary, it does not contain all the information
that may be important to you. To understand the merger fully and for a more
complete description of the legal terms of the merger, you should read carefully
this entire document and the documents to which we have referred you.
THE PARTIES TO THE MERGER AND THE MERGER AGREEMENT
MetroBanCorp
10333 N. Meridian Street, Suite 111
Indianapolis, Indiana 46290
(317) 573-2400
MetroBanCorp is an Indiana corporation registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended, with its
principal office located in Indianapolis, Hamilton County, Indiana. MetroBanCorp
is the holding company for MetroBank, an Indiana state-chartered bank. As of
June 30, 2002 MetroBanCorp had consolidated total assets of $173.7 million,
consolidated total deposits of $135.6 million and shareholders' equity of $15.3
million. MetroBanCorp's common stock is listed on the NASDAQ Small-Cap Market
under the symbol "METB".
MetroBank
10333 N. Meridian Street, Suite 111
Indianapolis, Indiana 46290
(317) 573-2400
MetroBank is an Indiana state-chartered bank with its principal office
located in Indianapolis, Indiana. MetroBank serves its customers in the northern
suburbs of Indianapolis, Indiana from seven (7) branch locations.
First Indiana Corporation
First Indiana Plaza
135 N. Pennsylvania Street, Suite 2800
Indianapolis, Indiana 46204
(317) 269-1200
First Indiana Corporation is an Indiana corporation registered as a
bank holding company under the Bank Holding Company Act which has elected to be
a financial holding company under the Bank Holding Company Act. First Indiana
Corporation's principal office is located in Indianapolis, Marion County,
Indiana. First Indiana Corporation's common stock is listed on the NASDAQ
National Market System under the symbol "FINB".
First Indiana Acquisition Corporation
First Indiana Plaza
135 N. Pennsylvania Street, Suite 2800
Indianapolis, Indiana 46204
(317) 269-1200
First Indiana Acquisition Corp. is an Indiana corporation with its
principal office located in Indianapolis, Marion County, Indiana. First Indiana
Acquisition Corp. is a wholly-owned subsidiary of First Indiana Corporation.
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First Indiana Bank, National Association
First Indiana Plaza
135 N. Pennsylvania Street, Suite 2800
Indianapolis, Indiana 46204
(317) 269-1200
First Indiana Bank is a national bank with its principal office located
in Indianapolis, Marion County, Indiana. First Indiana Bank has twenty-six (26)
retail offices in Metropolitan Indianapolis, Franklin, Mooresville, Pendleton,
Rushville, and Westfield, Indiana.
THE MERGER
Description of the merger. Under the terms of the merger agreement and
subject to the merger of MetroBank and First Indiana Bank occurring immediately
after the merger, First Indiana Acquisition Corp. will merge with and into
MetroBanCorp, with MetroBanCorp as the surviving entity. MetroBanCorp will
thereby become a wholly-owned subsidiary of First Indiana. MetroBanCorp will
then merge with and into First Indiana, with First Indiana as the surviving
entity. See "Proposed Merger- - Description of the Merger" on page __.
Description of the bank merger. Subsequent to the completion of the
merger, MetroBank will merge with and into First Indiana Bank. First Indiana
Bank will be the surviving entity and will continue its existence under the
federal banking laws. See "Proposed Merger - - Description of the Merger" on
page __.
Recommendation of the Board of Directors of MetroBanCorp. The Board of
Directors of MetroBanCorp believes that the merger is in the best interests of
MetroBanCorp as a whole, including your interests, and unanimously recommends
that you vote "FOR" the proposal to approve the merger. See "Special
Meeting--Recommendation of the MetroBanCorp Board of Directors" on page __.
Voting agreement. In connection with the merger, each of the directors
of MetroBanCorp have entered into a voting agreement pursuant to which each
director has agreed to vote his shares of MetroBanCorp common stock and to use
his best efforts to cause all additional shares of MetroBanCorp common stock
owned jointly with any other person to be voted in favor of the merger. In
addition, each director has agreed, subject to his fiduciary duties, to
recommend that the shareholders vote in favor of the merger.
MetroBanCorp shareholders will receive cash in the merger. Each issued
share of MetroBanCorp common stock will be converted into the right to receive a
cash amount equal to seventeen dollars ($17.00). Each outstanding and then
exercisable option to purchase MetroBanCorp common stock will be converted into
the right to receive cash in an amount equal to the excess of seventeen dollars
($17.00) over the option exercise price. See "Proposed Merger - - Conversion of
MetroBanCorp Common Stock; Treatment of MetroBanCorp Stock Options" on page __.
Merger generally taxable for MetroBanCorp shareholders. Generally, the
merger will be treated as a taxable sale or exchange of MetroBanCorp common
stock for cash by each shareholder of MetroBanCorp, including shareholders who
properly exercise dissenters' rights. Tax matters are very complicated, and the
tax consequences of the merger to you will depend on the facts of your own
situation. The directors of MetroBanCorp urge you to consult with your tax
advisor for a full understanding of the tax consequences of the merger to you.
See "Federal Income Tax Consequences" on page __.
Dissenters' rights. MetroBanCorp shareholders have the right, under the
Indiana Business Corporation Law to dissent from the merger. Certain specific
procedures must be followed to dissent from the merger. A shareholder of
MetroBanCorp who complies with the required procedures will be entitled to
demand payment of the fair value of his MetroBanCorp shares. A copy of Chapter
44 of Title 23 of the Indiana Business Corporation Law is attached as Appendix C
to this proxy statement. See "Dissenter's Rights" on page __.
Our reasons for the merger. MetroBanCorp and First Indiana are
proposing to merge because they believe that by combining the companies they can
create a stronger and more diversified company that will provide significant
benefits to the community and MetroBanCorp's customers. The Board of Directors
of MetroBanCorp believes that by bringing its customers and banking products
together with those of First Indiana, the companies can do a better job of
growing their combined revenue than if they did not merge. You can find a more
detailed discussion of the background to the merger agreement and MetroBanCorp's
and First Indiana's reasons for the merger under "Proposed Merger--Reasons for
the Merger" on page __.
2
MetroBanCorp's financial advisor believes the conversion price is fair,
from a financial point of view, to MetroBanCorp's shareholders. Among other
factors considered in deciding to approve the merger, the MetroBanCorp Board of
Directors received the opinion of its financial advisor, Hovde Financial, LLC,
that, as of __________________, seventeen dollars ($17.00) per share of
MetroBanCorp common stock was fair to the holders of MetroBanCorp common stock
from a financial point of view. MetroBanCorp has received a written opinion from
Hovde dated as of the date of this document. The opinion is attached to this
document as Appendix B. You should read this opinion completely to understand
the assumptions made, matters considered and limitations of the review
undertaken by Hovde. See "Proposed Merger--Fairness Opinion of MetroBanCorp's
Financial Advisor" on page __.
Conditions to completion of the merger. The completion of the merger
depends on a number of conditions being met. Some of the conditions are:
o The merger agreement is approved by the holders of at least a
majority of the outstanding shares of MetroBanCorp common
stock.
o Regulatory approvals required under federal and state banking
laws are received and the waiting periods have expired.
See "Proposed Merger--Conditions to Completion of the Merger" on page
__.
We may decide not to complete the merger. First Indiana and
MetroBanCorp can agree at any time to not complete the merger, even if the
shareholders of MetroBanCorp have approved it. Also, either party can decide,
without the consent of the other, to terminate the merger agreement if, among
other reasons:
o The other party breaches any representation or any warranty
contained in the merger agreement.
o The other party breaches any covenant contained in the merger
agreement.
o Certain claims, proceedings or litigation are commenced or
threatened.
o First Indiana experiences a material adverse change in
financial condition from that which existed on September 4,
2002.
o MetroBanCorp experiences a material adverse change in
financial condition from that which existed on September 4,
2002.
o The merger is not completed by February 28, 2003.
See "Proposed Merger - - Termination of the Merger Agreement" on page
__.
Effective time of the merger. The merger shall become effective upon
the filing, in the office of the Secretary of State of Indiana, of Articles of
Merger in accordance with Indiana Code Section 23-1-40-5, as amended, or at such
later date and time as may be set forth in such Articles. First Indiana and
MetroBanCorp anticipate that the merger will be completed in January, 2003. See
"Proposed Merger--Effective Time" on page __.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Some of the directors and officers of MetroBanCorp have interests in
the merger in addition to their interests as shareholders generally, including
the following:
o Ike G. Batalis, President of MetroBanCorp, has entered into a
Consulting Agreement with First Indiana in connection with the
merger; and
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o Some of the executive officers of MetroBanCorp have entered
into agreements with First Indiana which provide for the
termination of the existing employment agreements of those
officers and the payment of a lump sum severance amount.
BREAK-UP FEE
Break-up Fee. MetroBanCorp has agreed to pay to First Indiana a
break-up fee in the amount of $1,500,000, plus out-of-pocket expenses, upon the
occurrence of certain actions by MetroBanCorp or the MetroBanCorp Board Of
Directors. See "Break-up Fee" on page __.
SPECIAL MEETING
Date, time and place of special meeting. The MetroBanCorp special
meeting will be held on ___________, _______________, 2002, at ____ __.m., local
time, at _____________________, __________________________________,
_______________, __________________________.
Purposes of special meeting. At the MetroBanCorp special meeting, you
will be asked:
o to approve the merger agreement; and
o to act upon any other items that may be submitted to a vote at
the special meeting.
As of the date of this document the MetroBanCorp Board of Directors
does not know of any other matters that will be presented at the special
meeting. See "Notice of Special Meeting" and the discussions under the captions
"Special Meeting" and "Proposed Merger" on pages __ and __, respectively.
Required shareholder vote. In order to approve the merger, the holders
of at least a majority of the issued and outstanding shares of MetroBanCorp
common stock must vote in its favor. See "Special Meeting - - Record Date and
Voting Rights" on page __.
Proxies. You can revoke your proxy at any time before it is exercised
by delivering a later dated proxy to MetroBanCorp, by written notice delivered
to the Secretary of MetroBanCorp, or by attending the special meeting and voting
in person. See "Special Meeting--Proxies" on page __.
Shares issued and entitled to vote. As of_________________________,
there were __________ shares of MetroBanCorp common stock issued. You can vote
at the special meeting of MetroBanCorp shareholders if you owned MetroBanCorp
common stock at the close of business on that date. You can cast one vote for
each share of MetroBanCorp common stock you owned on that date. See "Special
Meeting--Record Date and Voting Rights" on page __.
SPECIAL MEETING
General
This document is first being mailed by MetroBanCorp to the holders of
MetroBanCorp common stock on ____________________ and is accompanied by the
notice of the MetroBanCorp special meeting of shareholders and a form of proxy
that is solicited by the Board of Directors of MetroBanCorp for use at the
special meeting. The special meeting will be held on ________,
______________________ at ______ __.m., local time at
_____________________________, __________________________________,
________________, _______________________.
4
Matters to be Considered
The purposes of the special meeting are to consider and vote upon the
merger agreement, which provides for the merger of MetroBanCorp into First
Indiana Acquisition Corp., and to consider and vote upon any other matters that
may properly come before the special meeting.
Proxies
The accompanying form of proxy is for your use at the special meeting
if you are unable or do not wish to attend the meeting in person. You may revoke
your proxy at any time before it is exercised by delivering to the Secretary of
MetroBanCorp a written notice of revocation, a properly executed proxy having a
later date, or by attending the special meeting and voting in person. Written
notices of revocation should be addressed to MetroBanCorp, 10333 N. Meridian
Street, Suite 111, Indianapolis, Indiana 46290, Attn: Charles V. Turean,
Secretary. To be effective, MetroBanCorp must receive the revocation before the
shares are voted. The shares represented by proxies, properly signed and
returned, will be voted at the special meeting as instructed by the shareholders
of MetroBanCorp giving the proxies. If you make no specification as to your vote
on the proxy, your proxy will be voted in favor of approval of the merger
agreement.
The MetroBanCorp Board is unaware of any other matters that may be
presented for action at the special meeting. However, if other matters do
properly come before the special meeting, the shares represented by properly
executed proxies will be voted in accordance with the best judgment of the
person named in the proxy.
Solicitation of Proxies
MetroBanCorp will bear the entire cost of soliciting proxies from
shareholders. In addition to the solicitation of proxies by mail, MetroBanCorp
will request that banks, brokers and other record holders send proxies and proxy
material to the beneficial owners of stock held by them and secure their voting
instructions, if necessary. Additionally, proxies may be solicited personally or
by telephone by directors, officers and certain employees of MetroBanCorp, who
will not be specifically compensated for such soliciting.
Record Date and Voting Rights
MetroBanCorp has fixed ______________, ____ as the record date for
determining those MetroBanCorp shareholders entitled to notice of, and to vote
at, the special meeting. Accordingly, only MetroBanCorp shareholders of record
at the close of business on _______________, _______ will be entitled to notice
of and to vote at the special meeting. Each share of MetroBanCorp common stock
you own on the record date entitles you to one vote on each matter presented for
a vote at the special meeting. At the close of business on the record date,
there were ____________ shares of MetroBanCorp common stock issued and held by
approximately _____ holders of record. The presence, in person or by proxy, of
shares of MetroBanCorp common stock representing a majority of those shares
outstanding and entitled to vote on the record date is necessary to constitute a
quorum at the special meeting.
Shares of MetroBanCorp common stock held by persons attending the
special meeting but not voting, and shares of MetroBanCorp common stock for
which MetroBanCorp has received proxies but with respect to which the holders
have abstained from voting, will be counted as present at the special meeting
for purposes of determining the presence or absence of a quorum for the
transaction of business at the special meeting. Brokers who hold shares of
MetroBanCorp common stock in nominee or "street" name for customers who are the
beneficial owners of those shares are prohibited from giving a proxy to vote
shares held for those customers on matters to be considered and voted upon at
the special meeting without specific instructions from those customers. These
so-called "broker non-votes" will be counted for purposes of determining whether
a quorum exists.
The merger agreement must be approved by the affirmative vote of the
holders of at least a majority of the issued and outstanding shares of
MetroBanCorp common stock entitled to vote at the special meeting.
Because approval of the merger agreement requires the affirmative vote
of the holders of at least a majority of the issued shares of MetroBanCorp
common stock entitled to vote at the special meeting, abstentions and broker
5
non-votes will have the same effect as votes against approval of the merger
agreement. Accordingly, the MetroBanCorp Board urges you to complete, date and
sign the accompanying proxy and return it promptly in the enclosed, postage-paid
envelope.
As of the record date, directors of MetroBanCorp owned approximately
__________ shares of MetroBanCorp common stock, and the executive officers owned
approximately ____ shares of MetroBanCorp common stock, entitling them to
exercise _____% of the voting power of the MetroBanCorp common stock entitled to
vote at the special meeting. On the basis of the unanimous approval of the
merger agreement and the Voting Agreement by the MetroBanCorp Board of
Directors, we currently expect that each director and executive officer of
MetroBanCorp will vote the shares of MetroBanCorp common stock owned by him for
approval of the merger agreement and the transactions contemplated by the merger
agreement.
Recommendation of MetroBanCorp Board of Directors
The MetroBanCorp Board has unanimously approved the merger agreement
and the transactions contemplated by the merger agreement. The MetroBanCorp
Board believes that the merger agreement is in the best interests of
MetroBanCorp as a whole, including the interests of MetroBanCorp shareholders,
and recommends that the MetroBanCorp shareholders vote "FOR" approval of the
merger agreement. See "Proposed Merger--Background of the Merger on page ___,
- --Reasons for the Merger on page ___, and --Recommendation of the MetroBanCorp
Board of Directors" on page ___.
PROPOSED MERGER
At the special meeting, the shareholders of MetroBanCorp will consider
and vote upon approval of the merger, certain features of which are summarized
below. The following summary of aspects of the merger is not a complete
description of the terms and conditions of the merger and is qualified in its
entirety by reference to the merger agreement, which is attached to this
document as Appendix A and is incorporated herein by reference.
General
The Board of Directors of First Indiana and MetroBanCorp each have
unanimously approved the merger agreement, which provides for the merger. First
Indiana and MetroBanCorp expect to complete the merger in January 2003. Each
share of MetroBanCorp common stock issued and outstanding at the effective time
of the merger will be converted into the right to receive a cash amount equal to
seventeen dollars ($17.00). Each outstanding and then exercisable option to
purchase MetroBanCorp common stock will be converted into the right to receive
cash in an amount equal to the excess of seventeen dollars ($17.00) over the
option exercise price.
Description of the Merger
Upon the terms and subject to the conditions of the merger agreement,
at the effective time of the merger (i) First Indiana Acquisition Corp. will
merge with and into MetroBanCorp, with MetroBanCorp as the surviving entity
thereby becoming a wholly-owned subsidiary of First Indiana; and (ii)
MetroBanCorp will then merge with and into and under the Articles of
Incorporation of First Indiana. The merger is subject to the merger of MetroBank
and First Indiana Bank occurring immediately after the merger, and if the bank
merger will not close immediately thereafter, the merger shall not occur. First
Indiana will survive the merger and will 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.
As of June 30, 2002, MetroBanCorp had consolidated total assets of
approximately $173.7 million, consolidated total deposits of approximately
$135.6 million and consolidated shareholders' equity of approximately $15.3
million.
Background of the Merger
Over the last several years the financial services industry has become
increasingly competitive, with many financial institutions expanding their size
and market share through consolidation. MetroBanCorp has from time to time been
contacted by other financial institutions to determine whether MetroBanCorp
would consider entering into a business combination. In response to these
developments, the MetroBanCorp Board, on an ongoing basis, has considered
strategic options for increasing shareholder value, including potential business
combinations with other institutions.
6
One of the objectives of the MetroBanCorp Board has been, and remains,
to enhance shareholder value. Over the years the Board has considered various
strategies intended to accomplish this goal. In April of 2001, the Board met
with representatives of Hovde at a strategic retreat to discuss the various
strategic alternatives available to MetroBanCorp. Among the alternatives
considered were internal growth, capital management, capital raising,
acquisitions of bank and non-bank financial services companies,
mergers-of-equals and a business combination with a third party. Shortly after
that meeting, the MetroBanCorp Board authorized the executive officers of
MetroBanCorp to work with Hovde to generate ideas that would contribute to
increasing value for the MetroBanCorp shareholders.
On September 10, 2001, MetroBanCorp formally retained Hovde as its
financial advisor to assist it in exploring a potential business combination
with another entity or financial institution or a strategic alliance or a merger
of equals. In light of the consolidation that was occurring at that time within
the U.S. banking industry, the opportunity for shareholders of MetroBanCorp to
receive an immediate premium and the significant interest of potential partners
in the Indianapolis and Hamilton County market, MetroBanCorp decided to actively
explore whether a transaction with a third party would be the best way to
maximize shareholder value.
Over the next several weeks, meetings were held between Hovde, the
MetroBanCorp Executive Committee and the MetroBanCorp management regarding
strategies, processes and potential partners in a business combination. Based on
its due diligence examination of MetroBanCorp documents and records as well as
interviews conducted with MetroBanCorp's management, Hovde assisted MetroBanCorp
in preparing a confidential information package for distribution to potential
partners. The information package was sent to a selected group of potential
partners that were considered to potentially have an interest in exploring a
business combination with MetroBanCorp. Each of the potential partners was
required to enter into a confidentiality agreement with MetroBanCorp.
During the time period from late February through March 2002, the
management of MetroBanCorp had several contacts with, and responded to various
questions from certain of the institutions that had received an information
package. In late April 2002, MetroBanCorp received preliminary proposals from
several interested parties, including First Indiana. On April 30, 2002, Hovde
met with the Executive Committee and presented its conclusions regarding the
various proposals. The Executive Committee reviewed and considered each of the
proposals and the Hovde presentation. After further discussions the MetroBanCorp
Executive Committee decided to continue discussions with three potential
partners. At that time, the proposal submitted by First Indiana was not deemed
compelling enough for the MetroBanCorp Board to continue to hold discussions
with First Indiana. After learning that it was not chosen to continue
discussions with MetroBanCorp, First Indiana revised its proposal such that it
became compelling enough for MetroBanCorp to include it in further discussions.
In early June 2002, Hovde and the MetroBanCorp Board participated in
meetings with representatives from each of the four potential partners. During
these discussions, the parties discussed the strategies of the respective
institutions, results of operations, future business plans and preliminary plans
for the integration of the companies. Based upon those meetings, the Board of
MetroBanCorp decided to permit each of the four potential partners to undertake
detailed due diligence. Following due diligence each potential partner was asked
to submit a final indication of interest to MetroBanCorp.
On July 9, 2002, a meeting with Hovde and the Executive Committee was
held to discuss the final proposals received from the competing parties. The
Executive Committee, with the assistance of Hovde, considered and compared each
of the competing final proposals by examining and analyzing, among other things,
the (i) nominal value to MetroBanCorp shareholders, (ii) operating
characteristics and market data for each of the competing institutions as
compared to each institution's individual peer group of companies, (iii)
historical stock performance of each entity and as compared to various market
indices, (iv) historical daily trading volume, growth rates and dividend yields
of the competing entities, (v) consensus analyst ratings, if any, of the
competing entities, and (vi) a direct comparison of the key financial and
non-financial attributes of each of the competing proposals. Based on the
results of that analysis and Hovde's opinion, MetroBanCorp determined to
continue discussions with First Indiana and to proceed, if the negotiations were
successful, toward the signing of a definitive agreement with First Indiana.
For the remainder of July, First Indiana performed additional due
diligence on MetroBanCorp. During August Management of First Indiana and its
counsel together with management and members of the Executive Committee of
MetroBanCorp and its counsel exchanged negotiated provisions of the definitive
merger agreement.
7
On August 5, 2002, the MetroBanCorp Executive Committee met to review
and comment upon the preliminary draft of the merger agreement.
On August 14, 2002, the Executive Committee discussed the revised draft
of the merger agreement. The members of the Committee commented upon issues
which remained outstanding from the previous draft as well as new matters.
On August 29, 2002, in preparation for a special meeting, a copy of the
proposed merger agreement and related agreements were provided to the
MetroBanCorp and MetroBank boards of directors for their review and comment.
On September 4, 2002, the parties executed the merger agreement. A
joint press release announcing the execution of the merger agreement was issued
on the same day. Under the terms of the merger agreement, First Indiana
Acquisition Corp. will merge into MetroBanCorp and MetroBanCorp will thereby
become a wholly-owned subsidiary of First Indiana. Each outstanding share of
MetroBanCorp will be converted into the right to receive a cash amount equal to
$17.00. In addition, each outstanding option to purchase MetroBanCorp common
stock will be converted into the right to receive a cash amount equal to $17.00
less the exercise price of the option.
Reasons for the Merger
In reaching its decision to approve the merger agreement, the
MetroBanCorp Board consulted with management of MetroBanCorp, as well as its
financial and legal advisors, and it considered a variety of factors, including
the following:
o The MetroBanCorp Board's knowledge and analysis of the current
environment of the financial services industry, which is
characterized by rapid consolidation, increased opportunities
for cross-industry expansion, evolving trends in technology
and increasing nationwide and Internet competition;
o The MetroBanCorp Board's belief that the financial terms of
the merger are fair to and in the best interests of
MetroBanCorp as a whole and MetroBanCorp's shareholders;
o The business, operations, financial condition, earnings and
prospects of MetroBanCorp and First Indiana. In making its
determination, the MetroBanCorp Board took into account the
results of MetroBanCorp's due diligence review of First
Indiana;
o The scale, scope, strength and diversity of operations,
product lines and delivery systems that can be achieved by
combining MetroBanCorp and First Indiana;
o The MetroBanCorp Board's belief that the merger represents:
o an opportunity to leverage MetroBanCorp's management,
infrastructure, products, marketing and business
lines over a larger consumer, business and corporate
customer base through First Indiana's geographically
diverse network; and
o the possibility of achieving expense savings and
operating efficiencies through, among other things,
the elimination of duplicative efforts;
o The opinion of Hovde to the MetroBanCorp Board that, based
upon and subject to the considerations set forth in the
opinion, the conversion price was fair from a financial point
of view to MetroBanCorp shareholders (see "Proposed
Merger--Fairness Opinion of MetroBanCorp's Financial
Advisor");
o The likelihood of the merger being approved by the appropriate
regulatory authorities;
o Consideration of the effect of the merger on MetroBanCorp's
other constituencies, including MetroBanCorp's employees and
the customers and communities served by MetroBanCorp,
including consideration of the opportunity for training,
education and advancement of employees within First Indiana or
one of its affiliated companies; and
8
o The MetroBanCorp Board's analysis of alternatives to merging
with First Indiana, including merging with other potential
acquirors and its analysis of relevant price information from
recent comparable bank mergers which occurred in the Midwest
and across the United States.
This discussion of the information and factors considered by the
MetroBanCorp Board is not intended to be exhaustive, but it does include all
material factors considered by the MetroBanCorp Board. In reaching its decision
to approve and recommend the merger, the MetroBanCorp Board of Directors did not
assign any relative or specific weights to these factors, and individual
directors may have given differing weights to different factors. Based upon the
foregoing and other factors, the Board of Directors of MetroBanCorp concluded
that it was in the best interests of MetroBanCorp and its shareholders to merge
with First Indiana.
Fairness Opinion of MetroBanCorp's Financial Advisor
Hovde was retained by MetroBanCorp to act as MetroBanCorp's financial
advisor in connection with the merger. MetroBanCorp's Board of Directors
requested Hovde's opinion as to the fairness, from a financial perspective, of
the consideration to be paid by First Indiana to MetroBanCorp shareholders as
set forth in the merger agreement.
Hovde is an investment banking firm with offices in Washington, DC,
Inverness, Illinois and West Palm Beach, Florida. Hovde, as part of its
investment banking business, is continually engaged in the valuation of
businesses and their securities in connection with mergers, acquisitions,
negotiated underwritings, competitive bidding, secondary distributions of listed
and unlisted securities, private placements and valuations for estate, corporate
and other purposes, and other transactions. Other than as disclosed herein,
neither Hovde nor any of its affiliates has a financial interest in MetroBanCorp
or First Indiana. Hovde was selected to advise MetroBanCorp's Board of Directors
based upon its familiarity with financial institutions and knowledge of the
banking industry as a whole.
Hovde performed certain analyses described herein and presented the
range of values for MetroBanCorp resulting from such analyses to the Board of
Directors of MetroBanCorp in connection with its advice as to the fairness of
the consideration to be paid by First Indiana.
Hovde delivered its fairness opinion to the Board of Directors of
MetroBanCorp on September 4, 2002, at a special meeting of the Board of
Directors of MetroBanCorp and has updated its opinion as of , 2002. A copy of
the fairness opinion, which includes a summary of the assumptions made and
information analyzed in deriving the fairness opinion, is attached as Appendix B
to this document and should be read in its entirety.
Opinion of MetroBanCorp's Financial Advisor
Hovde has delivered to the MetroBanCorp board its opinion that, based
upon and subject to the various considerations set forth in its written opinion
dated September 4, 2002, the merger consideration is fair from a financial point
of view to the holders of MetroBanCorp common stock as of such date and updated
as of , 2002. In requesting Hovde's advice and opinion, no limitations were
imposed by MetroBanCorp upon Hovde with respect to the investigations made or
procedures followed by it in rendering its opinion.
The full text of the opinion of Hovde, dated , 2002, which describes
the procedures followed, assumptions made, matters considered and limitations on
the review undertaken, is attached hereto as Appendix B. MetroBanCorp
shareholders should read this opinion in its entirety. Hovde's opinion is
directed only to the fairness, from a financial point of view, of the merger
consideration, and does not constitute a recommendation to any MetroBanCorp
shareholders as to how the shareholder should vote at the MetroBanCorp meeting.
The summary of the opinion of Hovde set forth in this proxy statement is
qualified in its entirety by reference to the full text of the opinion.
Hovde, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive bidding,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Hovde is familiar with
MetroBanCorp, having acted as its financial advisor in connection with, and
having participated in the negotiations leading to, the merger agreement. In the
course of their daily trading activities, investment funds controlled by an
affiliate (as
9
such term is defined in Regulation 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended) of Hovde and their affiliates may from time to
time effect transactions and hold securities of First Indiana and MetroBanCorp.
As of the date of its opinion, Hovde-affiliated entities owned 30,874 shares of
First Indiana and no shares of MetroBanCorp.
Hovde will receive a fee contingent upon the completion of the merger
for services rendered in connection with advising MetroBanCorp regarding the
merger, including the fairness opinion and financial advisory services provided
to MetroBanCorp. Hovde has received $50,000 to date for its fairness opinion and
other financial advisory services and is expected to receive a completion fee of
approximately $798,557 upon the completion of the merger. In addition, Hovde
will also receive a fairness opinion fee of $5,000 for a fairness opinion issued
to the Raymond James Trust Company, the trustee for MetroBanCorp's Thrift Plan.
The following is a summary of the analyses performed by Hovde in
connection with its fairness opinion. Certain of these analyses were presented
to the MetroBanCorp Board by Hovde on September 4, 2002. The summary set forth
below does not purport to be a complete description of either the analyses
performed by Hovde in rendering its opinion or the presentation made by Hovde to
the MetroBanCorp Board, but it does summarize all of the material analyses
performed by Hovde.
The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant methods of financial analyses and the
application of those methods to the particular circumstances. In arriving at its
opinion, Hovde did not attribute any particular weight to any analysis and
factor considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Hovde may have given
various analyses more or less weight than other analyses. Accordingly, Hovde
believes that its analyses and the following summary must be considered as a
whole and that selecting portions of its analyses, without considering all
factors and analyses, could create an incomplete view of the process underlying
the analyses set forth in its report to the MetroBanCorp Board and its fairness
opinion.
In performing its analyses, Hovde made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of First Indiana and
MetroBanCorp. The analyses performed by Hovde are not necessarily indicative of
actual value or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely as
part of Hovde's analysis of the fairness of the merger consideration, from a
financial point of view, to the MetroBanCorp shareholders. The analyses do not
purport to be an appraisal or to reflect the prices at which a company might
actually be sold or the prices at which any securities may trade at the present
time or at any time in the future. Hovde's opinion does not address the relative
merits of the merger as compared to any other business combination in which
MetroBanCorp might engage. In addition, as described above, Hovde's opinion to
the MetroBanCorp Board was one of many factors taken into consideration by the
MetroBanCorp Board in making its determination to approve the merger agreement.
During the course of its engagement and for the purposes of rendering
the opinion set forth herein, Hovde:
(i) reviewed the merger agreement;
(ii) reviewed certain historical publicly available business and
financial information concerning First Indiana and
MetroBanCorp;
(iii) reviewed certain internal financial statements and other
financial and operating data concerning First Indiana and
MetroBanCorp;
(iv) analyzed certain financial projections prepared by the
managements of First Indiana and MetroBanCorp;
(v) reviewed historical market prices and trading volumes for
First Indiana common stock and MetroBanCorp common stock;
(vi) reviewed the terms of recent merger and acquisition
transactions, to the extent publicly available, involving bank
and bank holding companies that we considered relevant;
(vii) analyzed the pro forma impact of the merger on the combined
company's earnings per share, consolidated capitalization and
financial ratios; and
10
(viii) performed such other analyses and considered such other
factors as it deemed appropriate.
In rendering its opinion, Hovde assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations contained in the materials provided to it by
First Indiana and MetroBanCorp and in the discussions with First Indiana and
MetroBanCorp management. In that regard, Hovde assumed that the financial
forecasts, including, without limitation, the projections regarding
under-performing and non-performing assets and net charge-offs were reasonably
prepared on a basis reflecting the best currently available information and
judgments and estimates of First Indiana and MetroBanCorp and that such
forecasts will be realized in the amounts and at the times contemplated thereby.
Hovde is not an expert in the evaluation of loan and lease portfolios for
purposes of assessing the adequacy of the allowances for losses with respect
thereto and has assumed that such allowances for First Indiana and MetroBanCorp
are in the aggregate adequate to cover such losses. Hovde was not retained to
and did not conduct a physical inspection of any of the properties or facilities
of First Indiana or MetroBanCorp. In addition, Hovde did not review individual
credit files nor make an independent evaluation or appraisal of the assets and
liabilities of First Indiana and MetroBanCorp and Hovde was not furnished with
any such evaluations or appraisals.
[The balance of this section to be updated as of
______________________, 2002.]
Statement of Offer. Hovde compared merger consideration to
MetroBanCorp's book value, tangible book value, last twelve months GAAP net
income, 2002 estimated GAAP net income, and tangible book value to core deposits
premium. Assuming merger consideration per share of $17.00 and aggregate merger
consideration of approximately $40.0 million, Hovde observed that the implied
transaction multiples to MetroBanCorp were as follows:
Merger consideration to book value 260.59%
Merger consideration to tangible book value 260.59%
Merger consideration to LTM net income 26.3x
Merger consideration to 2002 estimated GAAP net income 25.0x
Tangible book value to core deposits premium 20.0%
In terms of calculating the transaction multiples and the aggregate
transaction value, Hovde utilized the most recent publicly available data from
June 30, 2002. Throughout its fairness opinion analysis Hovde utilized
MetroBanCorp's June 30, 2002 shares outstanding figure of 2,063,418. On
September 4, 2002 there were 2,056,837 MetroBanCorp shares outstanding and
51,770 shares at Raymond James Trust Company for total issued of 2,108,607.
Discounted Cash Flow Analysis. Hovde estimated the discounted present
value of MetroBanCorp's common stock by using estimated 2002-2006 GAAP earnings
of $1.60 million, $1.76 million, $1.93 million, $2.13 million and $2.34 million,
respectively, and 2002-2006 dividends per share of $0.30, $0.33, $0.36, $0.40
and $0.44. In arriving at the terminal value of MetroBanCorp's earnings stream
at the end of 2006, Hovde assumed a terminal value multiple at a range of 13.5,
15.0, and 16.5. The terminal value was then discounted, along with yearly cash
flows for 2002 through 2006, using a range of discount rates of 11.0%, 13.0% and
15.0% to arrive at the present value for MetroBanCorp's common stock.
In addition to the 2002 analysis, Hovde estimated the discounted
present value of MetroBanCorp's common stock by using estimated 2003-2007 GAAP
earnings of $1.64 million, $1.80 million, $1.98 million, $2.18 million and $2.40
million, respectively, and 2003-2007 dividends per share of $0.33, $0.36, $0.40,
$0.44 and $0.44. In arriving at the terminal value of MetroBanCorp's earnings
stream at the end of 2007, Hovde assumed a terminal value multiple at a range of
13.5, 15.0, and 16.5. The terminal value was then discounted, along with yearly
cash flows for 2003 through 2007, using a range of discount rates of 11.0%,
13.0% and 15.0% to arrive at the present value for MetroBanCorp's common stock.
These rates and values were chosen to reflect different assumptions
regarding the required rates of return of holders or prospective buyers of
MetroBanCorp common stock. This analysis and its underlying assumptions yielded
a range of values for MetroBanCorp common stock of approximately $8.83 to $12.46
per share (utilizing MetroBanCorp's 2002 estimated earnings) and $9.14 to $12.88
per share (utilizing MetroBanCorp's 2003 estimated earnings). Hovde noted that
the merger consideration per share of $17.00 is in excess of all values
generated in this analysis.
11
Analysis of Selected Mergers. In rendering its opinion, Hovde reviewed
several groups of comparable mergers. First Hovde reviewed comparable mergers
involving banks and bank holding companies headquartered in the Midwest
announced after January 1, 1998, in which the seller's assets were between $100
million and $1.0 billion and the form of consideration was in cash and stock.
This Midwest Cash and Stock merger group consisted of the following
transactions:
Buyer Name & State Seller Name & State
- ------------------- -------------------
First Merchants Corp., IN CNBC Bancorp, OH
Merchants and Manuf., WI Fortress Bancshares Inc., WI
MB Financial Inc., IL First Lincolnwood Corp., IL
Marshall & Illsley Corp., WI Century Bancshares, Inc., MN
Macatawa Bank Corp., MI Grand Bank Financial, MI
Marshall & Illsley Corp., WI Richfield State Agency, MN
First Merchants Corp., IN Lafayette Bancorp., IN
First National of NE, NE Castle BancGroup Inc., IL
Second Bancorp Inc., OH Commerce Exchange, OH
MAF Bancorp Inc., IL Mid Town Bancorp, Inc., IL
Financial Federal MHC, IL Success Bancshares Inc., IL
Allegiant Bancorp Inc., MO Southside Bancshares, MO
First National of NE, NE Commercial Bancshares, SD
Fifth Third Bancorp, OH Peoples Bank of Indy, IN
State Financial Services, WI First Waukegan Corp., IL
Otto Bremer Foundation, MN Dean Financial Services, MN
Popular Inc., PR Gore-Bronson Bancorp, IL
The second group of comparable mergers which Hovde reviewed involved
banks and bank holding companies headquartered in the Midwest announced after
January 1, 1998, in which the seller's assets were between $100 million and $1.0
billion and the form of consideration was in cash only. This Midwest Cash merger
group consisted of the following transactions:
Buyer Name & State Seller Name & State
- ------------------ -------------------
MB Financial Inc., IL First Lincolnwood Corp., IL
First National of NE, NE Castle BancGroup Inc., IL
Second Bancorp Inc., OH Commerce Exchange, OH
Financial Federal MHC, IL Success Bancshares Inc., IL
State Financial Services, WI First Waukegan Corp., IL
Otto Bremer Foundation, MN Dean Financial Services, MN
Popular Inc., PR Gore-Bronson Bancorp, IL
In the final group, Hovde reviewed comparable mergers involving banks
and bank holding companies headquartered Nationwide, announced after January 1,
2001, in which the seller's assets were between $100 million and $1.0 billion
and the form of consideration was in cash and stock. This Nationwide Cash and
Stock merger group consisted of the following transactions:
Buyer Name & State Seller Name & State
- ------------------ -------------------
Royal Bank of Canada Admirality Bancorp Inc., FL
United Community, NC Community Bancshares, NC
Prosperity Bancshares, TX Southwest Bank Holding, TX
First State Bancorp, NM First Community, CO
BOK Financial Corp., OK Bank of Tanglewood, NA, TX
Synovus Financial, GA Community Financial, TN
BancorpSouth Inc., MS Pinnacle Bancshares, AR
Washington Trust, RI First Financial Corp., RI
Texas Regional, TX Riverway Holdings, Inc., TX
International Banc, TX National Bancshares, TX
Regions Financial, AL Park Meridian Financial, NC
Three Rivers Bancorp, PA Pennsylvania Capital, PA
Chittenden Corp., VT Maine Bank Corp., ME
12
Hovde calculated the medians, averages, high and lows for the following
relevant transaction ratios in the Midwest Cash and Stock merger group, Midwest
Cash merger group and the Nationwide Cash and Stock merger group: (i) the
multiple of the offer value to the acquired company's book value per share and
tangible book value per share; (ii) the multiple of the offer value to the
acquired companies earnings per share for the twelve months preceding the
announcement date of the transaction; and (iii) the tangible book value premium
to core deposits, each as of the announcement date of the transaction. Hovde
compared these multiples with the corresponding multiples for the merger, based
on merger consideration per share of $17.00. The results of this analysis are as
follows:
Offer Value to
-----------------------------------------------
Ratio of Tangible
12 months Book Value
Tangible Preceding Premium to Core
Book Value Book Value Earnings Deposits
(x) (x) (x) (%)
-------------- --------------- -------------- -------------------
MetroBanCorp 260.59 260.59 26.3 20.0
Midwest Cash and Stock merger group median 205.07 229.47 18.5 12.95
Midwest Cash and Stock merger group average 218.46 238.43 20.1 14.92
Midwest Cash and Stock merger group high 417.84 417.84 31.7 34.48
Midwest Cash and Stock merger group low 149.78 152.84 12.4 4.24
Midwest Cash merger group median 179.84 215.96 21.9 9.80
Midwest Cash merger group average 200.73 230.97 23.3 12.63
Midwest Cash merger group high 302.30 340.09 31.7 23.39
Midwest Cash merger group low 152.73 152.73 16.2 4.24
Nationwide Cash and Stock merger group median 206.09 207.26 18.3 16.75
Nationwide Cash and Stock merger group average 223.43 227.13 20.5 15.75
Nationwide Cash and Stock merger group high 414.75 414.75 37.7 25.75
Nationwide Cash and Stock merger group low 146.10 152.54 9.1 4.66
Mark-to-Market Analysis. Hovde calculated liquidation value of
MetroBanCorp based on estimated value of its component assets and liabilities.
For purposes of this analysis, Hovde assumed an aggregate value equal to common
equity of MetroBanCorp at June 30, 2002, as adjusted to reflect an estimated
range of values for transaction costs, premiums paid to retire existing
borrowings, deposit premiums, marked-to-market adjustments on the loan and
investment portfolios, and appraisals of fixed assets. This analysis imputed a
per share value of $12.09, which was lower than the merger consideration per
share of $17.00.
Premium to Market Analysis Based on MetroBanCorp Historical Trading
Valuation. Hovde reviewed the merger consideration premium to MetroBanCorp
common stock price at different intervals during the period commencing September
3, 2002, using the 5-day, 10-day, 20-day, 30-day, 60-day, 90-day, and 120-day
average closing price of common stock on days where trades were executed. Using
such average closing prices, Hovde observed that the premium to MetroBanCorp
common stock was as follows:
13
MetroBanCorp Premium
average to average
closing price trading price
---------------- ---------------------
Last Trading Day $9.86 72.41%
Last 5 Trading Days $9.36 81.62%
Last 10 Trading Days $9.23 84.18%
Last 20 Trading Days $9.06 87.64%
Last 30 Trading Days $9.25 83.78%
Last 60 Trading Days $9.35 81.82%
Last 90 Trading Days $8.96 89.73%
Last 120 Trading Days $8.66 96.30%
Stock Trading History Analysis. Hovde reviewed the history of the
reported trading prices and volume of MetroBanCorp common stock and the
relationship between the movements in the prices of MetroBanCorp common stock to
movements in certain stock indices, including the Standard & Poor's 500 Index,
the Russell 2000 Financial Services Index, and the NASDAQ Bank and Thrift Index.
Hovde noted that during the one year period ended September 3, 2002,
MetroBanCorp common stock outperformed the NASDAQ Bank and Thrift Index, Russell
2000 Financial Services Index and the Standard & Poor's 500 Index.
Beginning Index Ending Index Value
Value on September on September 3,
3, 2001 2002
------------------ ------------------
MetroBanCorp 100.00% 125.82%
Nasdaq Bank and Thrift Index 100.00% 110.38%
Russell 2000 Financial Services Index 100.00% 103.21%
S&P 500 Index 100.00% 77.46%
Hovde also noted that during the three year period ended September 3,
2002, MetroBanCorp common stock underperformed the NASDAQ Bank and Thrift Index,
and outperformed the Russell 2000 Financial Services Index and Standard & Poor's
500 Index.
Beginning Index Ending Index Value
Value on September on September 3,
3, 1999 2002
------------------ ------------------
MetroBanCorp 100.00% 122.41%
Nasdaq Bank and Thrift Index 100.00% 131.99%
Russell 2000 Financial Services Index 100.00% 120.97%
S&P 500 Index 100.00% 64.69%
Based upon the foregoing analyses and other investigations and
assumptions set forth in its opinion, without giving specific weightings to any
one factor or comparison, Hovde determined that the merger consideration per
share of $17.00 was fair from a financial point of view to the MetroBanCorp
shareholders.
Recommendation of the MetroBanCorp Board of Directors
The Board of Directors of MetroBanCorp has carefully considered and
unanimously approved the merger agreement and unanimously recommends that the
shareholders of MetroBanCorp vote "FOR" approval of the merger agreement and the
transactions contemplated by the agreement.
Conversion of MetroBanCorp Common Stock
Under the terms of the merger agreement, shareholders of MetroBanCorp
of record when the merger is completed will be entitled to receive a cash amount
equal to seventeen dollars ($17.00) per share of MetroBanCorp common stock.
14
Treatment of MetroBanCorp Stock Options
Each option to acquire MetroBanCorp common stock granted under
MetroBanCorp's stock option and incentive plans, outstanding and exercisable
immediately prior to the effective time of the merger, will be converted at the
effective time into the right to receive a cash amount equal to the excess of
seventeen dollars ($17.00) over the option exercise price.
Exchange of Certificates
As soon as reasonably practicable but in no event more than ten (10)
calendar days after the effective time of the merger, First Indiana will mail a
letter of transmittal to shareholders of MetroBanCorp. This transmittal letter
will contain instructions with respect to the surrender of certificates
representing shares of MetroBanCorp common stock. You should NOT return your
MetroBanCorp stock certificates with the enclosed proxy and should not forward
them to First Indiana until you receive a letter of transmittal from First
Indiana.
If your certificate for your shares of MetroBanCorp common stock has
been lost, stolen or destroyed, First Indiana will pay the conversion price to
the registered owner after First Indiana receives from you an agreement to
indemnify First Indiana against loss from such lost, stolen or destroyed
certificate and appropriate evidence of the loss, theft or destruction, such as
an affidavit.
First Indiana will pay seventeen dollars ($17.00) per share of
MetroBanCorp common stock to each former shareholder of MetroBanCorp as soon as
practical following the shareholder's delivery to First Indiana of his or her
certificate(s) representing shares of MetroBanCorp common stock.
Security Ownership of Management and Certain Beneficial Owners
The following table sets forth information concerning the beneficial
ownership of MetroBanCorp's common stock by directors and executive officers,
all directors and executive officers as a group (12 persons), and all persons
known to MetroBanCorp to be beneficial owners of more than five percent of
MetroBanCorp's common stock. The stock ownership information below has been
furnished to MetroBanCorp by the named persons or obtained from information
filed with the Commission. Beneficial ownership as reported in this table has
been determined in accordance with the regulations of the Commission and
includes shares of common stock which may be acquired within 60 days. Unless
indicated otherwise, the information below is current as of September 30, 2002,
and each named beneficial owner possesses sole voting and investment power with
respect to all shares. On September 30, 2002 MetroBanCorp had 2,056,837 shares
of common stock outstanding.
Name and Address of Beneficial Owner Shares Beneficially Percentage of
Owned (1) Class (1)
DIRECTORS
Chris G. Batalis (2,6) 59,621 2.86%
615 W. Colfax Avenue
South Bend, IN 46601
Ike G. Batalis (2,3,6,12) 107,197 4.99%
10333 N. Meridian, Ste 111
Indianapolis, IN 46290
Terry L. Eaton(4,6) 75,239 3.60%
10645 Winterwood
Carmel, IN 46032
15
James F. Keenan(5) 13,718 0.67%
423 Sycamore St., Suite 101
PO Box 906
Niles, MI 49120
Robert L. Lauth, Jr.(6,7) 60,286 2.89%
9777 N. College Avenue
Indianapolis, IN 46280
James C. Lintzenich(8) 35,479 1.71%
10707 Club Chase
Fishers, IN 46038
R.D. "Rusty" Richardson (6,9) 53,866 2.58%
1535 Prestwick Lane
Carmel, IN 46032
Edward R. Schmidt (6,10) 64,102 3.07%
One Indiana Square, Suite 2800
Indianapolis, IN 46204
Donald F. Walter(6,11) 70,397 3.37%
32578 S. Lyman Ferry Road
Sedro Woolley, WA 98284
EXECUTIVE OFFICERS
Charles V. Turean (16) 41,195 1.97%
10333 N. Meridian, Suite 111
Indianapolis, IN 46290
Andrew E. Illyes (14) 26,178 1.26%
10333 N. Meridian, Suite 111
Indianapolis, IN 46290
Gregory J. Murray (15) 17,717 .86%
10333 N. Meridian, Suite 111
Indianapolis, IN 46290
Directors and Executive Officers as a group of twelve 624,995 25.87%
BENEFICIAL OWNERS OF 5% OR MORE OF METROBANCORP'S
COMMON STOCK
Mary Morris Leighton 1992 Trust (13) 234,651 11.41%
Wells Fargo Bank, N. A. Trustee
112 West Jefferson Boulevard
South Bend, Indiana 46601
Judd C. Leighton 298,831 14.53%
211 West Washington Avenue, Suite 2400
South Bend, Indiana 46601
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(1) Based upon information provided to the Company by each director and
executive officer.
(2) Chris G. Batalis and Ike G. Batalis are brothers.
(3) Includes 4,074 shares of common stock held by a custodian for Mr. Batalis'
benefit in an individual retirement account. Also includes 60,379 shares of
common stock issuable under options granted pursuant to the Company's 1994 Stock
Option and Stock Appreciation Rights Plan.
(4) Includes 28,554 shares of common stock held jointly with Mr. Eaton's spouse.
(5) Includes 7,483 shares of common stock held by Walter and Keenan Financial
Consulting Co., of which Mr. Keenan serves as the President and Chief Executive
Officer. Also includes 4,135 shares of common stock issuable under options
granted pursuant to the 1994 Directors' Stock Option Plan.
(6) Includes 30,875 shares of common stock issuable under options granted
pursuant to the 1994 Directors' Stock Option Plan.
(7) Includes 11,363 shares of common stock held jointly with Mr. Lauth's spouse.
Also includes 18,048 shares held by Mr. Lauth's spouse.
(8) Includes 1,667 shares and 1,666 shares of common stock held for the benefit
of Mr. Lintzenich's minor son and daughter, respectively. Also includes 14,164
shares of common stock issuable under options granted pursuant to the 1994
Directors' Stock Option Plan.
(9) Includes 264 shares of common stock held in equal amounts for the benefit of
Mr. Richardson's minor son and daughter, with respect to which he disclaims any
beneficial interest. Also includes 13,369 shares of common stock held jointly
with Mr. Richardson's spouse.
(10) Includes 1,000 shares of common stock held by a custodian for Mr. Schmidt's
benefit in an individual retirement account.
(11) Includes 2,205 shares of common stock held by a custodian for Mr. Walter's
benefit in an individual retirement account. Also includes 5,250 shares held by
Donald F. Walter and Charles T. Walter as joint tenants.
(12) Includes 3,820 shares of common stock held in the MetroBanCorp Employees'
Thrift and Retirement Plan.
(13) Trust was established in 1992 and funded upon death of Mary Morris Leighton
on March 16, 2001.
(14) Includes 64 shares held jointly with Mr. Illyes' spouse. Also includes
4,117 shares held by a custodian for Mr. Illyes' benefit in an individual
retirement account and 2,281 shares of common stock held in MetroBanCorp
Employees' Thrift and Retirement Plans. Also includes 4,007 shares of common
stock under options granted pursuant to the 1994 Directors' Stock Option Plan
and 15,285 shares issuable pursuant to options granted under the 1994 Stock
Option and Stock Appreciation Rights Plan.
(15) Includes 4,469 shares of common stock held by a custodian for Mr. Murray's
benefit in an individual retirement account and 1,493 shares held in the
MetroBanCorp Employee's Thrift and Retirement Plan. Also includes 2,000 shares
of common stock issuable under the 1994 Directors' Stock Option Plan and 9,678
shares issuable under the 1994 Stock Option and Stock Appreciation Rights Plan.
(16) Includes 1,603 shares of common stock held by a custodian for Mr. Turean's
benefit in an individual retirement account. Also includes 2,509 shares held in
the MetroBanCorp Employee's Thrift and Retirement Plan and 732 shares of common
stock held for the benefit of Mr. Turean's minor son and 732 shares of stock
held for the benefit of Mr. Turean's minor daughter. Also includes 4,007 shares
of commons stock issuable under options granted pursuant to the 1994 Director's
Stock Option Plan and 2,911 shares of common stock issuable under the 1994 Stock
Option and Stock Appreciation Rights Plan.
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Dissenters' Rights
The Indiana Business Corporation Law provides shareholders of merging
corporations with certain dissenters' rights. The dissenters' rights of
MetroBanCorp shareholders are set forth in Indiana Code Chapter 23-1-44, a copy
of which is attached to this Proxy Statement as Appendix C. Shareholders of
MetroBanCorp will be entitled to dissenters' rights only upon strict compliance
with procedures of the Indiana Business Corporation Law.
The Indiana Business Corporation Law provides that shareholders of
MetroBanCorp have the right to demand payment for the fair value of their shares
of MetroBanCorp common stock immediately before the merger becomes effective,
excluding any appreciation or depreciation in the value in anticipation of the
merger, unless a court determines that such exclusion would be inequitable. To
claim this right, the shareholder must first:
o Deliver to MetroBanCorp, before the vote is taken, written
notice of the shareholder's intent to demand payment in cash
for the shareholder's shares if the merger is consummated, and
o Not vote in favor of the merger in person or by proxy.
Dissenting shareholders may send their written notice to Charles V.
Turean, Secretary, MetroBanCorp, 10333 N. Meridian Street, Suite 111,
Indianapolis, Indiana 46290.
If the merger is approved by MetroBanCorp shareholders, First Indiana
will send notice of dissenters' rights to those shareholders satisfying the
above conditions no later than ten (10) days after shareholder approval has
occurred. The notice will state the procedures the dissenting shareholder
thereafter must follow to exercise dissenters' rights in accordance with Indiana
law.
A shareholder of MetroBanCorp who is sent such a notice must then:
o Demand payment for the shareholder's shares of MetroBanCorp
common stock,
o Certify whether beneficial ownership of the shares of
MetroBanCorp common stock was acquired before the dates set
forth in such notice; and
o Deposit the shareholder's certificates representing shares of
MetroBanCorp common stock in accordance with the terms of such
notice.
MetroBanCorp shareholders who do not demand payment or deposit the
shareholder's certificates representing shares of MetroBanCorp common stock as
required and within the applicable time period are considered to have voted such
shares of MetroBanCorp common stock in favor of the merger and are not entitled
to receive payment for such shares under the dissenters' rights provision of the
Indiana Business Corporation Law.
A shareholder who does not comply with the preliminary conditions
described above will be considered not to be entitled to dissenters' rights
under the Indiana Business Corporation Law. Shareholders who execute and return
the enclosed proxy but do not specify a choice on the merger proposal will be
deemed to have voted in favor of the merger and accordingly to have waived their
dissenters' rights, unless the shareholder revokes the proxy prior to its being
voted.
Upon consummation of the merger, First Indiana will pay each dissenting
shareholder who has fully complied with all statutory requirements and First
Indiana's notice, and who was the beneficial owner of the MetroBanCorp common
stock prior to September 4, 2002 (the date that the merger was first publicly
announced), First Indiana's estimate of the fair value of each share of
MetroBanCorp common stock as of the time immediately prior to the merger,
excluding any appreciation in value in anticipation of the merger.
Dissenters who comply with the above procedures can object to the fair
value established by First Indiana by stating their estimate of the fair value
and demanding payment of the additional amount claimed as fair value. First
Indiana can elect to agree to the dissenters' fair value demand or can commence
an action in the Marion County Circuit or Superior Court for a judicial
determination of the fair value. The court may appoint appraisers to determine
the fair value. The cost of the
18
proceeding, including compensation and expenses of the appraisers and counsel
for the parties and experts, will be assessed against all parties to the action
in such amounts as the court finds equitable. Each dissenter made a party to the
action will be entitled to receive the amount, if any, by which the court finds
the fair value of this dissenters' shares, plus interest, exceeds the amount
paid by First Indiana.
The foregoing summary of the applicable provisions of Chapter 44 of
Title 23 of the Indiana Business Corporation Law is not intended to be a
complete statement of such provisions, and is qualified in its entirety by
reference to such Chapter, a copy of which is attached as Appendix C. Any
MetroBanCorp shareholder who intends to dissent from the merger should review
the text of Appendix C carefully and should also consult with an attorney. Any
shareholder who fails to strictly follow the procedures described in the statute
will forfeit dissenters' rights.
Conditions to the Completion of the Merger
MetroBanCorp's and First Indiana's obligations to complete the merger
are subject to the satisfaction of the following conditions at or prior to the
effective time of the merger:
o The merger agreement will have been approved by the
affirmative vote of the holders of at least a majority of the
issued shares of MetroBanCorp common stock and shareholders
owning no more than ten percent (10%) of the outstanding
shares of MetroBanCorp will have exercised a right to dissent
from the merger;
o MetroBanCorp, as the sole shareholder of MetroBank, will have
approved and adopted the merger agreement;
o First Indiana and MetroBanCorp will have received all
regulatory approvals required for the merger;
o Hovde will have issued its fairness opinion stating that the
consideration to be received by the MetroBanCorp shareholders
is fair from a financial point of view;
o First Indiana and MetroBanCorp will have received certain
officers' certificates and other closing documents;
o The representations and warranties contained in the merger
agreement will be accurate at the effective time of the
merger;
o Certain covenants set forth in the merger agreement will have
been fulfilled;
o The closing book value of MetroBanCorp, excluding certain
allowed reductions which might occur as a result of the
merger, will not be less than $15,342,000. However, First
Indiana will still be obligated to proceed with the merger if
all other conditions precedent to such obligation are
satisfied and MetroBanCorp agrees to certain reductions in the
conversion price;
o The aggregate amount of benefits payable to the officers,
directors and employees of MetroBanCorp under certain
MetroBanCorp employment agreements, change of control
agreements, and incentive plans shall not exceed $1,752,398;
o First Indiana will have received a favorable, written opinion
from KPMG with respect to certain issues related to Section
280G of the Internal Revenue Code; and
o MetroBank will have reached a final disposition with respect
to certain outstanding regulatory compliance matters.
The conditions to consummation of the merger, which are more fully
enumerated in the merger agreement, are requirements subject to waiver by the
party entitled to the benefit of such conditions, as set forth in the merger
agreement. The condition of MetroBanCorp reaching a final disposition with
respect to certain outstanding regulatory compliance matters has been satisfied.
19
Interests of Certain Persons in the Merger
Interest of Ike G. Batalis. Ike G. Batalis and First Indiana have
entered into a Consulting Agreement, wherein Mr. Batalis agrees, contingent upon
the consummation of the bank merger, to the termination of his employment
agreement as of the effective time of the merger; to waive his rights to further
payments and benefits under that employment agreement, as well as his rights to
any payments under MetroBanCorp's Incentive Plan and MetroBanCorp's Target
Benefit Plan, and to accept in lieu of such payments and benefits, in respect of
his services prior to the effective time, (i) a lump sum cash amount equal to
$186,340, relating to the benefit to which he would have been entitled under
MetroBanCorp's Target Benefit Plan had it been continued in effect and had he
terminated service voluntarily on December 31, 2002, otherwise than in
connection with a change in control, plus (ii) a lump sum cash payment in the
amount of $395,000. That employment agreement entitled Mr. Batalis to receive an
amount equivalent to three (3) years' base salary plus other benefits for a
period of two (2) years upon the termination of his employment due to a change
of control of MetroBanCorp. The Incentive Plan provided for the establishment of
a fund in an amount equal to 4% of the net total sale value of MetroBanCorp, of
which 75% would be paid to Mr. Batalis upon MetroBanCorp being acquired. Based
upon the total value of the merger, Mr. Batalis would have received $751,206
under the Incentive Plan. Under the terms of the Consulting Agreement, Mr.
Batalis will also receive (i) a signing bonus in the amount of $1,000,000; (ii)
consulting fees at an annual rate of $54,250 for a three-year period in exchange
for his future service as a consultant and his agreement not to compete with
First Indiana and its subsidiaries; and (iii) additional fees of up to $50,000
per year for a three year period contingent upon his meeting certain defined
targets with respect to the retention of the loan and deposit business of
MetroBank. In addition, Mr. Batalis will be entitled to receive the
nonforfeitable accrued benefits payable to him under the MetroBanCorp Employees
Thrift and Retirement Plan and the MetroBanCorp Supplemental Executive
Retirement Plan in respect to his service prior to the effective time.
Other Executive Officers. Pursuant to the terms of the merger
agreement, Charles V. Turean, Gregory J. Murray and Andrew E. Illyes have
entered into separate agreements with First Indiana which provide that,
contingent upon the consummation of the merger, their individual employment
agreements will be terminated, as of the effective time of the merger, and they
will each waive their rights to any payments under those employment agreements
and under MetroBanCorp's Target Plan, and accept, in lieu of such payments, a
single sum cash payment in an amount equal to $253,016 for Mr. Turean, $228,706
for Mr. Murray and $219,964 for Mr. Illyes. The employment agreements provided
that Messrs. Murray, Illyes and Turean would each receive an amount equal to two
(2) years' base salary plus various other benefits for a period of one (1) year
upon the termination of his employment due to a change in control of
MetroBanCorp. In addition, Messrs. Murray, Illyes and Turean will be entitled to
receive the nonforfeitable accrued benefits payable to them under the
MetroBanCorp Employees Thrift and Retirement Plan and the MetroBanCorp
Supplemental Executive Retirement Plan in respect of their service prior to the
effective time of the merger.
Break-up Fee
MetroBanCorp has agreed to pay First Indiana a break-up fee in the
amount of $1,500,000, plus out-of-pocket expenses, in the event that (i) the
MetroBanCorp Board fails to recommend to MetroBanCorp shareholders approval of
the merger agreement; (ii) the MetroBanCorp Board withdraws, modifies or
conditions its recommendation of approval of the merger agreement to the
MetroBanCorp shareholders; (iii) the MetroBanCorp Board fails to undertake a
solicitation of proxies in favor of the merger from the shareholders of
MetroBanCorp or MetroBanCorp fails to approve the bank merger as the sole
shareholder of MetroBank; or (iv) MetroBanCorp terminates the merger agreement
as a result of contemporaneously entering into a definitive agreement with a
third party.
Termination of the Merger Agreement
The merger agreement contains provisions allowing First Indiana and
MetroBanCorp to terminate the merger agreement and the merger for various
reasons. The merger may be terminated by First Indiana or MetroBanCorp before or
after the shareholders of MetroBanCorp have approved the merger if one of the
events which gives a party the right to terminate occurs. The merger agreement
may be terminated:
o by the mutual agreement of the Boards of Directors of First
Indiana and MetroBanCorp;
o by either First Indiana or MetroBanCorp if the merger has not
been completed by February 28, 2003;
20
o by either First Indiana or MetroBanCorp if there has been a
breach of any representation or warranty contained in the
merger agreement by MetroBanCorp, in the case of termination
by First Indiana, or by First Indiana, in the case of
termination by MetroBanCorp, and the breach has not been cured
within 30 days after written notice to the breaching party of
the breach;
o by either First Indiana or MetroBanCorp if there has been a
breach of any of the covenants or agreements contained in the
merger agreement by MetroBanCorp, in the case of termination
by First Indiana, or by First Indiana, in the case of
termination by MetroBanCorp, and (1) the breach has not been
cured within 30 days written notice to the breaching party of
the breach; and (2) the breach will be likely, individually or
in the aggregate with other breaches, to result in a material
adverse effect, as defined in the merger agreement;
o by either First Indiana or MetroBanCorp if the terminating
party reasonably determines that the merger has become
impracticable because of (1) the commencement or threat of any
claim or litigation against First Indiana, First Indiana Bank,
MetroBanCorp, or MetroBank, or any director or officer of any
of these companies relating to the merger, the bank merger, or
the merger agreement, if First Indiana is the terminating
party or (2) the commencement, a threat of any material claim,
litigation or proceeding against First Indiana which relates
to the merger or merger agreement or which is likely to have a
material adverse effect on First Indiana, if the terminating
party is MetroBanCorp; or
o by either First Indiana or MetroBanCorp if the shareholders of
MetroBanCorp do not approve the merger agreement and
MetroBanCorp has not satisfied its obligation to obtain
shareholder approval.
Additionally, First Indiana may terminate the merger if:
o there has been a material adverse change in the business,
assets, capitalization, financial condition or results of
operations of MetroBanCorp and its subsidiaries (considered as
a whole) as of the effective time of the merger compared to
that in existence as of September 4, 2002 (the date of the
merger agreement), other than changes that occur as a result
of changes in banking laws, accounting principles, actions
approved by First Indiana, changes such as interest rates that
affect the banking industry generally and changes and charges
that are a result of the merger; or
Further, MetroBanCorp may terminate the merger if:
o there has been a material adverse change in the financial
condition, results of operations, business, assets or
capitalization of First Indiana on a consolidated basis as of
the effective time as compared to that in existence on
September 4, 2002, other than changes that occur as a result
of changes in banking laws, accounting principles, changes
such as interest rates that affect the banking industry
generally and changes and charges that are a result of the
merger; or
o prior to approval of the shareholders of MetroBanCorp of the
merger, without breaching its covenant relating to
negotiations with other potential acquirors, MetroBanCorp
enters into a definitive agreement with a third party that
provides for an acquisition of MetroBanCorp or a subsidiary of
MetroBanCorp on terms determined in good faith by the
MetroBanCorp Board to be more favorable to the shareholders of
MetroBanCorp than the merger with First Indiana and the
MetroBanCorp Board has determined that to proceed with the
merger with First Indiana would violate the directors'
fiduciary duties to MetroBanCorp's shareholders.
Upon termination for any of these reasons, the merger agreement will be of no
further force or effect except with respect to those provisions concerning
confidentiality, the payment of expenses and the break-up fee.
Restrictions Affecting MetroBanCorp
The merger agreement contains a number of restrictions regarding the
conduct of business of MetroBanCorp until the merger is completed. Among other
items, MetroBanCorp or any subsidiary of MetroBanCorp may not, without the prior
written consent of First Indiana:
21
o change its capital stock accounts, except for the issuance of
up to 446,007 shares of MetroBanCorp common stock under the
MetroBanCorp Stock Option Plans and 1,070 shares of
MetroBanCorp common stock under the MetroBanCorp Employee
Equity Ownership Plan;
o authorize any additional class of stock or issue securities
other than or in addition to the securities which were issued
and outstanding as of the date of the merger agreement;
o distribute or pay any dividends or make any other
distributions to its shareholders except that (1) MetroBank
may pay cash dividends to MetroBanCorp in the ordinary course
of business for payment of reasonable and necessary business
and operating expenses of MetroBank and to provide funds for
MetroBanCorp's dividends to its shareholders in accordance
with the merger agreement; and (2) MetroBanCorp may pay to its
shareholders its usual and customary quarterly cash dividend
of no greater than seven and one-half cents ($.075) per share
for any quarterly period;
o redeem any of its outstanding shares of common stock;
o merge, consolidate or sell its assets or securities to any
other person or entity;
o purchase any assets or securities or assume any liabilities of
another bank, bank holding company or other entity, except in
the ordinary course of business;
o make any loan or commitment to lend money or accept any
deposit except in accordance with existing banking practices;
o acquire or dispose of any real or personal property or fixed
asset in excess of certain dollar value thresholds except in
the ordinary course of business;
o amend or restate its Articles of Incorporation or By-Laws or
the Articles of Incorporation or By-Laws of any of its
subsidiaries;
o open, close or alter any of its offices or facilities;
o fail to maintain the reserve for loan and lease losses of its
subsidiary financial institution;
o elect or appoint any new executive officers or directors of
MetroBanCorp or any of its subsidiaries;
o hire or employ additional employees of MetroBanCorp or any
subsidiary, except those which are reasonably necessary for
the proper operation of their businesses; or
o negotiate or discuss with third parties a possible sale,
merger or combination of MetroBanCorp, unless the failure to
do so would be a breach of the fiduciary duties of the
MetroBanCorp Board of Directors.
This discussion of the restrictions imposed by the merger agreement is not
intended to be exhaustive, but includes the material restrictions imposed on
MetroBanCorp. Please refer to the merger agreement, which has been attached as
Appendix A, for a complete listing of the restrictions.
Regulatory Approvals Required for the Merger and the Bank Merger
First Indiana and MetroBanCorp have agreed to use their best efforts to
obtain all regulatory approvals required to complete the transactions
contemplated in the merger agreement. The merger may require the prior approval
of the Board of Governors of the Federal Reserve System. The Indiana Department
of Financial Institutions may make comments to the Federal Reserve regarding the
mergers. The mergers cannot be completed without the approval of the Federal
Reserve or the waiver of approval by the Federal Reserve under 12 C.F.R. Section
225.12. The bank merger requires the approval of the Office of the Comptroller
of the Currency and cannot be completed without this approval.
22
As of the date of this document, none of the regulators have approved
the merger.
Approval of the merger by the Federal Reserve, or waiver of the process
thereby, or approval of the bank merger by the OCC is not to be interpreted as
the opinion of the regulatory authorities that the merger or the bank merger is
favorable to the shareholders of MetroBanCorp from a financial point of view or
that the regulatory authorities have considered the adequacy of the terms of the
merger or the bank merger. An approval or waiver of the approval process by the
Federal Reserve or an approval by the OCC in no way constitutes an endorsement
or a recommendation of the merger or bank merger by such regulatory authority.
o Federal Reserve
The merger may be subject to approval by the Federal Reserve. However,
First Indiana has filed a request for waiver under 12 C.F.R. Section
225.12(d)(2) of the formal approval process normally required for approval of a
merger under Section 3 of the Bank Holding Company Act of 1956, as amended.
Assuming the Federal Reserve approves the merger, rather than waiving the
approval process, First Indiana and MetroBanCorp may not complete the merger
until 30 days after that approval. During that time, the Department of Justice
may challenge the merger on antitrust grounds. With the approval of the Federal
Reserve and the Department of Justice, the waiting period may be reduced to no
fewer than 15 days. The commencement of an antitrust action by the Department of
Justice would stay the effectiveness of Federal Reserve approval of the merger,
unless a court specifically orders otherwise.
In reviewing a transaction under the applicable statutes, the Federal
Reserve will consider the financial and managerial resources of the companies
and their subsidiary banks and the convenience and needs of the communities to
be served. As part of, or in addition to, consideration of these facts, First
Indiana and MetroBanCorp anticipate that the Federal Reserve will consider the
regulatory status of First Indiana and MetroBanCorp, current and projected
economic conditions in the areas of the Midwestern United States where First
Indiana and MetroBanCorp operate, and the overall capital and safety and
soundness standards established by the Federal Deposit Insurance Corporation
Improvement Act of 1991 and the regulations promulgated under that act.
Under the Community Reinvestment Act of 1977, as amended, the Federal
Reserve must take into account the record of performance of each First Indiana
and MetroBanCorp in meeting the credit needs of the entire community, including
low and moderate-income neighborhoods, served by each company and their
subsidiaries. Each of First Indiana's and MetroBanCorp's subsidiary depository
institutions has either an outstanding or satisfactory CRA rating with the
appropriate federal regulator.
In the event that the Federal Reserve denies the request for waiver of
the approval process and requires a formal application regarding the merger, the
Bank Holding Company Act and Federal Reserve regulations require publication of
notice of, and the opportunity for public comment on, the application submitted
by First Indiana for approval of the merger, and authorize the Federal Reserve
to hold a public meeting in connection with the application if the Federal
Reserve determines that a meeting would be appropriate. Any meeting or comments
provided by third parties could prolong the period during which the application
is subject to review by the Federal Reserve.
o Department of Financial Institutions
The Federal Reserve approval of the merger is subject to comment by the
DFI. The merger is exempt from the application requirements of IC 28-2-14-12,
based upon the exemption contained in IC 28-2-14-15(b) and the definition of
"acquire" contained in IC 28-2-14-1.
o Office of the Comptroller of the Currency
The bank merger requires the approval of the OCC. First Indiana has
filed the required application with the OCC for approval of the bank merger. The
OCC will review the bank merger under statutory criteria which are substantially
the same as those required to be considered by the Federal Reserve in evaluating
the merger, except that the OCC will not conduct an independent antitrust
analysis of the bank merger if the Federal Reserve does so. Applicable
regulations require publication of
23
notice of the application for approval of the bank merger and an opportunity for
the public to comment on the application in writing and to request a hearing.
Any transaction approved by the OCC may not be completed until 30 days after
such approval, during which time the U.S. Department of Justice may challenge
such transaction on antitrust grounds and seek divestiture of certain assets and
liabilities. With the approval of the OCC and the U.S. Department of Justice,
the waiting period may be reduced to no less than 15 days.
Effective Time
The merger will become effective upon the filing, in the office of the
Secretary of State of the State of Indiana, of Articles of Merger, or at such
later date and time as may be set forth in such Articles. First Indiana and
MetroBanCorp currently anticipate that the merger will be consummated during
January, 2003. However, completion of the merger could be delayed if there is a
delay in obtaining the required regulatory approvals or in satisfying other
conditions to the merger.
Management, Personnel and Employee Benefits After the Merger
Upon consummation of the merger, the separate corporate existence of
MetroBanCorp will cease. Consequently, the directors and officers of
MetroBanCorp will no longer serve in such capacities after the effective time of
the merger.
MetroBank will become a wholly-owned subsidiary of First Indiana. The
directors and officers of all of MetroBanCorp's subsidiaries serving at the
effective time of the merger will no longer serve in such capacities after the
effective time of the merger. Following the effective time of the merger, First
Indiana, as the sole shareholder of each of the subsidiaries, will have the
ability to elect the boards of directors and officers of the subsidiaries. The
current officers of First Indiana will continue in their respective positions
after the merger, until the Board of Directors of First Indiana determines
otherwise.
Those persons who are employees of MetroBanCorp as of the effective
time of the merger, who continue as employees of First Indiana, First Indiana
Bank or any other subsidiary of First Indiana after the effective time of the
merger, will receive substantially the same employee benefits on substantially
the same terms and conditions that First Indiana and First Indiana Bank may
offer to similarly situated employees of its banking subsidiaries from time to
time. In addition, years of service of an employee of MetroBanCorp or any of its
subsidiaries prior to the effective time of the merger will be credited to each
such employee for purposes of eligibility under First Indiana employee welfare
benefit and fringe benefit plans and for purposes of eligibility and vesting,
but not for purposes of accrual or contributions, under the First Indiana
Corporation Defined Benefit Pension Plan ("First Indiana Pension Plan"), the
First Indiana Corporation 401(k) Plan ("First Indiana 401(k) Plan"), and the
First Indiana Corporation Stock Purchase Plan ("First Indiana Stock Purchase
Plan").
Those officers and employees of MetroBanCorp or any of its subsidiaries
who otherwise meet the eligibility requirements of the First Indiana Pension
Plan, the First Indiana 401(k) Plan and the First Indiana Stock Purchase Plan,
based upon their age or years of service to MetroBanCorp or any of its
subsidiaries, will become participants under the First Indiana Pension Plan, the
First Indiana 401(k) Plan and the First Indiana Stock Purchase Plan as of the
effective time of the merger or as soon as administratively practical
thereafter. Those officers and employees who do not meet the eligibility
requirements of the First Indiana Pension Plan, the First Indiana 401(k) Plan or
the First Indiana Stock Purchase Plan on such date, will become participants in
these plans on the first "plan entry date" (as defined in the First Indiana
Pension Plan, the First Indiana 401(k) Plan or the First Indiana Stock Purchase
Plan, as the case may be) which coincides with or next follows the date on which
such eligibility requirements are satisfied.
Employees of MetroBanCorp and its Subsidiaries who become participants
in the First Indiana group health plan will be given "creditable coverage"
credit for their coverage under the MetroBanCorp group health plan and for the
First Indiana group health plan's pre-existing condition limitation provisions.
If a condition was not a "pre-existing condition" for a participant in the
MetroBanCorp group health plan it will not be considered to be a pre-existing
condition under the First Indiana group health plan.
The MetroBanCorp Employees Thrift and Retirement Plan ("MetroBanCorp
Thrift Plan") will be terminated, effective as of December 31, 2002, but
contingent on the merger consummating thereafter and contingent on receipt of a
favorable determination letter from the Internal Revenue Service as to the
MetroBanCorp Thrift Plan's status as a qualified plan at its termination.
MetroBanCorp may continue to make matching contributions to the MetroBanCorp
Thrift Plan
24
until the plan is frozen, effective December 31, 2002, so long as the matching
contributions are comparable in amount to past contributions to the plan. All
MetroBanCorp Thrift Plan participants will be fully vested in their benefits
under the Thrift Plan, effective as of December 31, 2002.
In connection with the merger, MetroBanCorp Thrift Plan participants
will direct the Trustee of the MetroBanCorp Thrift Plan to vote the shares of
MetroBanCorp common stock allocated to their accounts with respect to the
merger. In connection with the merger, the Trustee and the Benefits Committee of
the MetroBanCorp Thrift Plan have obtained a written opinion from Hovde to the
effect that the price of seventeen dollars ($17.00) per share to be received by
the MetroBanCorp Thrift Plan in exchange for its shares of MetroBanCorp common
stock will constitute "adequate consideration" as defined in Section 3(18) of
ERISA, and that the terms and conditions of the merger transaction, as they
apply to the MetroBanCorp Thrift Plan, are fair to the MetroBanCorp Thrift Plan
and its participants from a financial point of view.
The MetroBanCorp Employee Equity Ownership Plan ("Equity Plan") will be
terminated, subject to consummation of the merger, effective as of the date
preceding the effective time of the merger. Awards will be granted under the
terms of the Equity Plan for the period ending December 31, 2002. If the
effective time of the merger occurs on or before February 10, 2003, no awards or
related cash payments will be made under the Equity Plan in respect of service
occurring after December 31, 2002. If the effective time of the merger occurs
after February 10, 2003, awards and related cash payments will be made under the
Equity Plan for each one-half (1/2) month of service completed after December
31, 2002, but prior to the effective time of the merger.
The MetroBanCorp Supplemental Executive Retirement Plan ("MetroBanCorp
SERP") and all participation agreements in effect thereunder will be terminated,
subject to consummation of the merger, effective as of the date immediately
preceding the effective time of the merger. No participant under the
MetroBanCorp SERP will accrue any additional benefits under the MetroBanCorp
SERP attributable to periods of service beginning after December 31, 2002. The
accumulated benefit obligation in the MetroBanCorp SERP will, after the
effective time of the merger, be distributed to the MetroBanCorp SERP
participants in single sum distributions in cash.
Prior to the effective time of the merger, the MetroBanCorp Target
Benefit Plan ("Target Plan"), subject to consummation of the merger, will be
amended to provide for the termination of the Target Plan as of the effective
time of the merger and to provide for the forfeiture of any benefits accrued
under the Target Plan.
Prior to the effective time of the merger, all unexercised options and
their related stock appreciation rights ("SARs") granted under the MetroBanCorp
stock option plans, including both the 1994 Directors Stock Option Plan and the
1994 Stock Option and Stock Appreciation Rights Plan, will be surrendered for a
single sum cash payment from MetroBanCorp equal to the difference between the
exercise price of each option and related SAR and the conversion price of
seventeen dollars ($17.00) per share. Effective as of the effective time of the
merger, both of MetroBanCorp's stock option plans will be terminated.
The MetroBanCorp Directors' Retirement Plan ("MetroBanCorp Directors'
Plan") will be amended prior to the effective time of the merger, conditioned on
the consummation of the merger, to provide for its termination, effective as of
the date immediately preceding the date on which the merger is consummated. Each
participant in the MetroBanCorp Directors' Plan will receive a single sum cash
distribution of his vested accrued benefit as of the date of the plan's
termination.
MetroBanCorp will adopt a severance plan ("Severance Pay Plan") for the
benefit of the employees of MetroBanCorp and its subsidiaries, other than Ike G.
Batalis, Charles V. Turean, Gregory J. Murray and Andrew E. Illyes, who remain
employed as of the last business day prior to the date of the consummation of
the merger. Individuals covered by the Severance Pay Plan will receive a
severance benefit, if within twelve (12) months after the effective time of the
merger his or her employment is terminated involuntarily without cause. The
individual's severance benefit will be a single sum payment equal to one week's
base pay times the number of such employee's years of service with MetroBanCorp
and its subsidiaries prior to the effective time of the merger.
The amount that would otherwise be distributable under MetroBanCorp's
Incentive Plan as a result of the merger will be reduced by eliminating the 75%
portion thereof that otherwise would be distributable to Ike G. Batalis. No
portion of the remaining 25% of the benefit payable under the Incentive Plan may
be allocated to Ike G. Batalis. Any portion of the remaining 25% which is
allocated to Charles V. Turean, Gregory J. Murray or Andrew E. Illyes will be
limited to amounts
25
calculated in a manner to cause such payments, when combined with other payment
to not be considered "excess parachute payments" pursuant to Section 280G of the
Code.
Termination of Employment Agreements
For a discussion of the termination of the employment agreements of Ike
G. Batalis, Charles V. Turean, Gregory J. Murray and Andrew E. Illyes see
"Interests of Certain Persons in the Merger" on page ___.
Indemnification; Directors' and Officers' Liability Insurance
The merger agreement provides that First Indiana will, for six (6)
years after the effective time of the merger, indemnify, defend and hold
harmless any person who is or has been a director or officer of MetroBanCorp or
its subsidiaries against all losses, expenses (including attorneys' fees),
claims, damages or liabilities arising out of any claim that is based upon or in
any way relates to any act or omission occurring at or prior to the effective
time of the merger in the person's capacity as a director or officer. First
Indiana will indemnify officers and directors of the subsidiaries of
MetroBanCorp following the effective time of the merger to the full extent then
permitted under applicable federal and state law and by MetroBanCorp's Articles
of Incorporation as in effect on September 4, 2002, including provisions
relating to advances of expenses incurred in the defense of any action or suit.
The merger agreement also provides that First Indiana will maintain in effect
for not less than two (2) years from the effective time of the merger the
directors' and officers' liability insurance policies carried by MetroBanCorp.
However, First Indiana may substitute other liability insurance policies if the
policies provide substantially similar coverage.
FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences of the merger to holders of MetroBanCorp common stock.
This discussion is based upon the Internal Revenue Code of 1986, as
amended, the Treasury Regulations under the Code, Internal Revenue Service
rulings and judicial and administrative decisions in effect as of the date of
this Proxy Statement, all of which are subject to change, possibly with
retroactive effect.
The following discussion is intended only as a summary of the material
federal income tax consequences of the merger and does not purport to be a
complete analysis or listing of all potential tax effects relative to the
merger. The following discussion does not address all aspects of federal income
taxation that may be applicable to certain MetroBanCorp shareholders who may be
subject to special treatment under the federal income tax laws, such as
insurance companies, financial institutions, dealers in securities, tax-exempt
organizations, S corporations and taxpayers subject to the alternative minimum
tax. In addition, the following discussion may not apply to shareholders who
acquired their shares of MetroBanCorp common stock upon the exercise of employee
stock options or otherwise as compensation or who hold their shares as part of a
hedge, straddle or conversion transaction.
The following discussion does not address potential foreign, state,
local and other tax consequences of the merger. This discussion assumes that
MetroBanCorp shareholders hold their respective shares of MetroBanCorp common
stock as capital assets within the meaning of Section 1221 of the Code (i.e.,
property held for investment).
For federal income tax purposes, the merger will be treated as a
taxable sale or exchange of MetroBanCorp common stock by each MetroBanCorp
shareholder (including any shareholder who properly exercises dissenters'
rights). Accordingly, the federal income tax consequences to MetroBanCorp
shareholders receiving cash will generally be as follows:
The shareholder may recognize a capital gain or loss by reason of the
disposition of his, her or its shares of MetroBanCorp common stock pursuant to
the merger.
The capital gain or loss, if any, will be long-term with respect to
shares of MetroBanCorp common stock with a holding period of more than twelve
(12) months as of the effective time of the merger, and for individuals such
capital gain will generally be subject to a maximum federal income tax rate of
twenty percent (20%). The deductibility of capital losses is subject to
limitations for both individuals and corporations.
26
The amount of capital gain or loss to be recognized by each shareholder
will be measured by the difference between the amount of cash received by the
shareholder in connection with the merger, or cash received in connection with
the exercise of dissenters rights, and the shareholder's tax basis in the shares
of MetroBanCorp common stock at the effective time of the merger.
Cash payments made pursuant to the merger, including any cash paid to a
shareholder who properly exercises dissenters' rights, will be reported to the
extent required by the Code to MetroBanCorp shareholders and the Internal
Revenue Service. These amounts will ordinarily not be subject to withholding of
United States federal income tax. However, backup withholding of tax at a rate
of thirty percent (30%) will apply to a holder who fails to supply MetroBanCorp
with the shareholder's correct taxpayer identification number or has failed to
report all interest and dividends required to be shown on the shareholder's
federal income tax returns. Accordingly, each MetroBanCorp shareholder will be
asked to provide a correct taxpayer identification number on a Substitute Form
W-9 which will be included in the appropriate letter of transmittal for the
shares of MetroBanCorp common stock. Withholding may also apply to MetroBanCorp
shareholders who are otherwise exempt from this withholding, such as a
non-resident alien, if that person fails to properly document its status as an
exempt recipient.
We intend this discussion to provide only a summary of the material
federal income tax consequences of the merger. We do not intend that it be a
complete analysis or description of all potential federal income tax
consequences of the merger. We do not address tax consequences which may vary
with, or are contingent upon, individual circumstances. In addition, we do not
address any non-income tax or any foreign, state or local tax consequences of
the merger. Moreover, the above discussion may not be applicable with respect to
shares acquired pursuant to the exercise of stock options or otherwise received
as compensation. Accordingly, we strongly urge you to consult your tax advisor
to determine your particular United States federal, state, local or foreign
income or other tax consequences resulting from the merger, with respect to your
individual circumstances.
DESCRIPTION OF FIRST INDIANA
First Indiana was incorporated under the laws of the State of Indiana
in 1986. It is the holding company for First Indiana Bank, National Association,
the largest bank headquartered in Indianapolis, and Somerset Financial Services,
LLC, a financial services and consulting firm.
In 2001, the Federal Reserve approved First Indiana's Bank Holding
Company Application, and the Office of the Comptroller of the Currency approved
the conversion of First Indiana Bank from a federal savings bank to a national
bank. Upon First Indiana Bank becoming a national bank it surrendered its thrift
charter. Subsequently, the Federal Reserve Board approved First Indiana's
election to become a financial holding company. As a financial holding company,
the permissible scope of activities that First Indiana may engage in was
expanded to include activities that are financial in nature or incidental to a
financial activity.
First Indiana Bank is engaged primarily in the business of attracting
deposits from the general public and originating commercial loans and consumer
loans. It offers a full range of banking services through 26 offices in central
Indiana. First Indiana Bank also originates home equity loans in 46 states
through a national independent agent network. First Indiana Bank has
construction and consumer loan service offices in Indiana, Arizona, Florida,
Illinois, North Carolina, Oregon, and Ohio. Through its subsidiaries, First
Indiana offers a full array of financial services, including tax planning and
preparation, accounting services, retirement and estate planning, and investment
advisory and trust services.
DESCRIPTION OF METROBANCORP
MetroBanCorp was incorporated under the laws of the State of Indiana on
June 22, 1987 for the purpose of holding all of the shares of common stock of
MetroBank, an Indiana chartered commercial bank which commenced operations in
April, 1988. MetroBank offers a broad range of commercial and consumer lending
and deposit services to its customers located principally in Hamilton County and
northern Marion County, Indiana. MetroBank conducts its business through banking
offices located in Hamilton County. MetroBank's products are principally
oriented towards small and medium-sized businesses and the professional
community.
LEGAL MATTERS
Krieg DeVault LLP has represented MetroBanCorp and MetroBank in the
negotiation of the mergers and has been asked to render its legal opinion in
connection with the merger agreement. Edward R. Schmidt is a partner at such
firm and also a director of MetroBanCorp and MetroBank. See "Security Ownership
of Management and Certain Beneficial Owners" on page __.
27
OTHER MATTERS
The special meeting is called for the purposes set forth in the notice
attached to this Proxy Statement. The Board of Directors of MetroBanCorp knows
of no other matters for action by shareholders at the MetroBanCorp special
meeting other than the matters described in the notice. However, the enclosed
proxy will confer discretionary authority to the persons named therein with
respect to any such matters, none of which are known to the Board of Directors
of MetroBanCorp as of the date hereof, which may properly come before the
special meeting. It is the intention of the persons named in the proxy to vote
pursuant to the proxy with respect to such matters in accordance with the best
judgment of the person named in the proxy. To the extent that the merger
agreement is approved and the transactions contemplated therein are consummated,
the independent corporate existence of MetroBanCorp will end and MetroBanCorp
will cease to hold its annual meeting of shareholders.
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements with respect
to the financial condition, results of operations, plans, objectives, future
performance and business of each of First Indiana and MetroBanCorp, as well as
certain information relating to the merger, including, without limitation
statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "estimates" or similar expressions. These
forward-looking statements involve certain risks and uncertainties. Actual
results may differ materially from those contemplated by such forward-looking
statements due to, among others, the following factors: (a) expected cost
savings from the merger may not be fully realized or realized within the
expected time frame; (b) revenues following the merger may be lower than
expected, or deposit attrition, operating costs or customer loss and business
disruption following the merger may be greater than expected; (c) competitive
pressures among depository and other financial institutions may increase
significantly; (d) changes in the interest rate environment may reduce margins;
(e) general economic or business conditions, either nationally or in the states
in which First Indiana is doing business, may be less favorable than expected
resulting in, among other things, a deterioration in credit quality or a reduced
demand for credit; (f) legislative or regulatory changes may adversely affect
the business in which First Indiana is engaged; (g) technological changes may be
more difficult or expensive than anticipated; and (h) changes may occur in the
securities markets.
WHERE YOU CAN FIND MORE INFORMATION
First Indiana and MetroBanCorp are subject to the reporting
requirements of the Exchange Act and in accordance therewith file reports, proxy
statements and other information with the SEC. Such reports, proxy statements
and other information may be inspected and copied at prescribed rates at the
following locations of the SEC:
Public Reference Room Midwest Regional Office
450 Fifth Street, N.W. 500 West Madison Street
Room 1024 Suite 1400
Washington, D.C. 20549 Chicago, IL 60661-2511
Copies of such material may also be obtained at prescribed rates from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding First Indiana and MetroBanCorp, and the address of that
site is http://www.sec.gov.com You may obtain information about First Indiana
and MetroBanCorp on their Internet sites at http://www.firstindiana.com and
http://www.metb.com, respectively. The contents of those Internet sites are not
incorporated by reference in, or otherwise a part of, this Proxy Statement.
First Indiana's common stock is quoted on the NASDAQ National Market System and
reports, proxy statements and other information concerning First Indiana are
available for inspection and copying at prescribed rates at the office of the
National Association of Securities Dealers, Inc., 1735 K Street, Washington,
D.C. 20006.
MetroBanCorp has not authorized anyone to give any information or make
any representation about the merger or MetroBanCorp that is different from, or
in addition to, that contained in this document or any of the materials that we
have incorporated into this document. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
28
LIST OF APPENDICES
Agreement and Plan of Merger.........................................Appendix A
Fairness Opinion of Hovde............................................Appendix B
Chapter 44 of Title 23 of the Indiana Business Corporation Law.......Appendix C
30
Appendix A
AGREEMENT AND PLAN OF MERGER
by and among
METROBANCORP, INC. and METROBANK
and
FIRST INDIANA CORPORATION,
FIC ACQUISITION CORP.
and
FIRST INDIANA BANK, NATIONAL ASSOCIATION
September 4, 2002
TABLE OF CONTENTS
SECTION 1 THE MERGERS.............................................................................................2
1.01. The Company Merger..............................................................................2
1.02. The Bank Merger.................................................................................3
1.03. Reservation of Right to Revise Structure........................................................3
SECTION 2 CONSIDERATION...........................................................................................4
2.01. Consideration...................................................................................4
2.02. Rights as Shareholders; Stock Transfers.........................................................4
2.03. Distribution of Cash............................................................................5
SECTION 3 DISSENTING SHAREHOLDERS.................................................................................5
SECTION 4 REPRESENTATIONS AND WARRANTIES OF MBC...................................................................6
4.01. Organization and Authority......................................................................7
4.02. Authorization...................................................................................7
4.03. Capitalization..................................................................................8
4.04. Organizational Documents.......................................................................10
4.05. Compliance with Law............................................................................10
4.06. Litigation and Pending Proceedings.............................................................11
4.07. Financial Statements and Reports...............................................................11
4.08. Properties, Contracts, Employees and Other Agreements..........................................12
4.09. Absence of Undisclosed Liabilities.............................................................13
4.10. Title to Assets................................................................................14
i
4.11. Employee Benefit Plans.........................................................................14
4.12. Labor Matters..................................................................................16
4.13. Environmental Matters..........................................................................17
4.14. Tax Matters....................................................................................17
4.15. Risk Management................................................................................18
4.16. Books and Records..............................................................................18
4.17. Loans. ......................................................................................18
4.18. Shareholder Rights Plan........................................................................19
4.19. Deposit Insurance..............................................................................19
4.20. Insurance......................................................................................19
4.21. Broker's, Finder's or Other Fees...............................................................19
4.22. Interim Events.................................................................................19
4.23. Regulatory Filings.............................................................................20
4.24. Indemnification Agreements.....................................................................20
4.25. Shareholder Approval...........................................................................20
4.26. CRA Rating.....................................................................................21
4.27. Capital Requirements...........................................................................21
4.28. Representations and Warranties at the Effective Time...........................................21
4.29. Nonsurvival of Representations and Warranties..................................................21
SECTION 5 REPRESENTATIONS AND WARRANTIES OF FIC..................................................................21
5.01. Organization and Authority.....................................................................22
5.02. Authorization..................................................................................22
5.03. Organizational Documents.......................................................................23
5.04. Regulatory Filings.............................................................................23
ii
5.05. Litigation and Pending Proceedings.............................................................23
5.06. Shareholder Approval...........................................................................24
5.07. Broker's, Finder's or Other Fees...............................................................24
5.08. Employee Benefit Plans.........................................................................24
5.09. CRA Rating.....................................................................................25
5.10. Pro Forma Capital Requirements.................................................................25
5.11. No Financing Contingencies.....................................................................25
5.12. Representations and Warranties at the Effective Time...........................................25
5.13. Nonsurvival of Representations and Warranties..................................................25
SECTION 6 COVENANTS OF MBC AND THE BANK..........................................................................25
6.01. Shareholder Approval...........................................................................25
6.02. Other Approvals and Actions....................................................................26
6.03. Conduct of Business............................................................................26
6.04. Preservation of Business.......................................................................29
6.05. Other Negotiations.............................................................................30
6.06. FIC Break-up Fee...............................................................................30
6.07. Press Releases.................................................................................31
6.08. Disclosure Schedule Update.....................................................................31
6.09. Information, Access Thereto, Confidentiality...................................................31
6.10. Subsequent MBC Financial Statements............................................................33
6.11. Employee Benefits..............................................................................33
6.12. Disposition of MBC Thrift Plan.................................................................33
6.13. Group Health Plan..............................................................................34
6.14. Long Term Disability Plan......................................................................34
iii
6.15. Section 125 Plan...............................................................................34
6.16. MBC Group Life Plan............................................................................35
6.17. Termination of MBC SERP........................................................................35
6.18. Termination of MBC Target Benefit Plan.........................................................35
6.19. Termination of MBC Employee Equity Ownership Plan..............................................35
6.20. Termination of MBC Directors' Retirement Plan..................................................36
6.21. MBC Stock Option Plans.........................................................................36
6.22. Elimination of Gross-Up Obligations............................................................36
6.23. Employment Agreements..........................................................................36
6.24. Change of Control Payments.....................................................................37
6.25. Batalis Consulting Agreement...................................................................37
6.26. Severance Pay..................................................................................37
6.27. Disposition of Incentive Plan..................................................................38
6.28. Reports. 38
6.29. Adverse Actions................................................................................38
SECTION 7 COVENANTS OF FIC AND FIRST INDIANA.....................................................................38
7.01. Approvals......................................................................................38
7.02. Employee Benefit Plans.........................................................................39
7.03. Press Releases.................................................................................40
7.04. Indemnification and D&O Insurance..............................................................40
7.05. Adverse Actions................................................................................41
7.06. Regulatory Capital.............................................................................41
7.07. Sole Shareholder Approval......................................................................41
iv
SECTION 8 CONDITIONS PRECEDENT TO THE MERGERS....................................................................41
8.01. FIC. ......................................................................................41
8.02. MBC. ......................................................................................44
SECTION 9 TERMINATION OF MERGERS.................................................................................45
9.01. Manner of Termination..........................................................................45
9.02. Effect of Termination..........................................................................46
SECTION 10 CLOSING...............................................................................................47
10.01. Closing Date and Place.........................................................................47
10.02. Deliveries.....................................................................................47
SECTION 11 MISCELLANEOUS.........................................................................................48
11.01. Binding Effect; Assignment.....................................................................48
11.02. Waiver; Amendment..............................................................................48
11.03. Notices. 48
11.04. Headings.......................................................................................49
11.05. Severability...................................................................................49
11.06. Counterparts...................................................................................49
11.07. Governing Law..................................................................................49
11.08. Entire Agreement...............................................................................50
11.09. Expenses.......................................................................................50
11.10. Certain References.............................................................................50
v
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into, effective as of the 4th day of September, 2002, by and among MetroBanCorp,
Inc. ("MBC"), First Indiana Corporation ("FIC"), FIC Acquisition Corp. ("Merger
Sub"), MetroBank (the "Bank"), and First Indiana Bank, National Association
("First Indiana").
W I T N E S S E T H:
WHEREAS, MBC is an Indiana corporation registered as a bank holding
company under the federal Bank Holding Company Act of 1956, as amended (the "BHC
Act"), with its principal office located in Indianapolis, Hamilton County,
Indiana; and
WHEREAS, MBC is the sole owner, directly or indirectly, of all of the
outstanding capital stock of the Bank and MB Realty Corporation ("MB Realty")
(collectively, the "Subsidiaries"); and
WHEREAS, FIC is an Indiana corporation registered as a bank holding
company under the BHC Act which has elected to be a financial holding company
under the BHC Act, with its principal office located in Indianapolis, Marion
County, Indiana; and
WHEREAS, FIC is the sole owner, directly or indirectly, of all of the
outstanding capital stock of Merger Sub and First Indiana (collectively, the
"FIC Subsidiaries"); and
WHEREAS, MBC and FIC seek to affiliate through a corporate
reorganization whereby MBC will first merge with Merger Sub and will thereby
become a wholly-owned subsidiary of FIC; and MBC will then merge with and into
FIC, with FIC as the surviving entity; and the Bank will merge immediately
thereafter with and into First Indiana and will become a wholly-owned subsidiary
of FIC; and
WHEREAS, the Boards of Directors of the parties hereto have determined
that it is in the best interests of their respective corporations or banks and
the shareholders thereof to consummate the strategic business combinations
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 sufficiency of which is hereby
acknowledged, the parties hereby make this Agreement and prescribe the terms and
conditions of the merger of MBC with the Merger Sub, the merger of MBC with and
into FIC and the Bank with and into First Indiana and the mode of carrying such
mergers into effect as follows:
A-1
SECTION 1
THE MERGERS
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 Section 1.01(b) hereof), (i)
Merger Sub shall merge with and into MBC, with MBC as the surviving entity
thereby becoming a wholly-owned subsidiary of FIC; and (ii) MBC will then merge
with and into and under the Articles of Incorporation of FIC (such mergers,
collectively, the "Company Merger"). The Company Merger is subject to the Bank
Merger (as defined in Section 1.02 hereof) occurring immediately after the
Company Merger, and if the Bank Merger will not close immediately thereafter,
the Company Merger shall not occur. FIC (sometimes hereinafter referred to as
the "Surviving Corporation") shall survive the Company Merger 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) Effective Time. The Company Merger shall become effective upon the filing,
in the office of the Secretary of State of the State of Indiana, of Articles of
Merger in accordance with Indiana Code Section 23-1-40-5, as amended, or at such
later date and time as may be set forth in such articles (the "Effective Time").
Subject to the terms of this Agreement, the parties shall cause the Company
Merger to become effective (a) on the date that is the seventh full NASDAQ
trading day (the "Closing Date") to occur after the last of the conditions set
forth in Section 8 (other than conditions relating solely to the delivery of
documents dated as of the Closing Date) shall have been satisfied or waived in
accordance with the terms of this Agreement, or (b) on such other date as the
parties may agree in writing; provided, however, that the Mergers shall not
become effective prior to January 13, 2003.
(c) Name, Officers and Directors. The name of the Surviving Corporation shall be
"First Indiana Corporation." Its principal office shall be located at 135 North
Pennsylvania Street, Indianapolis, Marion County, Indiana. The officers of FIC
serving at the Effective Time shall continue to serve as the officers of the
Surviving Corporation, until such time as their successors shall have been duly
elected and have qualified or until their earlier resignation, death or removal
from office. The directors of the Surviving Corporation following the Effective
Time shall be those individuals serving as directors of FIC at the Effective
Time, who shall continue to serve until such time as their successors have been
duly elected and have qualified or until their earlier resignation, death, or
removal as directors.
(d) Articles of Incorporation and By-Laws. The Articles of Incorporation and
By-Laws of FIC 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
in accordance with applicable law.
A-2
(e) Effect of the Company Merger. At the Effective Time, the title to all
assets, real estate and other property owned by MBC shall vest in the 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 MBC shall be
assumed by the Surviving Corporation.
1.02. The Bank Merger.
(a) General Description. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time, the Bank shall merge with and into and under
the Articles of Association of First Indiana (the "Bank Merger" and together
with the Company Merger, the "Mergers"). First Indiana (sometimes hereinafter
referred to as the "Surviving Bank") shall survive the Bank Merger and shall
continue its corporate existence under the federal banking laws pursuant to the
provisions of and with the effect provided in The National Bank Act, as amended.
(b) Name, Officers and Directors. The name of the Surviving Bank shall be "First
Indiana Bank, National Association." Its principal office shall be located at
135 North Pennsylvania Street, Indianapolis, Marion County, Indiana. The
officers of First Indiana 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. The directors of the Surviving Bank following the
Effective Time shall be those individuals serving as directors of First Indiana
at the Effective Time, who shall continue to serve until such time as their
successors have been duly elected and have qualified or until their earlier
resignation, death, or removal as directors.
(c) Articles of Association and By-Laws. The Articles of Association and By-Laws
of First Indiana in existence at the Effective Time shall remain the Articles of
Association and By-Laws of the Surviving Bank following the Effective Time,
until such Articles of Association and By-Laws shall be further amended as
provided by applicable law.
(d) Effect of the Bank Merger. The effect of the Bank Merger upon consummation
thereof shall be as set forth under The National Bank Act, as amended.
(e) Integration. At the Effective Time, the parties hereto currently intend to
effectuate, or cause to be effectuated, the Bank Merger. The parties agree to
cooperate and to take all reasonable actions prior to and following the
Effective Time, including executing all requisite documentation, as may be
reasonably necessary to effect the Bank Merger.
1.03. Reservation of Right to Revise Structure. At FIC's election, the Company
Merger may alternatively be structured so that (a) MBC is merged with and into
FIC or any other direct or indirect wholly owned subsidiary of FIC or (b) any
other direct or indirect wholly owned subsidiary of FIC is merged with and into
MBC; provided, however, that no such change shall (x) alter or change the amount
or kind of the Conversion Price or the treatment of the holders of MBC Common
Stock or MBC Stock Options (as defined herein), (y) prevent the parties from
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obtaining the opinions of Bose McKinney & Evans LLP and Krieg DeVault LLP
referred to in Sections 10.02(a)(iv) and 10.02(b)(iv), respectively, 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.
SECTION 2
CONSIDERATION
2.01. Consideration.
(a) Subject to the terms and conditions of this Agreement, upon and by virtue of
the Company Merger becoming effective at the Effective Time, each issued and
outstanding share of MBC Common Stock (as defined in Section 4.03(a) hereof)
shall be converted into the right to receive a cash amount equal to Seventeen
and No/100 Dollars ($17.00) (the "Conversion Price"). Each share of MBC Common
Stock that, immediately prior to the Effective Time, is held as treasury stock
of MBC or held directly or indirectly by FIC, 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.
(b) Each outstanding and then exercisable option to purchase MBC Common Stock
shall be converted into the right to receive cash in an amount equal to the
excess of the Conversion Price over the option exercise price.
(c) In no event will the total consideration paid by FIC for MBC Common Stock
exceed the product of the Conversion Price times the sum of (i) the number of
shares of such Common Stock issued on the date hereof (2,108,607), plus (ii) the
number of shares of such Common Stock issued after the date hereof upon exercise
of any of the 446,007 vested, in-the-money options outstanding on the date
hereof under MBC's stock option plans (or, in the case of options converted to
rights to receive cash, the amount paid in respect of such rights pursuant to
Section 2.01(b)), plus (iii) to the extent permitted under Section 6.19 and
subject to Section 6.03(a)(xi) below, the number of shares of such Common Stock
issued after the date hereof pursuant to MBC's Employee Equity Ownership Plan.
2.02. Rights as Shareholders; Stock Transfers. At the Effective Time, (a)
holders of MBC Common Stock shall cease to be, and shall have no rights as,
shareholders of MBC, other than the right to receive (1) any dividend or other
distribution with respect to such MBC Common Stock with a record date occurring
prior to the Effective Time and (2) the consideration provided under this
Section 2, and (b) holders of MBC Stock Options shall have no further or
continuing right to receive MBC Common Stock or any form of consideration other
than the consideration provided under this Section 2. After the Effective Time,
there shall be no transfers on the stock transfer books of MBC or the Surviving
Corporation of shares of MBC Common Stock, and no attempted or purported
exercise of MBC Stock Options shall be effective.
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2.03. Distribution of Cash.
(a) As soon as reasonably practicable but in no event more than ten (10)
calendar days after the Effective Time, FIC shall mail to each record holder of
any certificate or certificates whose shares of MBC Common Stock were converted
into the right to receive the Conversion Price, a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
MBC certificates shall pass, only upon proper delivery of the MBC certificates
to FIC and shall be in such form and have such other provisions as FIC may
reasonably specify) and instructions for use in effecting the surrender of the
MBC certificates in exchange for the Conversion Price.
(b) Following the Effective Time, payment of the Conversion Price, without
interest, shall be made by FIC to each former shareholder of MBC within five (5)
business days following delivery to FIC of the shareholder's certificate(s)
representing its shares of MBC Common Stock accompanied by a properly completed
and executed letter of transmittal, all in form and substance reasonably
satisfactory to FIC.
(c) Following the Effective Time, stock certificates representing shares of MBC
Common Stock held by shareholders of MBC shall be deemed to evidence only the
right to receive the Conversion Price, without interest thereon, pursuant to
Section 2.01 hereof.
(d) FIC shall be entitled to rely upon the stock transfer books of MBC to
establish the persons entitled to receive payment of the Conversion Price
pursuant to this Agreement, which books shall be conclusive with respect to the
ownership of shares of MBC Common Stock.
(e) With respect to any certificate for shares of MBC Common Stock which has
been lost, stolen or destroyed, FIC shall be authorized to pay the Conversion
Price to the registered owner of such certificate upon receipt by FIC of an
affidavit of lost, stolen or destroyed stock certificate together with an
indemnity, both in form and substance reasonably satisfactory to FIC, and upon
compliance by the MBC shareholder with all other reasonable requirements of FIC
in connection with lost, stolen or destroyed stock certificates.
(f) Notwithstanding the foregoing, no party hereto shall be liable to any former
holder of MBC Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
SECTION 3
DISSENTING SHAREHOLDERS
Notwithstanding the foregoing, if any holders of MBC Common Stock
dissent from the Company Merger and demand dissenters' rights under the IBCL,
any issued and outstanding shares of MBC Common Stock held by such dissenting
holders shall not be converted as described in Section 2 but shall from and
after the Effective Time represent only the right to receive such consideration
as may be determined to be due to such dissenting holders pursuant to the IBCL;
provided, however, that each share of MBC Common Stock outstanding immediately
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prior to the Effective Time and held by a dissenting holder who shall, after the
Effective Time, withdraw his or her demand for dissenters' rights or lose his or
her right to exercise dissenters' rights shall have only such rights as are
provided under the IBCL.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF MBC
On or prior to the date hereof, MBC has delivered to FIC 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 Section 4 or to one or
more of its covenants contained in Section 6 or which is otherwise disclosed
pursuant to this Agreement; 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 MBC that such item represents a material exception of
fact, event or circumstance or that such item is reasonably likely to result in
a Material Adverse Effect (as defined below) as to MBC.
For the purpose of this Agreement, and in relation to MBC and the
Subsidiaries, a "Material Adverse Effect" means any effect that (i) is material
and adverse to the financial condition, operations, business, assets,
liabilities or prospects of MBC and the Subsidiaries taken as a whole, or (ii)
would materially impair the ability of MBC 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.
Without limiting the foregoing, items, individually or in the aggregate, that
have a negative financial effect of $150,000 or more shall be deemed to have a
Material Adverse Effect. Material Adverse Effect shall not, however, be deemed
to include the impact of (a) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in accounting principles generally accepted in the United States or
regulatory accounting requirements applicable to banks and their holding
companies generally, (c) actions taken or to be taken by MBC or its Subsidiaries
in accordance with the specific terms of this Agreement or based upon the
written request of FIC pursuant to this Agreement, in each case in accordance
with accounting principles generally accepted in the United States, (d) fees and
expenses associated with the Mergers, including legal, accounting, investment
banking and any expenses relating to litigation that may be filed to contest the
Mergers, (e) acts of terrorism or war, (f) effects of any action taken with the
prior written consent of FIC, and (g) changes in general levels of interest
rates or conditions or circumstances that affect the banking industry,
generally.
No representation or warranty of MBC and the Bank contained in Sections
4.02(b)(iii), (iv) and (v) and 4.02(c), 4.05(a), 4.08(b) and 4.08(d), 4.10(b),
4.17(c), and 4.23 shall be deemed untrue, incomplete or incorrect, and neither
MBC nor the Bank shall be deemed to have breached any such specified
representation or warranty, as a consequence of the existence of any fact, event
or circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in this Section 4, has had or is reasonably
likely to have a Material Adverse Effect.
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Accordingly, MBC and Bank hereby represent and warrant to FIC, as
follows:
4.01. Organization and Authority.
(a) MBC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Indiana and is a registered bank holding company
under the BHC Act. MBC has full power and authority (corporate and otherwise) to
own, operate and lease its properties as presently owned, operated and leased
and to conduct its business in the manner and by the means utilized as of the
date hereof. MBC has a class of stock registered pursuant to Section 12, and is
subject to the reporting requirements, of the Securities Exchange Act of 1934,
as amended (the "1934 Act"). The Bank and MB Realty are MBC's only direct or
indirect subsidiaries, and except as disclosed in the Disclosure Schedule MBC
owns no voting stock or equity securities of any other corporation, partnership,
association or other entity.
(b) The Bank is an Indiana chartered bank duly organized, validly existing and
in good standing under the laws of the State of Indiana. The Bank is subject to
primary regulatory supervision and examination by the Indiana Department of
Financial Institutions ("DFI"). The Bank has full power and authority (corporate
and otherwise) to own, operate and lease its properties as presently owned,
operated and leased and to conduct its business in the manner and by the means
utilized as of the date hereof. Except for MB Realty and as set forth in the
Disclosure Schedule and except as security for the satisfaction of obligations
to the Bank, the Bank has no subsidiaries and owns no voting stock or equity
securities of any corporation, partnership, association or other entity.
(c) MB Realty is a corporation duly organized, validly existing and in good
standing under the laws of the State of Indiana. MB Realty has full power and
authority (corporate and otherwise) to own, operate and lease its properties as
presently owned, operated and leased and to conduct its business in the manner
and by the means utilized as of the date hereof. Except as set forth in the
Disclosure Schedule, MB Realty has no subsidiaries and owns no voting stock or
equity securities of any corporation, partnership, association or other entity.
4.02. Authorization.
(a) MBC 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 Section 8.02(d) and (e) hereof. As of
the date hereof, MBC is not aware of any reason why the approvals set forth in
Section 8.02(d) 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(d). This Agreement, and its execution and delivery by MBC, has been
duly authorized and approved by the Board of Directors of MBC and, assuming due
execution and delivery by FIC, constitutes a valid and binding obligation of
MBC, 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 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.
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(b) Except as set forth in the Disclosure Schedule, neither the execution of
this Agreement nor consummation of the Mergers contemplated hereby: (i)
conflicts with or violates the organizational documents of either MBC or the
Bank; (ii) conflicts with or violates any local, state, federal or foreign law,
statute, ordinance, rule or regulation (provided that the approvals of or
filings with applicable government regulatory agencies or authorities required
for consummation of the 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 MBC or either Subsidiary is a party or by which MBC or
either Subsidiary 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 FIC and First Indiana) or any other
adverse interest, upon any right, property or asset of MBC or either Subsidiary;
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 MBC or either Subsidiary is bound
or with respect to which MBC or either Subsidiary 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, 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 MBC
or any Subsidiary.
(d) MBC has received an oral opinion of Hovde Financial, LLC, to the
effect that, as of the date of this Agreement, the Conversion Price to be
received in the Company Merger by the shareholders of MBC is fair to the
shareholders of MBC from a financial point of view.
4.03. Capitalization.
(a) The authorized capital stock of MBC as of the date hereof consists, and at
the Effective Time will consist, of (i) 1,000,000 shares of preferred stock, no
par value, none of which shares are issued or outstanding, and (ii) 3,000,000
shares of common stock, no par value per share, of which 2,056,837 shares are
issued and outstanding, and of which another 51,770 shares, although classified
as treasury shares, are issued to Raymond James Trust Company as trustee of a
trust established by MBC to provide benefits under the MBC SERP. The total of
such issued shares of MBC Common Stock, constituting 2,108,607 shares, have been
duly and validly authorized by all necessary corporate action of MBC, are
validly issued, fully paid and nonassessable and have not been issued in
violation of any pre-emptive rights of any present or former MBC shareholder. An
additional 446,007 shares of MBC Common Stock are subject to issuance upon the
exercise of options (the "Stock Options") granted under the 1994 Stock Option
and Stock Appreciation Rights Plan and the 1994 Directors Stock Option Plan (the
"MBC Stock Option Plans"). MBC 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 MBC Common Stock except upon the exercise of Stock Options.
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Any shares issued upon exercise of the Stock Options will be validly issued,
fully paid and nonassessable. The Disclosure Schedule sets forth, for each Stock
Option outstanding under the MBC Stock Option Plans, the name of the grantee,
the date of the grant, the type of grant, the status of the grant as qualified
or non-qualified under Section 422 of the Internal Revenue Code, the number of
shares of MBC Common Stock subject to options that are exercisable as of the
date hereof and the exercise price per share.
(b) The authorized capital stock of the Bank as of the date hereof consists, and
at the Effective Time will consist, of 10,000 shares of common stock, $10.00 par
value per share, all of which shares are issued and outstanding (such issued and
outstanding shares are referred to herein as "Bank Common Stock"). Such issued
and outstanding shares of Bank Common Stock have been duly and validly
authorized by all necessary corporate action of the Bank, are issued, fully paid
and nonassessable, and have not been issued in violation of any pre-emptive
rights of any present or former Bank shareholder. All of the issued and
outstanding shares of Bank Common Stock are owned by MBC 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. The Bank 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 Bank Common Stock.
(c) The authorized capital stock of MB Realty as of the date hereof consists,
and at the Effective Time will consist, of one (1) share of common stock, no par
value per share, all of which shares are issued and outstanding (such issued and
outstanding shares are referred to herein as "MB Realty Common Stock"). Such
issued and outstanding shares of MB Realty Common Stock have been duly and
validly authorized by all necessary corporate action of MB Realty, are validly
issued, fully paid and nonassessable, and have not been issued in violation of
any pre-emptive rights of any present or former MB Realty shareholder. All of
the issued and outstanding shares of MB Realty Common Stock are owned by the
Bank 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. MB Realty has no capital stock authorized, issued or outstanding other
than as described in this Section 4.03(c) and has no intention or obligation to
authorize or issue any other capital stock or any additional shares of MB Realty
Common Stock.
(d) 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 MBC Common Stock, or any
securities convertible into or representing the right to purchase or otherwise
acquire any common stock or debt securities of MBC, by which MBC is or may
become bound. MBC does not have any outstanding contractual or other obligation
to repurchase, redeem or otherwise acquire any of the issued and outstanding
shares of MBC Common Stock. To the knowledge of MBC and the Bank, there are no
voting trusts, voting arrangements, buy-sell agreements or similar arrangements
affecting the capital stock of either of them or of MB Realty. To the knowledge
of MBC and the Bank, upon consummation of the Company Merger and the Bank
Merger, FIC shall own and have the power and right to vote all of the
outstanding capital stock of the Bank and First Indiana shall own and have the
power and right to vote all of the outstanding capital stock of MB Realty.
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(e) There are no options, warrants, commitments, calls, puts, agreements,
understandings, arrangements or subscription rights relating to any shares of
common stock of the Subsidiaries, or any securities convertible into or
representing the right to purchase or otherwise acquire any common stock or debt
securities of either Subsidiary, by which either Subsidiary is or may become
bound. The Subsidiaries do not have any outstanding contractual or other
obligation to repurchase, redeem or otherwise acquire any of the issued and
outstanding shares of their respective common stock.
(f) Except as set forth in the Disclosure Schedule, MBC has no knowledge of any
person or entity which beneficially owns 5% or more of its outstanding shares of
MBC Common Stock.
4.04. Organizational Documents. The Articles of Incorporation and the By-Laws of
MBC and the Subsidiaries, as amended, representing true, accurate and complete
copies of such corporate documents in effect as of the date of this Agreement,
have been delivered to FIC.
4.05. Compliance with Law.
(a) Neither MBC nor either Subsidiary 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. MBC and the
Subsidiaries 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 FIC
or First Indiana 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) Except as set forth in the Disclosure Schedule, neither MBC nor either
Subsidiary or their respective property is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state governmental agency or authority
charged with the supervision or regulation of financial institutions or issuers
of securities or engaged in the insurance of deposits (including, without
limitation, DFI, the Federal Reserve Board and the Federal Deposit Insurance
Corporation) or the supervision or regulation of MBC or either Subsidiary. There
are no uncured violations, or violations with respect to which refunds or
restitutions may be required, cited in any examination report of MBC or either
Subsidiary as a result of an examination by any regulatory agency or body, or
set forth in any accountant's or auditor's report to MBC or either Subsidiary.
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4.06. Litigation and Pending Proceedings.
(a) Except as set forth in the Disclosure Schedule and lawsuits involving
collection of delinquent accounts as to which no counterclaims are asserted
against MBC or either Subsidiary, there are no claims, actions, suits,
proceedings, mediations, arbitrations or investigations pending or to the
knowledge of MBC or either Subsidiary threatened in any court or before any
government agency or authority, arbitration panel or otherwise (nor does MBC or
either Subsidiary have any knowledge of a basis for any claim, action, suit,
proceeding, litigation, arbitration or investigation) against, by or affecting
MBC or either Subsidiary or which would prevent the performance of this
Agreement, declare the same unlawful or cause the rescission hereof.
(b) Except as set forth in the Disclosure Schedule, neither MBC nor the
Subsidiaries are: (i) subject to any outstanding judgment, order, writ,
injunction or decree of any court, arbitration panel or governmental agency or
authority; (ii) presently charged with or, to the knowledge of MBC or either
Subsidiary, under governmental investigation with respect to any actual or
alleged violations of any law, statute, rule, regulation or ordinance; or (iii)
the subject of any pending or, to the knowledge of MBC or either Subsidiary,
threatened proceeding by any government regulatory agency or authority having
jurisdiction over its respective business, assets, capital, properties or
operations.
4.07. Financial Statements and Reports.
(a) MBC has delivered to FIC copies of the following financial statements and
reports of MBC and the Subsidiaries including the notes thereto (collectively,
the "MBC Financial Statements"):
(i) Consolidated Balance Sheets and the related Consolidated Statements of
Income and Consolidated Statements of Changes in Shareholders' Equity of MBC and
the Subsidiaries as of and for the years ended December 31,1999, 2000, 2001, and
as of and for the six months ended June 30, 2002;
(ii) Consolidated Statements of Cash Flows of MBC and the Subsidiaries for the
years ended December 31, 1999, 2000 and 2001, and for the six months ended June
30, 2002;
(iii) Consolidated Statements of Changes in Financial Position of MBC and the
Subsidiaries for the years ended December 31, 1999, 2000, and 2001, and for the
six months ended June 30, 2002.
(iv) Reports of Condition and Income ("Call Reports") for the Bank as of close
of business on December 31,1998, 1999, 2000 and 2001 and on March 31, 2002 and
June 30, 2002; and
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(v) Financial Statements of MBC on Form FRY-9LP and Form FRY-9C filed with the
Board of Governors of the Federal Reserve System at the close of business on
December 31, 2001 and on March 31, 2002 and June 30, 2002.
(b) The MBC Financial Statements present fairly the consolidated financial
position of MBC as of and at the dates shown and the consolidated results of
operations for the periods covered thereby and to the knowledge of MBC and the
Bank are complete, correct, represent bona fide transactions, and have been
prepared from the books and records of MBC and its subsidiaries. The MBC
Financial Statements described in clauses (i), (ii) and (iii) of Section 4.07(a)
above for completed fiscal years are audited financial statements and have been
prepared in conformance with accounting principles generally accepted in the
United States applied on a consistent basis, except as may otherwise be
indicated in any accountants' notes or reports with respect to such financial
statements.
4.08. 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 MBC and
each Subsidiary and the principal buildings and structures located thereon and
each lease of real property to which MBC or either Subsidiary 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) a list of all agreements, contracts, leases, licenses, lines of credit,
understandings, commitments or obligations of MBC or either Subsidiary which
individually or in the aggregate:
(A) involve payment or receipt by MBC or either Subsidiary (other than as
disbursements of loan proceeds to customers, loan payments by customers or
customer deposits) of more than $30,000 per annum or in excess of $150,000 for
the remaining term of such agreement;
(B) involve payments based on profits of MBC or either Subsidiary;
(C) relate to the purchase of goods, products, supplies or services in excess of
$50,000;
(D) were not made in the ordinary course of business;
(E) may not be terminated without penalty within one (1) year from the date of
this Agreement;
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(F) to which MBC or any of its Subsidiaries is a party, on the one hand, and
under which any affiliate, officer, director or employee of MBC or any of its
Subsidiaries, or any person who owns more than 10% of the outstanding MBC Common
Stock, on the other hand, is a party or beneficiary; or
(G) with respect to the employment of, or payment to, any present or former
directors, officers, employees or consultants relating to their services as such
with MBC or any Subsidiary; and
(iii) The name and current annual salary of each director, officer and employee
of MBC or either Subsidiary whose current annual salary is in excess of $75,000,
and the profit sharing, bonus or other form of compensation (other than salary)
paid or payable by MBC or either Subsidiary to or for the benefit of each such
person for the year ended December 31, 2001, and any employment, severance or
deferred compensation agreement or arrangement with respect to each such person.
(b) Each of the agreements, contracts, commitments, leases, instruments and
documents set forth in the Disclosure Schedule relating to this Section 4.08 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 creditors' rights, and MBC and the
Subsidiaries (to the extent each is a party thereto) are, and, to the knowledge
of MBC and each Subsidiary, all other parties thereto are, in compliance with
the provisions thereof, and neither MBC nor either Subsidiary is in default in
the performance, observance or fulfillment of any obligation, covenant or
provision contained therein.
(c) None of the agreements, contracts, commitments, leases, instruments and
documents set forth in the Disclosure Schedule relating to this Section 4.08
requires the consent of any party to its assignment in connection with the
Mergers contemplated by this Agreement.
(d) Neither MBC nor either Subsidiary is, to the knowledge of MBC or either
Subsidiary, in default under or in breach of, or alleged to be in default under
or in 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.
4.09. Absence of Undisclosed Liabilities. Except (i) as provided in the MBC
Financial Statements, Subsequent MBC Financial Statements (as defined in Section
6.10 hereof and only with respect to obligations incurred after the date of this
Agreement) and in the Disclosure Schedule, (ii) for unfunded loan commitments
and obligations on letters of credit to customers of the Bank, and trade
payables incurred in the ordinary course of either Subsidiary's business, and
(iii) for the transactions contemplated by this Agreement, neither MBC nor
either Subsidiary has, nor will have at the Effective Time, any obligation,
agreement, contract, commitment, liability, lease or license which exceeds
$50,000 individually, or any obligation, agreement, contract, commitment,
liability, lease or license made outside of the ordinary course of business, nor
does there exist any circumstances resulting from transactions effected or
events occurring on or prior
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to the date of this Agreement or from any action omitted to be taken during such
period which could reasonably be expected to result in any such obligation,
agreement, contract, commitment, liability, lease or license.
4.10. Title to Assets.
(a) Except as described in this Section 4.10, MBC or one of the Subsidiaries, 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 MBC
Financial Statements as of June 30, 2002, good title to all personal property
reflected in the MBC Financial Statements as of June 30, 2002, other than
personal property disposed of in the ordinary course of business since June 30,
2002, good 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 MBC or either Subsidiary purports to own or which MBC or
either Subsidiary uses in its respective business; good title to, or right to
use by terms of a valid and enforceable lease or contract, all other property
used in their respective businesses; and good title to all property and assets
acquired and not disposed of or leased since June 30, 2002. All of such
properties and assets are owned by MBC or the Subsidiaries 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 forth in the Disclosure Schedule; (ii) as
specifically noted in the MBC 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
amount to MBC 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 impair the use thereof for the purposes for
which they are held or used. All real property owned or leased by MBC or a
Subsidiary is in compliance with all applicable zoning and land use laws.
(b) All real property, machinery, equipment, furniture and fixtures
owned or leased by MBC or a Subsidiary is structurally sound, in good operating
condition and has been and is being maintained and repaired in the ordinary
course of business.
4.11. Employee Benefit Plans.
(a) MBC's Disclosure Schedule contains a complete list of all bonus, vacation,
deferred compensation, commission-based compensation, pension, retirement,
profit sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock appreciation and stock option plans, all
employment or severance contracts, all medical, dental, disability, severance,
health and life insurance plans, all other employee benefit and fringe benefit
plans, contracts or arrangements and any "change of control" or similar
provisions in any plan, contract or arrangement maintained or contributed to by
MBC or any of its Subsidiaries for the benefit of current or former officers,
employees or directors or the beneficiaries or dependents of any of the
foregoing (collectively, "Compensation Plans").
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(b) With respect to each Compensation Plan, if applicable, MBC has provided or
made available to FIC, at FIC's request, true and complete copies of existing:
(A) Compensation Plan documents and amendments thereto; (B) trust instruments
and insurance contracts; (C) the most recent Form 5500 filed with the Internal
Revenue Service ("IRS"); (D) the most recent actuarial report and financial
statement; (E) the most recent summary plan description; (F) forms filed with
the PBGC (other than for premium payments); (G) the most recent determination
letter issued by the IRS; (H) any Form 5310 or Form 5330 filed with the IRS; and
(I) the most recent nondiscrimination tests performed under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the Internal
Revenue Code of 1986, as amended (the "Code") (including 401(k) and 401(m)
tests).
(c) Except as set forth in the Disclosure Schedule: (i) each of the Compensation
Plans has been administered and operated in all material respects in accordance
with the terms thereof and with applicable law, including ERISA, the Code and
the Securities Act of 1933, as amended (the "Securities Act"); (ii) neither MBC,
any of its Subsidiaries nor any other person for whom indemnification by MBC or
any of its Subsidiaries could apply ("Indemnified Person") has incurred or is
likely to incur fiduciary liability under Part 4 of Title I of ERISA with
respect to any Compensation Plan; (iii) each of the Compensation Plans which is
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the IRS which
reflects all law changes through the "GUST" round of amendments, or an
application for such a letter is pending with the IRS, and MBC is not aware of
any circumstances that would likely result in the revocation or denial of any
such favorable determination letter; (iv) none of MBC, any of its Subsidiaries
or an Indemnified Person has engaged in any transaction or taken any action with
respect to any Compensation Plan that has subjected, or could, to MBC's
knowledge, subject MBC or any of its Subsidiaries or any Indemnified Person to a
tax or penalty imposed by either Section 4975 of the Code or Section 502 of
ERISA; and (v) there is no pending or, to MBC's knowledge, threatened litigation
or governmental audit, examination or investigation relating to MBC's
Compensation Plans.
(d) None of the Compensation Plans is a plan, and none of MBC and its
Subsidiaries ever have maintained or made any contributions to any plan, that is
subject to Part 3 of Title I of ERISA, Title IV of ERISA or Section 412 of the
Code. No Compensation Plan is a "multiemployer plan" within the meaning of
Section 3(37) or 4001(a)(3) of ERISA or a "multiple employer plan" within the
meaning of Section 4064 of ERISA or Section 413(c) of the Code. None of MBC and
its Subsidiaries have any current or potential liability or obligation, whether
direct or indirect, with respect to any multiemployer or multiple employer plan.
(e) Reserved.
(f) Reserved.
(g) Except as set forth in the Disclosure Schedule or as otherwise provided for
in this Agreement, no Compensation Plan provides benefits, including death or
medical benefits, with respect to any employees or former employees of MBC or
any of its Subsidiaries (or their spouses, beneficiaries, or dependents) beyond
the retirement or other termination of service of
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any such employee other than (A) coverage mandated by Part 6 of Title I of ERISA
or Section 4980B of the Code, (B) retirement or death benefits under any Pension
Plan, (C) disability benefits under any Compensation Plan which is an employee
welfare benefit plan (as defined under Section 3(1) of ERISA) that have been
fully provided for by insurance or otherwise, (D) benefits in the nature of
severance pay under any Compensation Plan, or (E) miscellaneous other
post-employment benefits not exceeding $10,000 in the aggregate. Except as set
forth in the Disclosure Schedule or as otherwise provided for in this Agreement,
MBC and its Subsidiaries may amend or terminate any health plan which provides
post-retirement or termination of employment benefits at any time without
incurring any liability thereunder. Except as set forth in the Disclosure
Schedule, there has been no communication to employees, former employees or
their spouses, beneficiaries or dependents by MBC or any of its Subsidiaries
that promised or guaranteed such employees retiree health or life insurance or
other retiree death benefits on a permanent basis or promised or guaranteed that
any such benefits could not be modified, eliminated or terminated.
(h) Except as set forth in the Disclosure Schedule or as otherwise provided for
in this Agreement, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby including, without
limitation, any termination of employment relating thereto and occurring prior
to, at or following the Effective Time, will (A) result in any increase in
compensation or any payment (including, without limitation, severance, golden
parachute or otherwise) becoming due to any current or former director, officer
or employee of MBC or any of its Subsidiaries under any Compensation Plan or
otherwise from MBC or any of its Subsidiaries, (B) increase any benefits
otherwise payable under any Compensation Plan, or (C) result in any acceleration
of the time of payment, funding or vesting of any such benefit; provided,
however, that effects described in (A), (B) or (C), the aggregate compensation
and benefit cost impact of which, actuarially determined as of the Effective
Time, do not exceed $10,000, shall not be deemed to violate the representations
made in this Section 4.11(h).
(i) Except as set forth in the Disclosure Schedule: (i) neither MBC nor any of
its Subsidiaries maintains any compensation plans, programs or arrangements the
payments under which are, or reasonably would be expected to be, non-deductible
as a result of the limitations under Section 162(m) of the Code and the
regulations issued thereunder; and (ii) none of MBC, the Surviving Corporation
or any of their respective subsidiaries will be obligated to make a payment as a
result, directly or indirectly, of the transactions contemplated by this
Agreement that reasonably would be expected to be non-deductible as a result of
the limitations under Section 162(m) of the Code and the regulations issued
thereunder.
4.12. Labor Matters. Neither MBC nor any of its Subsidiaries is a party to or is
bound by any collective bargaining contract or understanding with a labor union
or labor organization, nor is MBC or any of its Subsidiaries the subject of a
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel MBC or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any strike or
other labor dispute involving it or any of its Subsidiaries pending or, to MBC's
knowledge, threatened, nor is MBC aware of any activity involving it or any of
its Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
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4.13. Environmental Matters. Except as set forth in the Disclosure Schedule, (1)
to MBC's knowledge, MBC and each of its Subsidiaries has complied in all
material respects at all times with applicable Environmental Laws (as defined
below); (2) to MBC's knowledge, no property (including buildings and any other
structures) currently or formerly owned or operated by MBC or any of its
Subsidiaries has been contaminated with, or has had any release of, any
Hazardous Substance (as defined below); (3) to MBC's knowledge, neither MBC nor
any of its Subsidiaries would reasonably be expected to be ruled to have caused
or contributed to any contamination as the owner or operator under any
Environmental Law of any property in which it has currently or formerly held a
lien; (4) to MBC's knowledge, neither MBC nor any of its Subsidiaries is subject
to liability for any Hazardous Substance disposal or contamination on any other
third-party property; (5) neither MBC nor any of its Subsidiaries has received
any notice, demand letter, claim or request for information alleging any
violation of, or liability under, any Environmental Law; (6) neither MBC nor any
of its Subsidiaries is subject to any order, decree, injunction or other
agreement with any federal or state governmental authority or any third party
relating to any Environmental Law; (7) to MBC's knowledge, there are no
circumstances or conditions involving MBC or any of its Subsidiaries or any
currently or formerly owned or operated property (including the presence of
asbestos, underground storage tanks, lead products, polychlorinated biphenyls or
gas station sites) that could result in any claims, liability or investigations
or result in any restrictions on the ownership, use, or transfer of any property
pursuant to any Environmental Law; and (8) MBC has delivered to FIC copies of
all environmental reports, studies, sampling data, correspondence, filings and
other environmental information in its possession or reasonably available to it
relating to MBC, any of its Subsidiaries, any currently or formerly owned or
operated property or any property in which MBC or any of its Subsidiaries has
held a lien.
As used in this Section 4.13, "Environmental Laws" means any federal,
state or local law, regulation, order, decree, permit, authorization, common law
or agency requirement with force of law relating to: (1) the protection or
restoration of the environment, health or safety (in each case as relating to
the environment) or natural resources; or (2) the handling, use, presence,
disposal, release or threatened release of any Hazardous Substance. As used in
this Section 4.13, "Hazardous Substance" means: (1) any substance in any
concentration that is listed, classified or regulated pursuant to any
Environmental Law; (2) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (3) any other substance which is or may be
the subject of regulatory action by any federal, state or local governmental
authority pursuant to any Environmental Law.
4.14. Tax Matters. (1) All returns, declarations, reports, estimates,
information returns and statements required to be filed on or before the
Effective Time under any federal, state, local or foreign tax laws ("Tax
Returns") with respect to MBC or any of its Subsidiaries, have been or will be
timely filed, or requests for extensions have been timely filed and have not
expired; (2) all Tax Returns that have been filed by MBC and its Subsidiaries
since 1995 are complete and accurate in all respects; (3) all taxes shown to be
due and payable (without regard to whether such taxes have been assessed) on
such Tax Returns (or, with respect to Tax Returns for which an extension has
been timely filed, will be required to be shown as due and payable when such Tax
Returns are filed) have been paid or adequate reserves have been established for
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the payment of such taxes; (4) no audit or examination or refund litigation with
respect to any Tax Return is pending or, to MBC's knowledge, has been
threatened; (5) all deficiencies asserted or assessments made as a result of any
examination of a Tax Return of MBC or any of its Subsidiaries have been paid in
full; (6) no waivers of statutes of limitation have been given by or requested
with respect to any taxes of MBC or its Subsidiaries; (7) MBC and its
Subsidiaries have never been a member of an affiliated, combined, consolidated
or unitary tax group for purposes of filing any Tax Return (other than a
consolidated group of which MBC was the common parent); (8) no closing
agreements, private letter rulings, technical advice memoranda or similar
agreement or rulings have been entered into or issued by any taxing authority
with respect to MBC or any of its Subsidiaries; (9) no tax is required to be
withheld pursuant to Section 1445 of the Code as a result of the transactions
contemplated by this Agreement; (10) MBC and its Subsidiaries are not bound by
any tax indemnity, tax sharing or tax allocation agreement or arrangement; and
(11) MBC and its Subsidiaries have withheld and paid all taxes that they are
required to withhold from compensation income of their employees.
4.15. Risk Management. Except as set forth in the Disclosure Schedule, MBC and
the Subsidiaries are not parties to any swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management arrangements,
whether entered into for MBC's own account, or for the account of one or more of
MBC's Subsidiaries or their customers.
4.16. Books and Records. The books and records of MBC and its Subsidiaries have
been fully, properly and accurately maintained in all material respects, and
there are no material inaccuracies or discrepancies of any kind contained or
reflected therein, and they fairly present the financial position of MBC and its
Subsidiaries.
4.17. Loans.
(a) Except as set forth in the Disclosure Schedule, there is no loan by the Bank
in excess of $100,000 that has been classified by the Bank's regulators or
management as "Other Loans Specially Mentioned," "Substandard," "Doubtful" or
"Loss" or 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 Bank, and a list of all loans in excess of $100,000 which Bank,
has determined to be thirty (30) days or more past due with respect to principal
or interest payments or has placed on nonaccrual status, have been provided to
FIC.
(b) All loans reflected in the MBC Financial Statements as of June 30, 2002 and
which have been made, extended, renewed, restructured, approved, amended or
acquired since June 30, 2002: (i) to the knowledge of MBC and the Bank,
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; (ii) are evidenced by notes, instruments or other evidences of
indebtedness which are true, genuine and what they purport to be; and (iii) are
secured, to the extent that MBC or the Bank has a security interest in
collateral or a mortgage securing such loans, by perfected security interests or
recorded mortgages naming MBC or the Bank as the secured party or mortgagee.
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(c) The reserves, the allowance for possible loan and lease losses and the
carrying value for real estate owned which are shown on the MBC Financial
Statements are adequate in all 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.
4.18. Shareholder Rights Plan. Except as otherwise provided in this Agreement,
the Disclosure Schedule and MBC's Articles of Incorporation and By-Laws, MBC has
no shareholder rights plan or any other plan, program or agreement involving,
restricting, prohibiting or discouraging a change in control or merger of MBC or
which may be considered an anti-takeover mechanism.
4.19. Deposit Insurance. The deposits of Bank are insured by the FDIC in
accordance with the Federal Deposit Insurance Act, as amended (the "FDIA"), and
MBC or the Bank respectively, have paid or properly reserved or accrued for all
current premiums and assessments with respect to such deposit insurance.
4.20. 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 MBC or either Subsidiary on
the date hereof or with respect to which MBC or either Subsidiary 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 FIC prior to the date hereof.
4.21. Broker's, Finder's or Other Fees. Except for reasonable fees of MBC's
attorneys, accountants, employee benefits consultants, investment bankers and
amounts due under MBC's Incentive Plan, all of which shall be paid by MBC prior
to the Effective Time, no agent, broker or other person acting on behalf of MBC
or either Subsidiary or under any authority of MBC or either Subsidiary 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. No action has been taken by MBC
that would give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a fee to be paid by MBC to Hovde
Financial, LLC in an amount and on terms set forth in the Disclosure Schedule.
4.22. Interim Events.
(a) Except as set forth in the Disclosure Schedule, between the period from
December 31, 2001 to the date of this Agreement, no event has occurred and no
fact or circumstance shall have come to exist or come to be known which,
directly or indirectly, individually or taken together with all other facts,
circumstances and events, has had, or is reasonably likely to have, a Material
Adverse Effect.
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(b) Except as set forth in the Disclosure Schedule, between the period from
December 31, 2001 to the date of this Agreement, MBC and the Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their respective past practices (excluding the incurrence of
fees and expenses of professional advisors related to this Agreement and the
transactions contemplated hereby) and there has not been:
(i) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to MBC Common
Stock; or
(ii) any split, combination or reclassification of any capital stock of MBC or
either Subsidiary or any issuance or the authorization of any issuance of any
other securities in respect of, or in lieu of or in substitution for shares of
MBC Common Stock, except for issuances of MBC Common Stock upon the exercise of
options awarded prior to the date hereof in accordance with the terms of the MBC
Stock Option Plans.
4.23. Regulatory Filings. MBC and each Subsidiary respectively, have filed and
will continue to file in a timely manner all required filings with the
Securities and Exchange Commission ("SEC"), including, but not limited to, all
reports on Form 8-K, Form 10-K and Form 10-Q and proxy statements, and with all
appropriate federal and state regulatory agencies and authorities as required by
applicable law. All such filings with the SEC and with all other appropriate
federal and state regulatory agencies were and will be true, accurate and
complete as of the dates of the filings and have complied or will comply in all
respects as to form with the applicable requirements and were or will be
prepared in conformity with generally accepted regulatory accounting principles
applied on a consistent basis, and no such filing has contained or will contain
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 light of the
circumstances under which they were made, not false or misleading.
4.24. Indemnification Agreements.
(a) Neither MBC nor either Subsidiary 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 the By-Laws of MBC and
each Subsidiary respectively.
(b) No claims have been made against or filed with MBC or either Subsidiary nor
have, to the knowledge of MBC, any claims been threatened against MBC or either
Subsidiary 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
MBC or either Subsidiary.
4.25. Shareholder Approval. The affirmative vote of the holders of a majority of
the shares of MBC 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.
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4.26. CRA Rating. Except as set forth in the Disclosure Schedule, the Bank was
rated "Satisfactory" or "Outstanding" following its most recent Community
Reinvestment Act examination by the regulatory agency responsible for its
supervision. The Bank has received no notice of and has no knowledge of any
planned or threatened objection by any community group to the transactions
contemplated hereby.
4.27. Capital Requirements. The Bank is (i) at least "well capitalized", as
defined for purposes of the FDIA, and (ii) in compliance with all capital
requirements, standards and ratios required by each state or federal bank
regulator with jurisdiction over the Bank.
4.28. Representations and Warranties at the Effective Time. All representations
and warranties of MBC and the Bank contained herein or in the Disclosure
Schedules or other documents provided pursuant to this Agreement shall be true,
accurate and complete in all material respects on and as of the Effective Time
as though made or given at such time.
4.29. Nonsurvival of Representations and Warranties. The representations and
warranties of MBC and the Bank contained in this Agreement shall expire at the
earlier of the termination of this Agreement and the Effective Time, and
thereafter MBC, the Bank and all directors, officers and employees of MBC and
the Bank shall have no further liability with respect thereto.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF FIC
On or prior to the date hereof, FIC has delivered to MBC a schedule
(the "FIC Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate as an exception to one or more
representations or warranties contained in this Section 5 or to one or more of
its covenants contained in Section 7 or which is otherwise disclosed pursuant to
this Agreement; provided, that the mere inclusion of an item in the FIC
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by FIC that such item represents a material exception of
fact, event or circumstance or that such item is reasonably likely to result in
a Material Adverse Effect on FIC (as defined below). The items set forth in the
in the FIC Disclosure Schedule establish only those items that constitute an
exception to a representation or warranty which constitutes, or is reasonably
likely to result in, a Material Adverse Effect as to FIC.
For the purpose of this Agreement, and in relation to FIC and the FIC
Subsidiaries, a "Material Adverse Effect" means any effect that (i) is material
and adverse to the financial condition, operations, business, assets,
liabilities or prospects of FIC and the FIC Subsidiaries taken as a whole, or
(ii) would materially impair the ability of FIC 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. Without limiting the foregoing, items, individually or in the
aggregate, that have a negative financial effect of $2,700,000 or more shall be
deemed to have a Material Adverse Effect. Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking and similar laws of
general
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applicability or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or regulatory accounting
requirements applicable to banks and 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) fees
and expenses associated with the Mergers, including legal, accounting,
investment banking and any expenses relating to litigation that may be filed to
contest the Mergers and (e) acts of terrorism or war, (f) effects of any action
taken with the prior written consent of FIC, (g) changes in general level of
interest rate or conditions or circumstances that affect the banking industry,
generally.
No representation or warranty of FIC or First Indiana contained in
Sections 5.02(b)(iii), (iv) and (v), 5.04 and 5.08(a) shall be deemed untrue,
incomplete or incorrect, and neither FIC nor First Indiana shall be deemed to
have breached any such specified representation or warranty, as a consequence of
the existence of any fact, event or circumstance unless such fact, circumstance
or event, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty contained in this
Section 5, has had or is reasonably likely to have a Material Adverse Effect.
Accordingly, FIC and First Indiana hereby represent and warrant to MBC,
as follows:
5.01. Organization and Authority. FIC is a corporation duly organized and
validly existing under the laws of the State of Indiana, a registered bank
holding company which has elected to be a financial holding company under the
BHC Act, as amended, and 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. Each of
the FIC Subsidiaries has been duly organized and is validly existing in good
standing under the laws of the jurisdiction of its organization, and has full
power and authority 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.
5.02. Authorization.
(a) FIC has the requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, subject to the fulfillment
of the conditions precedent set forth in Section 8.01 (d) and (e) hereof. As of
the date hereof, FIC is not aware of any reason why the approvals set forth in
Section 8.01(d) will not be received in a timely manner and without the
imposition of a condition, restriction or requirement of the type described in
Section 8.01(d). This Agreement and its execution and delivery by FIC have been
duly authorized by its Board of Directors. Assuming due execution and delivery
by MBC, this Agreement constitutes a valid and binding obligation of FIC,
subject 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.
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(b) Neither the execution of this Agreement nor consummation of the Mergers
contemplated hereby: (i) conflicts with or violates the organizational documents
of either FIC or First Indiana; (ii) conflicts with or violates in any 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, contract, lease,
agreement, arrangement, commitment or other instrument to which FIC or First
Indiana is a party or by which FIC or First Indiana 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 MBC
and the Bank) or any other adverse interest, upon any right, property or asset
of FIC or FIC Subsidiary; 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 FIC is bound
or with respect to which FIC is to perform any duties or obligations or receive
any rights or benefits.
(c) Other than in connection or in compliance with applicable federal and state
banking, securities 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 FIC and First Indiana of the Mergers
contemplated by this Agreement.
5.03. Organizational Documents. The Articles of Incorporation and By-Laws of FIC
in force as of the date of this Agreement have been delivered to MBC and
represent true, accurate and complete copies of such corporate documents of FIC
in effect as of the date of this Agreement.
5.04. Regulatory Filings. FIC and each of the FIC Subsidiaries have filed and
will continue to file in a timely manner all required filings with the SEC,
including, but not limited to, all reports on Form 8-K, Form 10-K and Form 10-Q
and proxy statements, and with all other federal and state regulatory agencies
as required by applicable law. All such filings by FIC with the SEC and with all
other federal and state regulatory agencies complied or will comply in all
respects as to form with the applicable requirements and were and will be true,
accurate and complete in all respects as of the dates of the filings, and no
such filings contained or will contain 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.
5.05. Litigation and Pending Proceedings. There are no claims, actions, suits,
proceedings, investigations or arbitrations pending or, to the knowledge of FIC,
threatened in any court or before or by any government agency or authority,
arbitration panel or otherwise (nor, to the knowledge of FIC, is there any basis
for any claim, action, suit, proceeding, litigation, investigation or
arbitration) against, by or affecting FIC or the FIC Subsidiaries which would
prevent the performance of this Agreement, declare the same unlawful or cause
the rescission hereof.
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5.06. Shareholder Approval. Approval by FIC's shareholders of the Company Merger
or for any other actions contemplated by this Agreement is not required.
5.07. Broker's, Finder's or Other Fees. Except for reasonable fees of FIC's
attorneys, accountants, employee benefit consultants, and investment bankers, no
agent, broker or other person acting on behalf of FIC or under any authority of
FIC 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. No action has been taken by
FIC or the FIC Subsidiaries that would give rise to any valid claim against any
party hereto for a brokerage commission, finder's fee or other like payment with
respect to the transactions contemplated by this Agreement, excluding a fee to
be paid by FIC to RBC Dain Rauscher Inc.
5.08. Employee Benefit Plans.
(a) Except as set forth in the Disclosure Schedule, with respect to the employee
benefit plans, as defined in Section 3(3) of ERISA, sponsored or otherwise
maintained by FIC or any of the FIC Subsidiaries, whether written or oral, in
which FIC or any of the FIC Subsidiaries participates as a participating
employer; to which FIC or any of the FIC Subsidiaries contributes and including
any such plans which within the preceding six years have been terminated, merged
into another plan of FIC or any of the FIC Subsidiaries, frozen or discontinued
(collectively, "FIC Plans"): (i) all such FIC Plans have been, in all 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 Treasury and Labor Regulations promulgated
thereunder, (ii) all FIC Plans intended to constitute tax-qualified plans under
Section 401(a) of the Code have complied since their adoption in all material
respects with applicable requirements of the Code and the Treasury Regulations
promulgated thereunder, and have, except with respect to plan amendments for
which the remedial amendment period under Code Section 401(b) has not yet
elapsed, received favorable determination letters from the IRS, and FIC is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter; (iii) each FIC 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 of Treasury Regulations promulgated
thereunder; (iv) except for the FIC common stock held by its trustee as an asset
of the FIC 401k Plan, no FIC Plan (or its related trust) holds any stock or
other securities of FIC or any related or affiliated person or entity; (v) FIC
has not engaged in any transaction that may subject FIC, or any FIC Plan, to a
civil penalty imposed by Section 502 of ERISA; (vi) no prohibited transaction
(as defined in Section 406 of ERISA and as defined in Section 4975(c) of the
Code) has occurred with respect to any FIC Plan; (vi) to the knowledge of FIC,
there are no actions, suits, proceedings or claims pending (other than routine
claims for benefits) or threatened, against FIC, any of the FIC Subsidiaries,
any FIC Plan, any fiduciary of any FIC Plan or the assets of any FIC Plan.
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(b) FIC has made available to MBC true, accurate and complete copies of the
following: (i) pension, retirement, profit-sharing, savings, stock purchase,
stock bonus, stock ownership, stock option and stock appreciation right plans
and all amendments thereto and all summary plan descriptions thereof (including
any modifications thereto); (ii) all group insurance and health insurance
contracts, policies or plans; and (iii) all other employee benefit plans
maintained or sponsored by, participated in, or contributed to by FIC or any of
the FIC Subsidiaries for its employees generally.
5.09. CRA Rating. First Indiana was rated "Satisfactory" or "Outstanding"
following its most recent Community Reinvestment Act examination by the
regulatory agency responsible for its supervision. First Indiana has received no
notice of and has no knowledge of any planned or threatened objection by any
community group to the transactions contemplated hereby.
5.10. Pro Forma Capital Requirements. First Indiana is, as of the date of this
Agreement and on a pro forma basis giving effect to the Mergers and any
financing or capital injection will be at the Effective Time, at least "well
capitalized," as defined in federal banking regulations for purposes of the
FDIA.
5.11. No Financing Contingencies. Not later than the Effective Time, FIC will
have available sufficient cash or other liquid assets to fund this transaction.
5.12. Representations and Warranties at the Effective Time. All representations
and warranties of FIC and First Indiana contained herein or in the Disclosure
Schedules or other documents provided pursuant to this Agreement shall be true,
accurate and complete in all material respects on and as of the Effective Time
as though made or given at such time.
5.13. Nonsurvival of Representations and Warranties. The representations and
warranties of FIC and First Indiana contained in this Agreement shall expire at
the earlier of the termination of this Agreement and the Effective Time and,
thereafter, FIC, First Indiana and all directors, officers and employees of FIC
and First Indiana shall have no further liability with respect thereto.
SECTION 6
COVENANTS OF MBC AND THE BANK
MBC and the Bank covenant and agree with FIC and First Indiana and
covenant and agree to cause their Subsidiaries to act as follows:
6.01. Shareholder Approval.
(a) Subject to Section 6.05 hereof and all applicable securities laws, MBC shall
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 MBC at the earliest possible reasonable date after
satisfaction of the requirement of a letter from KPMG as set forth in Section
8.01(i). Subject to Section 6.05 hereof, the Board of Directors of
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MBC shall recommend to MBC's shareholders that such shareholders approve and
adopt this Agreement and the Company Merger contemplated hereby and shall
solicit proxies voting in favor of this Agreement from MBC's shareholders unless
otherwise necessary under applicable fiduciary duties of MBC's Board of
Directors as determined by the Board of Directors of MBC in good faith after
consultation with independent legal counsel.
(b) Subject to Section 6.05(b) hereof, the Bank shall submit this Agreement to
MBC, as its sole shareholder, for approval by unanimous written consent without
a meeting in accordance with applicable law and the Articles of Incorporation
and By-laws of the Bank at a date reasonably in advance of the Effective Time.
The Board of Directors of the Bank shall recommend approval of this Agreement
and the Bank Merger to MBC, as the sole shareholder of the Bank, and MBC as sole
shareholder of the Bank, shall approve this Agreement and the Bank Merger.
6.02. Other Approvals and Actions.
(a) MBC and the Subsidiaries will proceed expeditiously, cooperate fully and use
their best efforts to assist FIC 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) Any materials or information provided by MBC or either Subsidiary to FIC for
use by FIC or First Indiana in any filing with any state or federal regulatory
agency or authority shall not contain any untrue or misleading statement of
material fact and shall not 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) Except as set forth in the Disclosure Schedule, on and after the date of
this Agreement and until the Effective Time or until this Agreement shall be
terminated as herein provided, neither MBC nor either Subsidiary shall, without
the prior written consent of FIC or First Indiana:
(i) issue additional capital stock or make any changes in its capital stock
accounts (including, without limitation, any stock split, stock dividend,
recapitalization or reclassification, and any capital stock issued as a matching
contribution to the MBC Thrift Plan or the MBC SERP), except for the issuance of
up to (A) 446,007 shares of MBC Common Stock under the MBC Stock Option Plans
and (B) 1,070 shares of MBC Common Stock under the Equity Plan (as defined
herein);
(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;
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(iii) distribute or pay any dividends on its shares of common stock, or make any
other distribution to its shareholders except that (A) the Subsidiaries may pay
cash dividends to MBC in the ordinary course of business for payment of
reasonable and necessary business and operating expenses of MBC and to provide
funds for MBC's dividends to its shareholders in accordance with this Agreement,
and (B) MBC may pay to its shareholders its usual and customary quarterly cash
dividend of no greater than Seven and One Half Cents ($.075) per share for any
quarterly period, provided that no dividend may be paid for the quarterly period
in which the Mergers are consummated unless at least thirty (30) calendar days
have elapsed in such quarter, in which case a prorated dividend shall be payable
for such partial quarter based upon the number of days from the beginning of the
quarter until the Effective Time as compared to the total number of days in the
quarter;
(iv) redeem any of its outstanding shares of common stock;
(v) merge, combine or consolidate or effect a share exchange with or sell its
assets or any of its securities to any other person, corporation or entity or
enter into any other similar transaction not in the ordinary course of business;
(vi) purchase any assets or securities or assume any liabilities of another bank
holding company, bank, corporation or other entity, except in the ordinary
course of business when necessary to manage their investment portfolios or in
satisfaction of debts previously contracted between the Bank and its borrowers;
(vii) 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 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 $50,000
individually or $125,000 in the aggregate;
(ix) subject any of its 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 and
except for pledges or liens: (i) required to be granted in connection with
acceptance by MBC or the Bank of government deposits; (ii) granted in connection
with repurchase or reverse repurchase agreements; or (iii) otherwise incurred in
the ordinary course of the conduct of its business;
(x) promote to a new position or increase the rate of compensation or enter into
any agreement to promote to a new position or increase the rate of compensation,
of any director, officer or employee of MBC or either Subsidiary (except for
promotions and compensation increases in the ordinary course of business and in
accordance with past practices and established employment policies of MBC and
the Subsidiaries which have been disclosed to FIC);
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(xi) except as agreed to herein, execute, create, institute, modify, amend or
terminate (except with respect to any amendments to the MBC Compensation Plans
required by law, rule or regulation) any pension, retirement, savings, stock
purchase, stock bonus, stock ownership, stock option, stock appreciation or
depreciation rights or profit sharing plans, or any employment, deferred
compensation, consulting, bonus or collective bargaining agreement, or 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 MBC or either Subsidiary, or
change the level of benefits or payments under any of the foregoing, or increase
or decrease any severance or termination benefits or any other fringe or
employee benefits other than as required by law or regulatory authorities or the
terms of any of the foregoing;
(xii) except as agreed to herein, 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 MBC or either
Subsidiary;
(xiii) hire or employ any new or additional employees of MBC or either
Subsidiary, except as reasonably necessary for the proper operation of their
respective businesses;
(xiv) elect or appoint any executive officers or directors of MBC or either
Subsidiary who are not presently serving in such capacities;
(xv) except for technical corrections or clarifications amend, modify or restate
MBC's or either Subsidiary's respective organizational documents (as described
in Section 4.04 hereof) from those in effect on the date of this Agreement and
delivered to FIC hereunder;
(xvi) 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 MBC or enter into
any agreement or commitment relative to the foregoing;
(xvii) fail to continue to make additions to in accordance with the Bank's past
practices and to otherwise maintain in all respects the Bank's reserve for loan
and lease losses, or any other reserve account, in accordance with safe, sound,
and prudent banking practices and in accordance with accounting principles
generally accepted in the United States and applied on a consistent basis;
(xviii) 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;
(xix) except for obligations disclosed within this Agreement or the Disclosure
Schedule, trade payables and similar liabilities and obligations incurred in the
ordinary course of business, and liabilities reflected in the MBC Financial
Statements or the Subsequent MBC Financial Statements, and except for investment
banking, legal, accounting and other fees related to the Mergers, and except as
contemplated by Section 6.03(a)(vii), (A) borrow any money (except for capital
purposes related to the Bank), (B) incur any indebtedness (including, without
limitation, through the issuance of debentures), or (C) incur any liability or
obligation (whether absolute, accrued, contingent or otherwise), in an aggregate
amount exceeding $50,000;
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(xx) open, close, move or, in any material respect, expand, diminish, renovate,
alter or change any of its offices or branches;
(xxi) pay or commit to pay any management or consulting or other similar type of
fees other than in the ordinary course of business;
(xxii) make any loan or advance (1) other than in the ordinary course of
business consistent with lending policies as in effect on the date hereof or (2)
in excess of $1,000,000; provided that MBC or any of its Subsidiaries may make
any such loan in the event (A) MBC or any of its Subsidiaries has delivered to
First Indiana or its designated representative a notice of its intention to make
such loan and such additional information as First Indiana or its designated
representative may reasonably require and (B) First Indiana or its designated
representative shall not have reasonably objected to such loan by giving notice
of such objection, including the reason for such objections, within three
business days following the delivery to First Indiana of the applicable notice
of intention; or
(xxiii) make any student loan or advance or process any student loan
applications other than in the ordinary course of business or in the aggregate
in excess of $1,000,000.
(b) MBC and each Subsidiary shall maintain, or cause to be maintained, in full
force and effect, insurance on their respective assets, properties and
operations, fidelity coverage and directors' and officers' liability insurance
on their directors, officers and employees in such amounts and with regard to
such liabilities and hazards as are currently insured by MBC and each Subsidiary
as of the date of this Agreement.
6.04. Preservation of Business. On and after the date of this Agreement and
until the Effective Time or until this Agreement is terminated as herein
provided, MBC and the Subsidiaries shall: (a) carry on their respective
businesses substantially in the manner as is presently being conducted and in
the ordinary course of business; (b) use their reasonable best efforts to
preserve their business respective organizations intact, keep available the
services of the present officers and employees and preserve their present
relationships with customers and persons having business dealings with them; (c)
maintain all of the properties and assets that each of them owns or utilizes in
good operating condition and repair, reasonable wear and tear excepted, and
maintain insurance upon such properties and assets in amounts and kinds
comparable to that in effect on the date of this Agreement; (d) maintain their
respective books, records and accounts in the usual, regular and ordinary
manner, on a basis consistent with prior years and in compliance with all
material respects with all statutes, laws, rules and regulations applicable to
them and to the conduct of their business; and (e) 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 any one of them is a party or by which any one of them is or may be
subject or bound.
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6.05. Other Negotiations.
(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 FIC, neither MBC nor either Subsidiary shall permit nor
authorize their respective 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 MBC or the Subsidiaries or to which MBC or
the Subsidiaries may become a party (all such transactions are hereinafter
referred to as "Acquisition Transactions").
(b) MBC shall promptly communicate to FIC the terms of any proposal or offer
which MBC or either Subsidiary may receive with respect to an Acquisition
Transaction. MBC or the Subsidiaries may, in response to an unsolicited written
proposal with respect to an Acquisition Transaction from a third party, furnish
information to, and negotiate, explore or otherwise engage in substantive
discussions with such third party, and enter into any such agreement,
arrangement or understandings, in each case, only if MBC'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 MBC's Board of Directors in connection with
seeking an Acquisition Transaction, and that the Acquisition Transaction is
substantially more favorable to the shareholders of MBC than the terms of the
Company Merger.
(c) This Section 6.05 shall not authorize MBC or either Subsidiary 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.
6.06. FIC Break-up Fee.
(a) MBC hereby acknowledges and agrees that FIC has committed and will commit
substantial time, effort, resources and expenses, will forgo other opportunities
in pursuing the Mergers and would not enter into this Agreement unless MBC
agreed to the provisions of this Section 6.06. MBC further agrees that it shall
pay in immediately available funds to FIC a break-up fee in the amount of One
Million Five Hundred Thousand Dollars ($1,500,000), plus out-of-pocket expenses
(collectively, the "FIC Break-up Fee"), in the event that:
(i) The Board of Directors of MBC fails to recommend to shareholders of MBC that
such shareholders should approve this Agreement and the Company Merger; or
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(ii) The Board of Directors of MBC withdraws, modifies or conditions its
recommendation to shareholders of MBC to approve this Agreement and the Company
Merger or is silent with respect to the approval of this Agreement and the
Company Merger; or
(iii) The Board of Directors of MBC fails to undertake a solicitation of proxies
in favor of the Mergers from the shareholders of MBC or MBC fails to approve the
Bank Merger as the sole shareholder of the Bank; or
(iv) The Board of Directors of MBC terminates the Agreement and the Mergers
pursuant to Section 9.01(c)(v) hereof.
(b) The FIC Break-up Fee shall be paid to FIC within thirty (30) days of the
occurrence of any of the events specified in Section 6.06(a) hereof. If the FIC
Break-up Fee is not paid as provided, then FIC shall be entitled to recover
interest at the highest prime rate set forth in The Wall Street Journal (Midwest
Edition) under the section entitled "Money Rates" on the unpaid amount of the
FIC Break-up Fee from the time the FIC Break-up Fee is due until paid-in-full,
together with all costs of collection thereof, including reasonable attorneys'
fees and expenses.
(c) MBC and FIC hereby acknowledge and agree that the FIC Break-up Fee shall
compensate FIC for (i) expenses incurred for attorneys, accountants, financial
advisors and consultants of FIC in developing the Mergers, (ii) FIC's management
time and expense in investigating, analyzing, developing and pursuing the
Mergers, and (iii) expenses relating to FIC's due diligence efforts. MBC further
acknowledges and agrees that the amount of the FIC Break-up Fee is fair,
reasonable and not a penalty and that its obligation to pay the Break-up Fee
shall survive any termination of this Agreement by MBC.
6.07. Press Releases. Except as required by law, neither MBC nor either
Subsidiary shall issue any news or press releases or make any other public
announcements or disclosures relating to the Mergers without the prior consent
of FIC, which consent shall not be unreasonably withheld.
6.08. Disclosure Schedule Update. MBC 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 MBC contained herein incorrect, untrue or
misleading. No such supplement, amendment or update shall become part of the
Disclosure Schedule unless FIC shall have first consented in writing with
respect thereto.
6.09. Information, Access Thereto, Confidentiality.
(a) FIC and its respective representatives and agents shall, upon 48 hours'
prior written notice and during normal business hours prior to the Effective
Time, have reasonable
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access to the properties, facilities, operations, books and records of MBC and
the Subsidiaries. FIC and its respective 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 MBC and the Subsidiaries and of
their financial and legal condition as they deem 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 with the normal business operations of MBC and the Subsidiaries. MBC
and the Subsidiaries will cooperate with FIC and the FIC Subsidiaries in their
efforts to effect a smooth transition of operations following the Effective
Time, including allowing representatives and agents of FIC and the FIC
Subsidiaries to schedule meetings with employees and officers of MBC and the
Subsidiaries prior to the Effective Time for the purpose of training such
employees and officers and enrolling them in the benefit plans of FIC and the
FIC Subsidiaries. In addition, MBC and the Subsidiaries will cooperate with any
environmental consulting firm designated by FIC in connection with the conduct
by such firm of an environmental investigation on all real property owned or
leased by MBC or the Subsidiaries as of the date of this Agreement and any real
property acquired or leased by them after the date of this Agreement. Upon
request, MBC and the Subsidiaries shall furnish FIC, or its respective
representatives or agents, their attorneys' responses to external auditors
requests for information, management letters received from their external
auditors and such financial, loan and operating data and other information
reasonably requested by FIC which has been or is developed by MBC or either
Subsidiary, their auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure would not result in the waiver by MBC or either
Subsidiary of any claim of attorney-client privilege), and will permit FIC and
its respective representatives or agents to discuss such information directly
with any individual or firm performing auditing or accounting functions for MBC
and the Subsidiaries, and such auditors and accountants shall be directed to
furnish copies of any reports or financial information as developed to FIC or
its respective representatives or agents. FIC shall not use any such information
obtained pursuant to this Agreement for any purpose unrelated to the Mergers.
Any confidential information or trade secrets received by FIC or its
representatives or agents in the course of such examination (whether conducted
prior to or after the date of this Agreement) shall 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 FIC or, at MBC's request, returned to MBC
in the event this Agreement is terminated as provided in Section 9 hereof.
(b) MBC shall not use any information obtained pursuant to this Agreement or in
contemplation of the Mergers, including any information obtained as a result of
their officers and employees participating in training programs or meetings of
FIC or the FIC Subsidiaries, for any purpose unrelated to the Mergers. Any
confidential information or trade secrets received by MBC or its Subsidiaries or
their representatives or agents pursuant to this Agreement or in contemplation
of the Mergers (whether conducted prior to or after the date of this Agreement)
shall 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 MBC or,
at FIC's request, returned to FIC in the event this Agreement is terminated as
provided in Section 9 hereof.
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(c) This Section 6.09 shall not require any party to disclose any information to
any other party which would be prohibited by law.
6.10. Subsequent MBC Financial Statements. As soon as reasonably available after
the date of this Agreement, MBC shall deliver to FIC the monthly unaudited
consolidated balance sheets and profit and loss statements of MBC prepared for
its internal use, Call Reports of the Bank 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, the "Subsequent MBC Financial Statements"). The
Subsequent MBC Financial Statements shall be prepared on a basis consistent with
past accounting practices and accounting principles generally accepted in the
United States 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, subject to year end audit adjustments and the
absence of footnotes for interim statements.
6.11. Employee Benefits. Neither the terms of Section 7.02 hereof, nor the
provision of any employee benefits by FIC or any of its subsidiaries to
employees of MBC or either of its Subsidiaries shall: (a) 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 MBC; or (b) prohibit or restrict FIC or the FIC Subsidiaries,
whether before or after the Effective Time, from changing, amending or
terminating any employee benefits provided to its employees from time to time.
6.12. Disposition of MBC Thrift Plan. MBC shall take any action that needs to be
taken prior to the Effective Time to effectuate the disposition of the
MetroBanCorp Employees Thrift and Retirement Plan ("MBC Thrift Plan") sponsored
by MBC as provided in this Section 6.12:
(a) Termination of MBC Thrift Plan. MBC and the Subsidiaries agree to adopt
resolutions to fully vest MBC Thrift Plan participants immediately prior to the
Effective Time and to terminate the MBC Thrift Plan. FIC shall receive from MBC
evidence that the directors of MBC and the Subsidiaries have adopted such
resolutions (the form and substance of which resolutions shall be subject to
review and approval of FIC), as of the day immediately preceding the day that
includes the Effective Time but contingent on the Closing occurring and
contingent on receipt of a favorable determination letter from the IRS as to the
MBC Thrift Plan's status as a qualified plan at its termination. The MBC Thrift
Plan shall be terminated and all benefits thereunder distributed in accordance
with the provisions of its plan documents in effect as of the Effective Time.
From the date of this Agreement through the Effective Time, MBC may continue to
make matching contributions to the MBC Thrift Plan so long as such contributions
are made in cash and are comparable in amount to its past contributions to such
plan.
(b) Participation in Merger Transaction. In connection with the Mergers, MBC
shall take all actions necessary to assist the fiduciaries of the MBC Thrift
Plan in taking the following actions:
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(i) Follow its written, confidential pass through voting procedure pursuant to
which the participants under the MBC Thrift Plan and their beneficiaries shall
direct the Trustee under the MBC Thrift Plan to vote the shares of MBC Common
Stock allocated to their MBC Thrift Plan accounts with respect to the Company
Merger.
(ii) Provide the MBC Thrift Plan participants and their beneficiaries with a
written notice regarding the existence of and provisions for such confidential
pass through voting procedures, as well as the same written materials to be
provided to the shareholders of MBC in connection with the Company Merger.
(iii) Obtain a written opinion from a qualified, independent financial advisor
to the Trustee and the Benefits Committee of the MBC Thrift Plan to the effect
that the Conversion Price to be received by the MBC Thrift Plan in exchange for
its shares of MBC Common Stock will constitute "adequate consideration" as
defined in Section 3(18) of ERISA, and that the terms and conditions of the
Company Merger transaction, as they apply to the MBC Thrift Plan, are fair to
the MBC Thrift Plan and its participants from a financial point of view, with
the cost of such opinion to be paid by MBC, provided such cost shall be
reasonable and in no event shall exceed an amount equal to $5,000.
(iv) Take any and all additional actions relating to the MBC Thrift Plan
necessary to satisfy the requirements of ERISA applicable to the fiduciaries
thereof in connection with the Mergers.
6.13. Group Health Plan. From the date of this Agreement until the Effective
Time, MBC and its Subsidiaries shall continue to fund all expenses of the MBC
Group Health Plan ("MBC Health Plan"), including but not limited to, benefits,
insurance premiums and administrative fees, attributable to claims incurred on
or prior to the Effective Time. If FIC decides that it wants to terminate the
MBC Health Plan at or shortly after the Effective Time and thereafter to cover
continuing employees under its own group health plan, MBC and its Subsidiaries
shall take such action in respect of the MBC Health Plan prior to the Effective
Time as FIC reasonably may request so that it will be able to effect such
termination and transfer of coverage in a prompt and efficient manner.
6.14. Long Term Disability Plan. From the date of this Agreement until the
Effective Time, MBC and its Subsidiaries shall continue to pay the insurance
premiums necessary to continue the benefits provided under the MBC Long Term
Disability Plan ("MBC LTD Plan").
6.15. Section 125 Plan. From the date of this Agreement through the Effective
Time, MBC and its Subsidiaries shall continue to contribute to the MBC Section
125 Plan ("MBC Cafeteria Plan") the pre-tax amounts which the MBC Cafeteria Plan
participants elect to defer from compensation in order to pay the employee
portion of the cost of coverage under the MBC Health Plan. If FIC decides that
it wants to terminate the MBC Cafeteria Plan at or shortly after the Effective
Time and thereafter to cover continuing employees under its own cafeteria plan,
MBC and its Subsidiaries shall take such action in respect of the MBC Cafeteria
Plan prior to the Effective Time as FIC reasonably may request so that it will
be able to effect such termination and transfer of coverage in a prompt and
efficient manner.
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6.16. MBC Group Life Plan. From the date of this Agreement through the Effective
Time, MBC and the Subsidiaries shall continue to pay the insurance premiums
necessary to continue the benefits provided by the MBC Group Term Life Insurance
Plan ("MBC Group Life Plan") through the end of the calendar month that includes
the Effective Time. If FIC decides that it wants to terminate the MBC Group Life
Plan at or shortly after the close of the calendar month that includes the
Effective Time, MBC and its Subsidiaries shall take such action in respect of
the MBC Group Life Plan prior to the Effective Time as FIC reasonably may
request so that it will be able to effect such termination in a prompt and
efficient manner.
6.17. Termination of MBC SERP. The MBC Supplemental Executive Retirement Plan
("MBC SERP") and all participation agreements in effect thereunder shall be
terminated, effective as of the day immediately preceding the day on which the
Effective Time occurs. No participant under the MBC SERP shall accrue any
benefits thereunder attributable to periods after December 31, 2002. Any
matching contributions required to be made to the MBC SERP after the date hereof
shall be made in cash. The Board of Directors of MBC shall, prior to the SERP
Termination Date, amend such plan to provide for its termination and to provide
that the accumulated benefit obligations in the MBC SERP shall, at the Effective
Time, be distributed to participants in a single sum in cash.
6.18. Termination of MBC Target Benefit Plan. Prior to the Effective Time, the
Board of Directors of MBC shall amend the MBC Target Benefit Plan ("Target
Plan"), conditional upon the consummation of the Mergers, to provide for the
termination of such plan effective as of the Effective Time and for the
forfeiture of any benefits previously accrued thereunder. The consulting
agreement provided for in Section 6.25 below includes a waiver by Ike G. Batalis
of his benefits under the Target Plan. Within 30 days after the date hereof, MBC
shall obtain written releases and consents from any other participants of the
Target Plan who have accrued or will accrue benefits thereunder prior to the
Effective Time wherein such participants consent to such forfeiture. In the
cases of Charles V. Turean, Gregory J. Murray, and Andrew E. Illyes, such
consents, if required, shall be in consideration of the amounts payable to them
pursuant to Section 6.23 below.
6.19. Termination of MBC Employee Equity Ownership Plan.
(a) Prior to the Effective Time, the Board of Directors of MBC shall amend the
MBC Employee Equity Ownership Plan ("Equity Plan"), conditional upon
consummation of the Mergers, to provide for the termination of such Equity Plan,
effective as of the day preceding the day of the Effective Time, and for the
grant of awards for any period between December 31, 2002 and the Effective Time,
as set forth in (i) and (ii) below:
(i) If the Effective Time occurs on or before February 10, 2003, no awards or
related cash payments will be made under the Equity Plan in respect of service
occurring after December 31, 2002.
(ii) If the Effective Time occurs after February 10, 2003, awards and related
cash payments will be made under the Equity Plan in respect of each one-half
month of service completed after December 31, 2002 and prior to the Effective
Time. Thus, Equity Plan
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participants who remain full time employees until the Effective Time will
receive, in respect of their service after December 31, 2002 two shares of MBC
Common Stock if the Effective Time occurs after February 10, 2003 and before
February 15, 2003, three shares of MBC Common Stock if the Effective Time occurs
after February 14, 2003 and before February 28, 2003, and four shares of MBC
Common Stock if the Effective Time occurs on February 28, 2003, in each case
with a related cash payment.
(b) The benefit of each participant under the Equity Plan shall be distributed
as soon as practicable after the termination of the Equity Plan but in any case
prior to the Effective Time.
6.20. Termination of MBC Directors' Retirement Plan. Prior to the Effective
Time, the Board of Directors of MBC shall amend the MBC Directors' Retirement
Plan ("MBC Directors' Plan"), conditional upon the consummation of the Mergers:
to provide for the termination of the MBC Directors' Plan, effective as of the
day immediately preceding the day on which the Effective Time occurs, and for
the distribution to each participant, as soon as practicable after the Effective
Time, in a single sum in cash, his vested accrued benefit as of the date of such
termination, in the respective amounts for each participant set forth in MBC's
Disclosure Schedule.
6.21. MBC Stock Option Plans. Prior to the Effective Time, the Board of
Directors of MBC shall amend the MBC Option Plans, conditional upon the
consummation of the Mergers, to provide for the following: (a) effective as of
the day immediately preceding the day on which the Effective Time occurs, all
unexercised options and their related stock appreciation rights ("SARs") shall
be surrendered by the optionees for a single sum cash payment from MBC equal to
the difference between the exercise price of each option and related SAR
outstanding on such date and the Conversion Price, treating each option and SAR
as a single unit; and (b) effective as of the Effective Time, all MBC Option
Plans shall be terminated. MBC shall take all actions necessary to amend all
option agreements executed under the MBC Option Plans to provide for the
disposition of options and their related SARs as specified in the preceding
sentence.
6.22. Elimination of Gross-Up Obligations. To the extent any of MBC and its
Subsidiaries are obligated, under the terms of any agreement, plan or
arrangement (whether or not identified in the Disclosure Schedule), to reimburse
any individual for, or to pay on behalf of any individual, any excise tax
imposed on such individual pursuant to Section 4999 of the Internal Revenue
Code, or any federal, state or local income taxes payable by such individual in
respect of payments by any of MBC and its Subsidiaries to such individual, MBC
shall eliminate such obligation prior to the Effective Time or, if it cannot do
so unilaterally, obtain from such individual, within 30 days from the date
hereof, a written release thereof (which release may be conditional upon the
consummation of the Mergers).
6.23. Employment Agreements.
(a) Within thirty (30) days after the date of this Agreement, MBC shall have
obtained signed agreements and releases (in a form previously approved by FIC)
from Charles V. Turean, Gregory J. Murray, and Andrew E. Illyes, officers of
MBC, in which such officers have agreed, contingent upon consummation of the
Mergers, each to terminate his employment agreement as
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of the Effective Time, each to waive his rights to any payments under said
employment agreement (including payments under sections 4(c)(ii) and 4(e)
thereof) and any payments under MBC's Target Plan; and each to accept in lieu of
such payments a lump sum cash severance payment, payable at the Effective Time,
equal to an amount, calculated and set forth in MBC's Disclosure Schedule.
(b) In addition to the lump sum cash severance amounts payable to them
under Section 6.23(a), but subject to Sections 6.12, 6.17 and 6.22 above,
Charles V. Turean, Gregory J. Murray, and Andrew E. Illyes shall be entitled to
receive the nonforfeitable accrued benefits payable to them under the MBC Thrift
Plan and the MBC SERP in respect of their service prior to the Effective Time.
6.24. Change of Control Payments. In consideration of their services to
MetroBank prior to the Effective Date, change of control payments shall be made
on the Effective Date to those specified officers of MetroBank who do not
currently have employment agreements with MetroBank in the respective amounts
for each such officer set forth in MBC's Disclosure Schedule. Such payments
shall be conditional upon the recipient officer's continued employment by
MetroBank until the Effective Time but shall not be conditional on the recipient
officer's termination of employment as of or following the Effective Time.
6.25. Batalis Consulting Agreement.
(a) Contemporaneous with the execution of this Agreement, Ike G. Batalis and
First Indiana shall have executed the Consulting Agreement attached hereto as
Exhibit A, wherein Mr. Batalis agrees, contingent upon consummation of the Bank
Merger, to terminate his employment agreement as of the Effective Time, to waive
his rights to further payments and benefits under said employment agreement
(including payments under sections 4(c)(ii) and 4(e) thereof), as well as any
payments under MBC's Incentive Plan and MBC's Target Plan, and to accept in lieu
of all such payments and benefits, in respect of his services prior to the
Effective Time, (i) a lump sum cash amount, as calculated and set forth in MBC's
Disclosure Schedule, and payable at the Effective Time, relating to the benefit
to which he would be entitled under MBC's Target Plan had it been continued in
effect and had he terminated service voluntarily on December 31, 2002 otherwise
than in connection with a change of control, plus (ii) a lump sum cash severance
payment, payable at the Effective Time, in the amount calculated and set forth
in MBC's Disclosure Schedule.
(b) In addition to the lump sum amounts payable to him under Section 6.25(a),
but subject to Sections 6.12, 6.17 and 6.22 above, Ike G. Batalis shall be
entitled to receive the nonforfeitable accrued benefits payable to him under the
MBC Thrift Plan and the MBC SERP in respect of his service prior to the
Effective Time.
6.26. Severance Pay. MBC and its Subsidiaries may adopt a severance pay plan (in
a form previously approved by FIC) for those of their employees, other than Ike
G. Batalis, Charles V. Turean, Gregory J. Murray, or Andrew E. Illyes, who
remain employed by them until the last business day prior to the day that
includes the Effective Time, pursuant to which any such employee whose
employment First Indiana does not offer to continue after the Effective
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Time or whose employment is terminated by First Indiana without cause within one
year after the Effective Time shall be entitled to a lump sum severance payment
equal to the product of (i) one week's base pay times (ii) the number of such
employee's full years of service with MBC and its Subsidiaries completed prior
to the Effective Time.
6.27. Disposition of Incentive Plan. The amount that otherwise would be
distributable under MBC's Incentive Plan by reason of the Mergers shall be
reduced by eliminating the seventy-five percent (75%) portion thereof that
otherwise would be distributable to Ike G. Batalis. The amount otherwise
distributable under MBC's Incentive Plan and the amount of the reduction
provided for in this section have been computed and are set forth in MBC's
Disclosure Schedule. No portion of the remaining amount distributable under
MBC's Incentive Plan shall be allocated to Ike G. Batalis. Any portion of such
remaining amount allocated to Charles V. Turean, Gregory J. Murray, or Andrew E.
Illyes shall be limited to the amounts calculated and set forth for each in
MBC's Disclosure Schedule.
6.28. Reports. Promptly upon its becoming available, MBC shall furnish to FIC
one (1) copy of each financial statement, report, notice, or proxy statement
sent by MBC to its shareholders generally and of each regular or periodic
report, registration statement or prospectus filed by MBC with the SEC or any
successor agency, and of any order issued by any Governmental Authority in any
proceeding to which MBC 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 MBC, the Subsidiaries of the respective
business, operations or properties of MBC or any of the Subsidiaries.
6.29. Adverse Actions. MBC shall not knowingly take any action or inaction 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, subject to
the standard set out in the third paragraph of Section 4, in any respect at any
time at or prior to the Effective Time, (ii) any of the conditions to the
Mergers set forth in Section 8 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.
SECTION 7
COVENANTS OF FIC AND FIRST INDIANA
FIC and First Indiana covenant and agree with MBC and the Bank, as
follows:
7.01. Approvals. FIC 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. FIC shall file all bank holding
company and bank regulatory applications as soon as practicable after the
execution of this Agreement. FIC shall provide to MBC's legal counsel a
reasonable opportunity to review such applications prior to their filing and
shall provide to MBC's legal 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.
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FIC shall proceed expeditiously, cooperate fully and use its best efforts to
procure, upon terms and conditions reasonably acceptable to FIC, all consents,
authorizations, approvals, registrations and certificates, to complete all
filings and applications and to satisfy all other requirements prescribed by law
which are necessary for consummation of the Mergers on the terms and conditions
provided in this Agreement at the earliest possible reasonable date.
7.02. Employee Benefit Plans.
(a) As of, or as soon as administratively possible following the Effective Time,
FIC and the FIC Subsidiaries will make available to the employees of MBC and its
Subsidiaries who continue as employees of FIC or any of the FIC Subsidiaries
after the Effective Time, subject to Sections 7.02(b) through 7.02(d) hereof,
substantially the same employee benefits on substantially the same terms and
conditions as FIC and the FIC Subsidiaries offer to other similarly situated
officers and employees. Until such time as such employees of MBC and its
Subsidiaries become covered by the FIC welfare benefit plans, they shall remain
covered by the corresponding MBC welfare benefit plans, which FIC and the FIC
Subsidiaries shall assume and maintain as successor employers. Except as
otherwise provided in Sections 6.11 through 6.27, and subject to any
modifications required to be made pursuant to Section 8.01(h), FIC will honor
(i) all employee benefit obligations of MBC and its Subsidiaries that as of the
Effective Time are accrued and nonforfeitable (including, without limitation,
any benefits payable under the MBC Health Plan on claims that are pending or
made after the Effective Time in respect of covered expenses incurred prior to
the Effective Time and any benefits payable under the MBC LTD Plan in respect of
covered MBC employees who become disabled after the date of this Agreement and
prior to the Effective Time) and (ii) all employment or severance agreements of
MBC and its Subsidiaries that are identified and described in the Disclosure
Schedule or provided for in this Agreement.
(b) Subject to the provisions of subsection (c) hereof, years of service (as
defined in the applicable FIC plan) of an officer or employee of MBC or any of
its Subsidiaries prior to the Effective Time shall be credited, effective as of
the date on which such officer or employee becomes covered by a particular FIC
plan or benefit, under Section 7.02(a) hereof: (i) for purposes of eligibility
under FIC's employee welfare benefit plans and other fringe benefit programs;
(ii) for purposes of eligibility and vesting, but not for purposes of benefit
accrual or contributions, under the FIC Defined Benefit Pension Plan ("FIC
Pension Plan"), the FIC 401(k) Plan, and the FIC Stock Purchase Plan. Those
officers and employees of MBC and its Subsidiaries who otherwise meet the
eligibility requirements of the FIC Pension Plan, FIC 401(k) Plan, and FIC Stock
Purchase Plan, based on their age and years of service to any of MBC and its
Subsidiaries, shall become participants thereunder at the Effective Time. Those
officers or employees who do not meet the eligibility requirements of the FIC
Pension Plan, FIC 401(k) Plan or Stock Purchase Plan at such times shall become
participants thereunder on the first plan entry date under the FIC Pension Plan,
FIC 401(k) Plan or Stock Purchase Plan, as the case may be, which coincides with
or next follows the date on which such eligibility requirements are satisfied.
(c) In accordance with the provisions of the Health Insurance Portability and
Accountability Act ("HIPAA") and the terms of the FIC group health plan,
officers and
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employees of any of MBC and its Subsidiaries who become participants in the FIC
group health plan will be given "creditable coverage" credit for their coverage
under the MBC Group Health Plan under the FIC group health plan's pre-existing
condition limitation provisions. In addition, if a condition was not a
"pre-existing condition" for a participant in the MBC Group Health Plan, it
shall not be considered to be a pre-existing condition under the FIC group
health plan.
(d) Neither the terms of this Section 7.02 nor the provision of any employee
benefits by FIC or any of the FIC Subsidiaries to employees of MBC or any of its
Subsidiaries 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 MBC or the
either Subsidiary; or (ii) prohibit or restrict FIC or the FIC Subsidiaries,
whether before or after the Effective Time, from changing, amending or
terminating any employee benefits provided to its employees from time to time.
(e) FIC shall assure that the members of the MBC Benefits Committee and the
directors and officers of MBC shall continue to have fiduciary insurance
coverage for a period of three (3) years following the Effective Time for their
activities in respect to MBC's Compensation Plans prior to the Mergers.
(f) FIC and First Indiana shall assume the obligations of MBC and its
Subsidiaries under the severance pay plan adopted by MBC and its Subsidiaries
pursuant to Section 4.26 above.
(g) For purposes of this Section 7.02, employees of MBC and its
Subsidiaries whose employment is terminated by FIC and the FIC Subsidiaries
within one week after the day that includes the Effective Time shall not be
considered employees of MBC and its Subsidiaries who continue as employees of
FIC or any of the FIC Subsidiaries after the Effective Time. Such employees
shall be entitled to receive the same benefits under the Compensation Plans of
MBC and its Subsidiaries as employees of MBC and its Subsidiaries whose
employment is terminated as of the Effective Time but shall not be eligible to
commence participation in any of the employee benefit plans of FIC and the FIC
Subsidiaries.
7.03. Press Releases. Except as required by law, FIC shall not issue any news or
press releases or make any other public announcements or disclosures relating
primarily to MBC with respect to the Mergers without the prior consent of MBC,
which consent shall not be unreasonably withheld.
7.04. Indemnification and D&O Insurance.
(a) For six years after the Effective Time, FIC shall indemnify, defend and hold
harmless the present and former officers and directors of MBC and its
Subsidiaries against all losses, expenses (including attorneys' fees), claims,
damages or liabilities arising out of their actions or omissions in such
capacities occurring on or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the full extent
then permitted under applicable federal and state law and by MBC's Articles of
Incorporation as in effect on the date hereof, including provisions relating to
advances of expenses incurred in the defense of any action or suit.
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(b) FIC shall use its best efforts to maintain in effect for not less than three
(3) years from the Effective Time at premiums not greater than 125% of the
premiums currently paid by MBC the policies of directors' and officers'
liability insurance most recently maintained by MBC which covers and insures
such directors and officers for past actions or omissions; provided, however,
that FIC may substitute therefor policies with reputable and financially sound
carriers for substantially similar coverage containing terms and conditions
which are no less advantageous for so long as such substitution does not result
in gaps or lapses in coverage with respect to claims arising from or relating to
matters occurring prior to the Effective Time.
7.05. Adverse Actions. FIC shall not knowingly take any action or inaction 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, subject to
the standard set out in the third paragraph to Section 5, in any respect at any
time at or prior to the Effective Time, (ii) any of the conditions to the
Mergers set forth in Section 8 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.
7.06. Regulatory CapitalSubject to Sections 7.01 and 8.01(d), FIC shall obtain
financing for the Mergers in a manner necessary to achieve regulatory capital
levels and ratios on a proforma basis as reasonably may be required by the Board
of Governors of the Federal Reserve System or the Office of the Comptroller of
the Currency.
7.07. Sole Shareholder Approval. FIC as the sole shareholder of Merger Sub shall
approve and adopt this Agreement as required by applicable law and the Articles
of Incorporation of Merger Sub. FIC as the sole shareholder of First Indiana
shall approve and adopt this Agreement as required by applicable law and the
Articles of Association of First Indiana.
SECTION 8
CONDITIONS PRECEDENT TO THE MERGERS
8.01. FIC. The obligation of FIC, First Indiana and Merger Sub 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 FIC:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of MBC with respect to itself and the
Subsidiaries contained in this Agreement shall, subject to the standard set out
in the second paragraph of Section 4, be true and correct 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.
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(b) Covenants. Each of the covenants and agreements of MBC with respect to
itself and the Subsidiaries shall have been fulfilled or complied with from the
date of this Agreement through and as of the Effective Time.
(c) Deliveries at Closing. FIC shall have received from MBC at the Closing (as
hereinafter defined) the items and documents, in form and content reasonably
satisfactory to FIC, set forth in Section 10.02(b) hereof.
(d) 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 FIC reasonably determines in good
faith would (i) following the Effective Time, have a Material Adverse Effect on
FIC or (ii) reduce the benefits of the transactions contemplated hereby to such
a degree that FIC would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the date hereof.
(e) Shareholder Approval. The shareholders of MBC shall have approved and
adopted this Agreement as required by applicable law and its Articles of
Incorporation, and shareholders owning no more than ten percent (10%) of the
outstanding shares of MBC shall have exercised a right to dissent from the
Company Merger. MBC as the sole shareholder of the Bank shall have approved and
adopted this Agreement as required by applicable law and the Bank's Articles of
Incorporation.
(f) Officers' Certificate. MBC shall have delivered to FIC a certificate signed
by its chief executive officer and chief financial officer, dated as of the
Effective Time, certifying: (i) to the effect set out in Section 8.01(a), that
the representations and warranties of MBC and the Bank contained in Section 4
hereof shall be true, accurate and correct at and as of the Effective Time; (ii)
that all the covenants of MBC and the Bank have been complied with from the date
of this Agreement through and as of the Effective Time; and (iii) that MBC and
the Bank have satisfied and fully complied with all conditions necessary to make
this Agreement effective as to MBC and the Bank.
(g) Closing Book Value. The Closing Book Value (as defined below) of MCB at the
end of the month prior to the Effective Time of the Company Merger (excluding
any reduction which might occur as a result of payments made by MCB to Hovde
Financial, LLC pursuant to the terms of the agreement attached to Section 4.21
of the Disclosure Schedule and any reduction which might occur as a result of
reasonable expenses or restructuring charges relating to the Mergers) shall not
be less than $15,342,000. As used in the preceding sentence, the term "Closing
Book Value" shall mean the amount of the shareholders' equity of MCB as of the
end of the month immediately preceding the Effective Time of the Company Merger,
determined in accordance with accounting principles generally accepted in the
United States, less the amount of any increase in the shareholders' equity of
MCB resulting from or attributable to the sale of securities held on and sold
after the date of this Agreement or any transactions or accounting adjustments
not in the ordinary course of business effected or completed after the date of
this Agreement. Notwithstanding anything to the contrary in the foregoing, if
the condition in this Section 8.01(g) is not met, FIC and First Indiana shall
still be obligated to proceed with the Mergers (assuming all other conditions
precedent to such obligation are satisfied), if MBC agrees to a reduction in the
Conversion Price which reduces the aggregate consideration paid by FIC for the
MBC Common Stock by the amount by which the Closing Book Value falls below
$15,342,000.
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(h) Aggregate Benefit Amounts. MBC shall have calculated the amounts paid or
payable to officers, directors and employees under Section 6.20 relating to the
MBC Directors' Plan, Section 6.23(a) relating to certain employment agreements,
Section 6.24 relating to change of control payments, Section 6.25(a) relating to
the compensation of Ike G. Batalis in respect of his services prior to the
Effective Time, and Section 6.27 relating to the MBC Incentive Plan, and the
affected officers, directors and employees shall have agreed in writing to
accept such amounts in full payment of the amounts due them under such
agreements, plans and arrangements; and the aggregate of all amounts so paid or
payable, including portions thereof previously accrued as an expense, shall not
exceed $1,752,398.
(i) 280G Opinion. FIC shall have received a written opinion from KPMG reasonably
satisfactory to FIC, based on MBC's data respecting payments made by MBC and its
Subsidiaries before or during the calendar month as of which this Agreement is
dated and MBC's estimates of payments to be made by MBC and its Subsidiaries
after such calendar month and prior to the Effective Time, to the effect that
any amounts that are paid by MBC and its Subsidiaries before the Effective Time,
or required under MBC's Compensation Plans or this Agreement to be paid at or
after the Effective Time, to persons who are disqualified individuals in respect
of MBC and its Subsidiaries, 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. The
foregoing requirement of such KPMG letter shall be deemed to have been satisfied
unless, prior to the date of the mailing of the proxy statement to the
shareholders of MBC (which shall not occur until at least 50 days after the date
of this Agreement), FIC notifies MBC in writing that KPMG has failed or refused
so to opine and identifies in such writing each payment or portion thereof as to
which KPMG fails or refuses so to opine. In that event, MBC and its Subsidiaries
shall have the opportunity to reduce or restructure the subject payments (with
the consent of the affected disqualified individuals, if necessary) so as to
satisfy the requirement for the issuance of such written opinion of KPMG.
Notwithstanding the foregoing, the satisfaction of the conditions in this
Section 8.01(i) is subject to the accuracy (in all respects material to such
KPMG opinion) of such data and estimates provided by MBC.
(j) FDIC Matter. The Bank shall have either (i) completely settled all issues
relating to the unresolved credit transaction item raised by the FDIC in its
Compliance Examination and identified in the Disclosure Schedules for Section
4.05(b) by the payment of an amount which, in the aggregate with all other
items, would not have a Material Adverse Effect on MBC or (ii) have received
from the FDIC or other appropriate regulatory agency having jurisdiction over
this matter a letter in form and substance satisfactory to FIC respecting the
disposition of this matter.
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8.02. MBC. The obligation of MBC and the Bank 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 MBC:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of FIC contained in this Agreement shall, subject
to the standards set out in the second paragraph of Section 5, be true and
correct 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.
(b) Covenants. Each of the covenants and agreements of FIC shall have been
fulfilled or complied with from the date of this Agreement through and as of the
Effective Time.
(c) Deliveries at Closing. MBC shall have received from FIC at the Closing the
items and documents, in form and content reasonably satisfactory to MBC, listed
in Section 11.02(a) hereof.
(d) 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 MBC reasonably determines in good
faith would reduce the benefits of the transactions contemplated hereby to such
a degree that MBC would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the date hereof.
(e) Shareholder Approval. The shareholders of MBC shall have approved and
adopted this Agreement as required by applicable law and its Articles of
Incorporation. MBC as the sole shareholder of the Bank shall have approved and
adopted this Agreement as required by applicable law and the Bank's Articles of
Incorporation.
(f) Officers' Certificate. FIC shall have delivered to MBC a certificate signed
by its chief executive officer and chief financial officer, dated as of the
Effective Time, certifying that: (i) to the effect set out in Section 8.02(a),
the representations and warranties of FIC contained in Section 5 hereof shall be
true, accurate and correct at and as of the Effective Time; (ii) that all the
covenants of FIC and First Indiana have been complied with from the date of this
Agreement through and as of the Effective Time; and (iii) FIC has satisfied and
fully complied with all conditions necessary to make this Agreement effective as
to it.
(g) Fairness Opinion to Shareholders. MBC's investment banker shall have issued
(as of a date not later than the mailing date of the proxy statement relating to
the Company Merger to be mailed to the shareholders of MBC) its fairness opinion
stating that the consideration to be received by MBC shareholders relating to
the Company Merger is fair to the shareholders of MBC from a financial point of
view.
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SECTION 9
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 FIC to MBC,
or by MBC to FIC as follows:
(a) By FIC or MBC, if:
(i) the Mergers contemplated by this Agreement have not been consummated by
February 28, 2003; 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 respective Boards of Directors of FIC and MBC mutually agree to
terminate this Agreement.
(b) By FIC, if:
(i) at any time prior to the Effective Time, FIC's Board of Directors so
determines, in the event of either
(A) a breach by MBC of any representation or warranty contained herein, which
breach cannot be or has not been cured within thirty (30) days after the giving
of written notice to MBC of such breach; or
(B) a breach by MBC of any of the covenants or agreements contained herein,
which breach cannot be or has not been cured within thirty (30) days after the
giving of written notice to MBC of such breach; or
(ii) it shall reasonably determine that the Mergers contemplated by this
Agreement have become impracticable by reason of commencement or threat of any
claim, litigation or proceeding against FIC, First Indiana, MBC or the Bank, 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 change in the business, assets,
capitalization, financial condition or results of operations of MBC and the
Subsidiaries taken as a whole, as of the Effective Time, as compared to that in
existence as of the date of this Agreement, other than any change resulting
primarily by reason of changes in banking laws or regulations (or
interpretations thereof), changes in banking laws of general applicability or
interpretations thereof by courts or governmental authorities, changes in
accounting principles generally accepted in the United States or regulatory
accounting requirements applicable to banks and their holding companies
generally, 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 accounting principles generally
accepted in the United States, effects of any action taken with the prior
written consent of FIC and changes in the general level of interest rates or
conditions or circumstances that affect the banking industry generally; or
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(iv) MBC fulfills the requirements of Section 6.01 hereof but the shareholders
of MBC do not approve and adopt the Company Merger and this Agreement.
(c) By MBC, if:
(i) at any time prior to the Effective Time, MBC's Board of Directors so
determines, in the event of either
(A) a breach by FIC of any representation or warranty contained herein, which
breach cannot be or has not been cured within thirty (30) days after the giving
of written notice to FIC of such breach; or
(B) a breach by FIC of any of the covenants or agreements contained herein,
which breach cannot be or has not been cured within thirty (30) days after the
giving of written notice to FIC of such breach; or
(ii) there has been a material adverse change in the financial condition,
results of operations, business, assets or capitalization of FIC on a
consolidated basis as of the Effective Time, as compared to that in existence as
of the date of this Agreement, other than any change resulting primarily by
reason of changes in banking laws or regulations (or interpretations thereof),
changes in banking and similar laws of general applicability or interpretations
thereof by courts or governmental authorities, changes in accounting principles
generally accepted in the United States or regulatory accounting requirements
applicable to banks and their holding companies generally, 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 accounting principles generally accepted in the United States,
effects of any action taken with the prior written consent of MBC and changes in
the general level of interest rates or conditions or circumstances that affect
the banking industry generally; 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 FIC or First Indiana (A)
relating to this Agreement or the Mergers or (B) which is likely to have a
Material Adverse Effect on FIC; or
(iv) MBC fulfills the requirements of Section 6.01 hereof but the shareholders
of MBC do not approve and adopt the Company Merger and this Agreement; or
(v) after the fulfillment of the requirements of Section 6.05(b) hereof, the
Board of Directors enters into an agreement, arrangement or understanding with a
third party with respect to an Acquisition Transaction.
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 FIC or MBC and
their respective directors, officers, employees, agents
A-46
and shareholders, except as provided in compliance with: (i) the confidentiality
provisions of this Agreement set forth in Section 6.09 hereof and the
Confidentiality Agreement dated February 20, 2002 by and between FIC and MBC
(the "Confidentiality Agreement"); (ii) the payment of expenses set forth in
Section 11.09 hereof; and (iii) the payment of the FIC Break-up Fee as provided
by Section 6.06 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. The obligation to pay the FIC
Break-up Fee in accordance with Section 6.06 hereof will survive any termination
of this Agreement.
SECTION 10
CLOSING
10.01. Closing Date and Place. So long as all conditions precedent set forth in
Section 8 hereof have been satisfied and fulfilled, the closing of the Mergers
("Closing") shall take place on the Effective Time in Indianapolis, Indiana at a
place designated by FIC.
10.02. Deliveries.
(a) At the Closing, FIC shall deliver to MBC the following:
(i) the officers' certificate contemplated by Section 8.02(f) hereof;
(ii) copies of all approvals by government regulatory agencies necessary to
consummate the Mergers;
(iii) copies of (A) the resolutions of the Board of Directors of FIC certified
by the Secretary of FIC, relative to the approval of this Agreement and the
Company Merger and (B) the resolutions of the Board of Directors and sole
shareholder of First Indiana, certified by its Secretary relative to the
approval of this Agreement and the Bank Merger;
A-47
(iv) an opinion of its counsel dated as of the Effective Time and substantially
in form set forth in Exhibit B attached hereto; and
(v) such other documents as MBC or its legal counsel may reasonably request.
(b) At the Closing, MBC shall deliver to FIC the following:
(i) the officers' certificate contemplated by Section 8.01(f) hereof;
(ii) a list of MBC's shareholders as of the Effective Time certified by the
President and Secretary of MBC;
(iii) copies of (A) the resolutions adopted by the Board of Directors of MBC
certified by the Secretary of MBC, relative to the approval of this Agreement
and the Company Merger and (B) the resolutions of the Board of Directors and
sole shareholder of the Bank, certified by its Secretary relative to the
approval of this Agreement and the Bank Merger;
(iv) an opinion of its counsel dated as of the Effective Time and substantially
in form set forth in Exhibit C attached hereto; and
(v) such other documents as FIC or its legal counsel may reasonably request.
SECTION 11
MISCELLANEOUS
11.01. Binding Effect; Assignment. This Agreement and the recitals hereof shall
be binding upon and inure to the benefit of the respective parties hereto and
their respective heirs, legatees, representatives, successors and assigns;
provided, however, that this Agreement may not be assigned by any party hereto
without the prior written consent of the other parties hereto, except that no
consent shall be required if this Agreement is assigned to any successor to or a
subsidiary of FIC following the Effective Time, whether by operation of law or
otherwise. The representations, warranties, covenants and agreements contained
in this Agreement are for the sole benefit of the parties hereto and their
successors and assigns, and they shall not be construed as conferring any rights
on any other persons except as specifically set forth in Section 7.04 hereof .
11.02. Waiver; Amendment.
(a) The parties may by an instrument in writing extend the time for the
performance of or otherwise amend any of the covenants, conditions or agreements
set forth in this Agreement, except that the consideration to be received by the
MBC shareholders shall not be decreased by such an amendment following the
adoption and approval of the Company Merger and this Agreement by the MBC
shareholders (other than a reduction in the Conversion Price pursuant to Section
8.01(g)). Either of the holding company parties by an instrument in writing (i)
may waive any inaccuracies in the representations or warranties of the other
holding company party or its subsidiaries contained in this Agreement or in any
document delivered pursuant hereto; (ii) waive the performance by the other
holding company party or its subsidiaries of any of the covenants or agreements
to be performed by it or them under this Agreement; or (iii) waive the
satisfaction or fulfillment of any condition, the satisfaction or fulfillment of
which is a condition to the obligation of the holding company 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 shall not operate or be
construed as a continuing waiver or a waiver of any other or subsequent breach
or noncompliance hereunder.
(b) This Agreement may be amended, modified or supplemented only by a written
agreement executed by the parties hereto.
11.03. Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by fax, by
overnight courier, or by registered or certified mail (postage prepaid and
return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by it by like notice):
A-48
If to MBC or the Bank: with a copy to (which shall not
constitute notice):
MetroBanCorp Krieg DeVault LLP
10333 N. Meridian Street One Indiana Square, Suite 2800
Suite 111 Indianapolis, Indiana 46204-2017
Indianapolis, Indiana 46290 ATTN: Michael J. Messaglia, Esq.
ATTN: Ike G. Batalis Telephone: (317) 238-6249
Telephone: (317) 573-2400 Fax: (317) 636-1507
Fax: (317) 573-2346
If to FIC, First Indiana or with a copy to (which shall not
Merger Sub: constitute notice):
First Indiana Corporation Bose McKinney & Evans LLP
First Indiana Plaza 135 N. Pennsylvania St., #2700
135 N. Pennsylvania Street Indianapolis, IN 46204
Indianapolis, Indiana 46204 ATTN: David A. Butcher
ATTN: Owen B. Melton, Jr. Telephone: (317) 684-5123
Telephone: (317) 269-1220 Fax: (317) 684-5173
Fax: (317) 269-1290
All such notices and other communications shall be deemed to have been duly
given as follows: when delivered by hand, if personally delivered; when
received, if delivered by registered or certified mail (postage prepaid and
return receipt requested); when receipt acknowledged, if faxed; and the next
business day after timely delivery to a recognized overnight courier service, if
delivered by overnight courier.
11.04. Headings. The headings in this Agreement have been inserted solely for
ease of reference and should not be considered in the interpretation or
construction of this Agreement.
11.05. Severability. In case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement, but this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions (or portion
thereof) had never been contained herein.
11.06. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
11.07. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana and applicable federal laws,
without regard to principles of conflicts of law. The parties hereto hereby
agree that all claims, actions, suits and proceedings between the parties hereto
relating to this Agreement shall be filed, tried and litigated only in the
Circuit or Superior Courts of Hamilton and Marion Counties, Indiana or the
United States District Court for the Southern District of Indiana. 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.
A-49
11.08. Entire Agreement. This Agreement when executed and delivered supersedes,
terminates and renders of no further force or effect all other prior or
contemporaneous understandings, commitments, representations, negotiations or
agreements, whether oral or written, among the parties hereto relating to the
Mergers or matters contemplated herein and constitutes the entire agreement
between the parties hereto, except for the Confidentiality Agreement, which
shall continue in full force and effect following the date hereof. 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 shall not be employed in the
interpretation of this Agreement or any amendments or exhibits hereto.
11.09. Expenses. FIC and First Indiana shall pay their expenses incidental to
the Mergers contemplated hereby. MBC and the Bank shall pay their expenses
incidental to the Mergers contemplated hereby.
11.10. Certain References. Whenever in this Agreement a singular word is used,
it also shall include the plural wherever required by the context and
vice-versa. 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" shall mean any day except Saturday and Sunday when the
Bank and First Indiana are open for the transaction of business.
A-50
IN WITNESS WHEREOF, MBC, the Bank, FIC, Merger Sub and First Indiana
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.
METROBANCORP
By: /s/ Ike G. Batalis
------------------------------
Ike G. Batalis
ATTEST: President and Chief Executive
By: /s/ Charles V. Turean Officer
----------------------------------- "MBC"
Charles V. Turean, Secretary
METROBANK
By: /s/ Ike G. Batalis
------------------------------
Ike G. Batalis
ATTEST: President and Chief Executive
By: /s/ Charles V. Turean Officer
----------------------------------- "Bank"
Charles V. Turean, Secretary
FIRST INDIANA CORPORATION
By: /s/ Marni McKinney
------------------------------
ATTEST: Marni McKinney
By: /s/ Owen B. Melton, Jr. "FIC"
------------------------------------
FIC ACQUISITION CORP.
By: /s/ Marni McKinney
------------------------------
ATTEST: Marni McKinney
By: /s/ Owen B. Melton, Jr. "Merger Sub"
------------------------------------
A-51
FIRST INDIANA BANK, NATIONAL
ASSOCIATION
By: /s/ Owen B. Melton, Jr.
------------------------------
ATTEST: Owen B. Melton, Jr.
By: /s/ Marni McKinney "First Indiana"
-------------------------------------
A-52
VOTING AGREEMENT
Each of the undersigned directors of MBC hereby (a) agrees in his
capacity as a director to recommend to MBC's shareholders the approval of this
Agreement and the Merger, except as otherwise provided in Sections 6.01 and 6.05
of this Agreement, and (b) agrees in his individual capacity to vote his shares
of MBC common stock that are registered in his personal name (and agrees to use
his best efforts to cause all additional shares of MBC Common Stock owned
jointly with any other person or by his spouse or over which he has voting
influence or control to be voted) in favor of this Agreement and the Company
Merger. In addition, each of the undersigned directors hereby agrees not to make
any transfers of shares of MBC with the purpose of avoiding his agreements set
forth in the preceding sentence.
Dated this 4th day of September, 2002.
/s/ Chris G. Batalis
-----------------------------------
Chris G. Batalis
/s/ Ike G. Batalis
-----------------------------------
Ike G. Batalis
/s/ Terry L. Eaton
-----------------------------------
Terry L. Eaton
/s/ James F. Keenan
-----------------------------------
James F. Keenan
/s/ Robert L. Lauth, Jr.
-----------------------------------
Robert L. Lauth, Jr.
/s/ James C. Lintzenich
-----------------------------------
James C. Lintzenich
/s/ R.D. Richardson
-----------------------------------
R.D. Richardson
/s/ Edward R. Schmidt
-----------------------------------
Edward R. Schmidt
/s/ Donald F. Walter
-----------------------------------
Donald F. Walter
A-53
SCHEDULE OF EXHIBITS
Exhibit A - Consulting Agreement
Exhibit B Legal opinion of Bose McKinney & Evans LLP
Exhibit C - Legal opinion of Krieg DeVault LLP
A-54
APPENDIX B
________, 2002
Board of Directors
MetroBanCorp, Inc.
10333 North Meridian Street
Suite 111
Indianapolis, IN 46290
Dear Members of the Board:
We understand that First Indiana Corporation ("FIC"), an Indiana
corporation, and MetroBanCorp, Inc. ("MBC"), an Indiana corporation, have
entered into an Agreement and Plan of Merger (the "Agreement") dated pursuant to
which MBC will merge with and into, and under the charter of FIC (the "Merger").
As set forth in Section 2.01 (a) of the Agreement, at the Effective Time of the
Merger (as defined in the Agreement) each of the outstanding shares of MBC
common stock ("MBC Common Stock"), par value $0.01 per share, shall be converted
into the right to receive a cash amount equal to Seventeen and No/100 Dollars
($17.00) (the "Merger Consideration"). In connection therewith, you have
requested our opinion as to the fairness, from a financial point of view, of the
Merger Consideration to the shareholders of MBC.
Hovde Financial LLC ("Hovde"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bidding, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. We are familiar with MBC, having acted as its financial advisor
in connection with, and having participated in the negotiations leading to, the
Agreement. As you are aware, in the course of its daily trading activities,
investment funds controlled by an affiliate (as such term is defined in Rule
12b-2 promulgated under the Securities Exchange Act of 1934, as amended) of
Hovde and their affiliates may from time to time effect transactions and hold
securities of FIC and MBC. As of the date hereof, 30,874 shares of FIC Common
Stock and no shares of MBC Common Stock are owned.
We were retained by MBC to act as its financial advisor in connection
with the Merger. We will receive compensation from MBC in connection with our
services, a significant portion of which is contingent upon the consummation of
the Merger. MBC has agreed to indemnify us for certain liabilities arising out
of our engagement.
During the course of our engagement and for the purposes of the opinion
set forth herein, we have:
B-1
Board of Directors
MetroBanCorp, Inc.
________, 2002
Page 2 of 4
(i) reviewed the Agreement;
(ii) reviewed certain historical publicly available business and
financial information concerning FIC and MBC;
(iii) reviewed certain internal financial statements and other
financial and operating data concerning FIC and MBC;
(iv) analyzed certain financial projections prepared by the
managements of FIC and MBC;
(v) conducted meetings with members of the senior management of
FIC and MBC for the purpose of reviewing the future prospects
of FIC and MBC, including financial forecasts related to the
respective businesses, earnings, assets, liabilities and the
amount and timing of cost savings and revenue enhancements
(the "Synergies") expected to be achieved as a result of the
Merger;
(vi) reviewed historical market prices and trading volumes for FIC
Common Stock and MBC Common Stock;
(vii) reviewed the terms of recent merger and acquisition
transactions, to the extent publicly available, involving
banks and bank holding companies that we considered relevant;
(viii) analyzed the pro forma impact of the Merger on the combined
company's earnings per share, consolidated capitalization and
financial ratios;
(ix) performed such other analyses and considered such other
factors as we have deemed appropriate.
We also took into account our assessment of general economic, market
and financial conditions and our experience in other transactions, as well as
our knowledge of the banking industry and our general experience in securities
valuations.
In rendering this opinion, we have assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations contained in the materials provided to us by FIC
and MBC and in the discussions with FIC and MBC management. In that regard, we
have assumed that the financial forecasts, including, without
B-2
Board of Directors
MetroBanCorp, Inc.
________, 2002
Page 3 of 4
limitation, the Synergies and projections regarding under-performing and
non-performing assets and net charge-offs have been reasonably prepared on a
basis reflecting the best currently available information and judgments and
estimates of FIC and MBC and that such forecasts will be realized in the amounts
and at the times contemplated thereby. We are not experts in the evaluation of
loan and lease portfolios for purposes of assessing the adequacy of the
allowances for losses with respect thereto and have assumed that such allowances
for FIC and MBC are in the aggregate adequate to cover such losses. We were not
retained to and did not conduct a physical inspection of any of the properties
or facilities of FIC or MBC. In addition, we have not reviewed individual credit
files nor have we made an independent evaluation or appraisal of the assets and
liabilities of FIC and MBC and we were not furnished with any such evaluations
or appraisals.
We have assumed that the Merger will be consummated substantially in
accordance with the terms set forth in the Agreement. We have further assumed
that the Merger will be accounted for as a purchase under generally accepted
accounting principles and that it will not qualify as a tax-free reorganization
for United States federal income tax purposes. We have assumed that the Merger
is, and will be, in compliance with all laws and regulations that are applicable
to FIC and MBC. In rendering this opinion, we have been advised by FIC and MBC
and we have assumed that there are no factors that would impede any necessary
regulatory or governmental approval of the Merger and we have further assumed
that, in the course of obtaining the necessary regulatory and governmental
approvals, no restriction will be imposed on FIC or the surviving corporation
that would have a material adverse effect on FIC or the contemplated benefits of
the Merger. We have also assumed that there would not occur any change in
applicable law or regulation that would cause a material adverse change in the
prospects or operations of FIC or the surviving corporation after the Merger.
Our opinion is based solely upon the information available to us and
the economic, market and other circumstances, as they exist as of the date
hereof. Events occurring and information that becomes available after the date
hereof could materially affect the assumptions and analyses used in preparing
this opinion. We have not undertaken to reaffirm or revise this opinion or
otherwise comment upon any events occurring or information that becomes
available after the date hereof, except as otherwise agreed in our engagement
letter.
We are not expressing any opinion herein as to constitute a
recommendation to any holder of MBC Common Stock as to how such holder should
vote with respect to the Agreement at any meeting of holders of MBC Common
Stock.
This letter is solely for the information of the Board of Directors of
MBC and is not to be used, circulated, quoted or otherwise referred to for any
other purpose, nor is it to be filed with,
B-3
Board of Directors
MetroBanCorp, Inc.
________, 2002
Page 4 of 4
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in each case in accordance with
our prior written consent which shall not be unreasonably withheld; provided,
however, that we hereby consent to the inclusion and reference to this letter in
any registration statement, proxy statement, information statement or tender
offer document to be delivered to the holders of MBC Common Stock in connection
with the Merger if and only if this letter is quoted in full or attached as an
exhibit to such document and this letter has not been withdrawn prior to the
date of such document.
Subject to the foregoing and based on our experience as investment
bankers, our activities and assumptions as described above, and other factors we
have deemed relevant, we are of the opinion as of the date hereof that the
Merger Consideration pursuant to the Agreement is fair, from a financial point
of view, to the shareholders of MBC.
Sincerely,
HOVDE FINANCIAL LLC
B-4
APPENDIX C
WEST'S ANNOTATED INDIANA CODE
TITLE 23. BUSINESS AND OTHER ASSOCIATIONS
ARTICLE 1. INDIANA BUSINESS CORPORATION LAW
CHAPTER 44. DISSENTERS' RIGHTS
23-1-44-1 "CORPORATION" DEFINED
Sec. 1. As used in this chapter, "corporation" means the issuer of the
shares held by a dissenter before the corporate action, or the surviving or
acquiring corporation by merger or share exchange of that issuer.
23-1-44-2 "DISSENTER" DEFINED
Sec. 2. As used in this chapter, "dissenter" means a shareholder who is
entitled to dissent from corporate action under section 8 of this chapter and
who exercises that right when and in the manner required by sections 10 through
18 of this chapter.
23-1-44-3 "FAIR VALUE" DEFINED
Sec. 3. As used in this chapter, "fair value", with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which the dissenter objects, excluding
any appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
23-1-44-4 "INTEREST" DEFINED
Sec. 4. As used in this chapter, "interest" means interest from the
effective date of the corporate action until the date of payment, at the average
rate currently paid by the corporation on its principal bank loans or, if none,
at a rate that is fair and equitable under all the circumstances.
23-1-44-5 "RECORD SHAREHOLDER" DEFINED
Sec. 5. As used in this chapter, "record shareholder" means the person
in whose name shares are registered in the records of a corporation or the
beneficial owner of shares to the extent that treatment as a record shareholder
is provided under a recognition procedure or a disclosure procedure established
under IC 23-1-30-4.
23-1-44-6 "BENEFICIAL SHAREHOLDER" DEFINED
Sec. 6. As used in this chapter, "beneficial shareholder" means the
person who is a beneficial owner of shares held by a nominee as the record
shareholder.
23-1-44-7 "SHAREHOLDER" DEFINED
Sec. 7. As used in this chapter, "shareholder" means the record
shareholder or the beneficial shareholder.
23-1-44-8 RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
Sec. 8. (a) A shareholder is entitled to dissent from, and obtain
payment of the fair value of the shareholder's shares in the event of, any of
the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party if:
(A) shareholder approval is required for the merger by IC
23-1-40-3 or the articles of incorporation; and
(B) the shareholder is entitled to vote on the merger.
C-1
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan.
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
(1) year after the date of sale.
(4) The approval of a control share acquisition under IC 23-1-42.
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) This section does not apply to the holders of shares of any class
or series if, on the date fixed to determine the shareholders entitled to
receive notice of and vote at the meeting of shareholders at which the merger,
plan of share exchange, or sale or exchange of property is to be acted on, the
shares of that class or series were:
(1) registered on a United States securities exchange registered under
the Exchange Act (as defined in IC 23-1-43-9); or
(2) traded on the National Association of Securities Dealers, Inc.
Automated Quotations System Over-the-Counter Markets -- National Market Issues
or a similar market.
(c) A shareholder:
(1) who is entitled to dissent and obtain payment for the shareholder's
shares under this chapter; or
(2) who would be so entitled to dissent and obtain payment but for the
provisions of subsection (b); may not challenge the corporate action creating
(or that, but for the provisions of subsection (b), would have created) the
shareholder's entitlement.
23-1-44-9 DISSENTERS' RIGHTS OF BENEFICIAL SHAREHOLDER
Sec. 9. (a) A record shareholder may assert dissenters' rights as to
fewer than all the shares registered in the shareholder's name only if the
shareholder dissents with respect to all shares beneficially owned by any one
(1) person and notifies the corporation in writing of the name and address of
each person on whose behalf the shareholder asserts dissenters' rights. The
rights of a partial dissenter under this subsection are determined as if the
shares as to which the shareholder dissents and the shareholder's other shares
were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on the shareholder's behalf only if:
(1) the beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(2) the beneficial shareholder does so with respect to all the
beneficial shareholder's shares or those shares over which the beneficial
shareholder has power to direct the vote.
23-1-44-10 PROPOSED ACTION CREATING DISSENTERS' RIGHTS; NOTICE
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Sec. 10.(a) If proposed corporate action creating dissenters' rights
under section 8 of this chapter is submitted to a vote at a shareholders'
meeting, the meeting notice must state that shareholders are or may be entitled
to assert dissenters' rights under this chapter.
(b) If corporate action creating dissenters' rights under section 8 of
this chapter is taken without a vote of shareholders, the corporation shall
notify in writing all shareholders entitled to assert dissenters' rights that
the action was taken and send them the dissenters' notice described in section
12 of this chapter.
23-1-44-11 PROPOSED ACTION CREATING DISSENTERS' RIGHTS; ASSERTION OF DISSENTERS'
RIGHTS
Sec. 11.(a) If proposed corporate action creating dissenters' rights
under section 8 of this chapter is submitted to a vote at a shareholders'
meeting, a shareholder who wishes to assert dissenters' rights:
(1) must deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment for the shareholder's
shares if the proposed action is effectuated; and
(2) must not vote the shareholder's shares in favor of the proposed
action.
(b) A shareholder who does not satisfy the requirements of subsection
(a) is not entitled to payment for the shareholder's shares under this chapter.
23-1-44-12 DISSENTERS' NOTICE; CONTENTS
Sec. 12.(a) If proposed corporate action creating dissenters' rights
under section 8 of this chapter is authorized at a shareholders' meeting, the
corporation shall deliver a written dissenters' notice to all shareholders who
satisfied the requirements of section 11 of this chapter.
(b) The dissenters' notice must be sent no later than ten (10) days
after approval by the shareholders, or if corporate action is taken without
approval by the shareholders, then ten (10) days after the corporate action was
taken. The dissenters' notice must:
(1) state where the payment demand must be sent and where and
when certificates for certificated shares must be deposited;
(2) inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is received;
(3) supply a form for demanding payment that includes the date
of the first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not the person acquired beneficial ownership of the
shares before that date;
(4) set a date by which the corporation must receive the
payment demand, which date may not be fewer than thirty (30) nor more than sixty
(60) days after the date the subsection (a) notice is delivered; and
(5) be accompanied by a copy of this chapter.
23-1-44-13 DEMAND FOR PAYMENT AND DEPOSIT OF SHARES BY SHAREHOLDER
Sec. 13. (a) A shareholder sent a dissenters' notice described in IC
23-1-42-11 or in section 12 of this chapter must demand payment, certify whether
the shareholder acquired beneficial ownership of the shares before the date
required to be set forth in the dissenter's notice under section 12(b)(3) of
this chapter, and deposit the shareholder's certificates in accordance with the
terms of the notice.
(b) The shareholder who demands payment and deposits the shareholder's
shares under subsection (a) retains all other rights of a shareholder until
these rights are canceled or modified by the taking of the proposed corporate
action.
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(c) A shareholder who does not demand payment or deposit the
shareholder's share certificates where required, each by the date set in the
dissenters' notice, is not entitled to payment for the shareholder's shares
under this chapter and is considered, for purposes of this article, to have
voted the shareholder's shares in favor of the proposed corporate action.
23-1-44-14 UNCERTIFICATED SHARES; RESTRICTION ON TRANSFER; DISSENTERS' RIGHTS
Sec. 14. (a) The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment is received
until the proposed corporate action is taken or the restrictions released under
section 16 of this chapter.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
23-1-44-15 PAYMENT TO DISSENTER
Sec. 15. (a) Except as provided in section 17 of this chapter, as soon
as the proposed corporate action is taken, or, if the transaction did not need
shareholder approval and has been completed, upon receipt of a payment demand,
the corporation shall pay each dissenter who complied with section 13 of this
chapter the amount the corporation estimates to be the fair value of the
dissenter's shares.
(b) The payment must be accompanied by:
(1) the corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for that
year, and the latest available interim financial statements, if any;
(2) a statement of the corporation's estimate of the fair value of the
shares; and
(3) a statement of the dissenter's right to demand payment under
section 18 of this chapter.
23-1-44-16 FAILURE TO TAKE ACTION; RETURN OF CERTIFICATES; NEW ACTION BY
CORPORATION
Sec. 16. (a) If the corporation does not take the proposed action
within sixty (60) days after the date set for demanding payment and depositing
share certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 12 of this chapter and repeat the payment
demand procedure.
23-1-44-17 WITHHOLDING PAYMENT BY CORPORATION; CORPORATION'S ESTIMATE OF FAIR
VALUE; AFTER-ACQUIRED SHARES
Sec. 17. (a) A corporation may elect to withhold payment required by
section 15 of this chapter from a dissenter unless the dissenter was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares and shall pay this amount to each dissenter who
agrees to accept it in full satisfaction of the dissenter's demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares and a statement of the dissenter's right to demand payment
under section 18 of this chapter.
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23-1-44-18 DISSENTERS' ESTIMATE OF FAIR VALUE; DEMAND FOR PAYMENT; WAIVER
Sec. 18. (a) A dissenter may notify the corporation in writing of the
dissenter's own estimate of the fair value of the dissenter's shares and demand
payment of the dissenter's estimate (less any payment under section 15 of this
chapter), or reject the corporation's offer under section 17 of this chapter and
demand payment of the fair value of the dissenter's shares, if:
(1) the dissenter believes that the amount paid under section 15 of
this chapter or offered under section 17 of this chapter is less than the fair
value of the dissenter's shares;
(2) the corporation fails to make payment under section 15 of this
chapter within sixty (60) days after the date set for demanding payment; or
(3) the corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set for
emanding payment.
(b) A dissenter waives the right to demand payment under this section unless the
dissenter notifies the corporation of the dissenter's demand in writing under
subsection (a) within thirty (30) days after the corporation made or offered
payment for the dissenter's shares.
23-1-44-19 COURT PROCEEDING TO DETERMINE FAIR VALUE; JUDICIAL APPRAISAL
Sec. 19.(a) If a demand for payment under IC 23-1-42-11 or under
section 18 of this chapter remains unsettled, the corporation shall commence a
proceeding within sixty (60) days after receiving the payment demand and
petition the court to determine the fair value of the shares. If the corporation
does not commence the proceeding within the sixty (60) day period, it shall pay
each dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the circuit or
superior court of the county where a corporation's principal office (or, if none
in Indiana, its registered office) is located. If the corporation is a foreign
corporation without a registered office in Indiana, it shall commence the
proceeding in the county in Indiana where the registered office of the domestic
corporation merged with or whose shares were acquired by the foreign corporation
was located.
(c) The corporation shall make all dissenters (whether or not residents
of this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one (1) or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment:
(1) for the amount, if any, by which the court finds the fair
value of the dissenter's shares, plus interest, exceeds the amount paid by the
corporation; or
(2) for the fair value, plus accrued interest, of the
dissenter's after-acquired shares for which the corporation elected to withhold
payment under section 17 of this chapter.
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23-1-44-20 COSTS; FEES; ATTORNEY FEES
Sec. 20.(a) The court in an appraisal proceeding commenced under
section 19 of this chapter shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers appointed by
the court. The court shall assess the costs against such parties and in such
amounts as the court finds equitable.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) against the corporation and in favor of any or all
dissenters if the court finds the corporation did not substantially comply with
the requirements of sections 10 through 18 of this chapter; or
(2) against either the corporation or a dissenter, in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
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