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AGREEMENT AND PLAN OF MERGER
dated as of March 10, 2005
among
NATIONAL CITY CORPORATION,
THE MADISON BANK & TRUST COMPANY
MAINSOURCE FINANCIAL GROUP, INC.
and
MAINSOURCE BANK
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TABLE OF CONTENTS
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Page No.
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ARTICLE I DEFINITIONS....................................................................................1
SECTION 1.01 Certain Defined Terms...........................................................1
SECTION 1.02 Other Definitions...............................................................6
SECTION 1.03 Interpretation and Rules of Construction........................................7
ARTICLE II THE MERGER....................................................................................8
SECTION 2.01 The Merger......................................................................8
(a) The Merger................................................................................8
(b) Filings...................................................................................8
(c) Effective Time............................................................................8
(d) Effects of the Merger.....................................................................8
(e) Articles of Incorporation; Bylaws.........................................................8
(f) Directors and Officers....................................................................8
SECTION 2.02 Effect on Capital Stock.........................................................8
SECTION 2.03 Merger Consideration............................................................9
(a) Merger Consideration Calculation..........................................................9
(b) Payment of the Merger Consideration.......................................................9
(c) Closing Payment Adjustment................................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF NATIONAL CITY.............................................10
SECTION 3.01 Organization and Authority of National City....................................10
SECTION 3.02 Organization, Authority and Qualification and Capital Stock of Madison;
Ownership of Shares............................................................11
SECTION 3.03 Subsidiaries...................................................................11
SECTION 3.04 No Conflict; Consents and Approvals............................................11
SECTION 3.05 Financial Information; Absence of Changes or Events............................12
SECTION 3.06 Litigation.....................................................................12
SECTION 3.07 Taxes..........................................................................13
SECTION 3.08 Regulatory Approvals...........................................................13
SECTION 3.09 Legal Compliance...............................................................13
SECTION 3.10 Employee Matters; ERISA........................................................14
SECTION 3.11 Real Property..................................................................15
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SECTION 3.12 Material Contracts.............................................................15
SECTION 3.13 Title to Assets................................................................16
SECTION 3.14 Environmental Matters..........................................................16
SECTION 3.15 Loans..........................................................................17
SECTION 3.16 Deposit Insurance..............................................................17
SECTION 3.17 Absence of Undisclosed Liabilities.............................................17
SECTION 3.18 CRA Rating.....................................................................18
SECTION 3.19 Capital Requirements...........................................................18
SECTION 3.20 Brokers........................................................................18
SECTION 3.21 National City Disclosure Letter................................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MAINSOURCE AND PURCHASER...................................18
SECTION 4.01 Organization and Authority.....................................................18
SECTION 4.02 No Conflict....................................................................19
SECTION 4.03 Governmental Consents and Approvals............................................19
SECTION 4.04 Litigation.....................................................................20
SECTION 4.05 Brokers........................................................................20
SECTION 4.06 Regulatory Approvals...........................................................20
SECTION 4.07 Available Funds................................................................20
SECTION 4.08 Compliance With Laws...........................................................20
SECTION 4.09 CRA Rating.....................................................................21
SECTION 4.10 Capital Requirements...........................................................21
SECTION 4.11 MainSource Disclosure Letter...................................................21
ARTICLE V PRE-MERGER AGREEMENTS.........................................................................21
SECTION 5.01 Conduct of Business Prior to the Effective Time................................21
SECTION 5.02 Confidentiality................................................................23
SECTION 5.03 Regulatory Applications........................................................23
SECTION 5.04 Exclusivity....................................................................23
SECTION 5.05 Notification...................................................................24
SECTION 5.06 Conversion.....................................................................24
SECTION 5.07 MainSource Acquisitions........................................................24
ARTICLE VI EMPLOYEE MATTERS.............................................................................24
SECTION 6.01 Transferred Employees..........................................................24
SECTION 6.02 Retirement.....................................................................25
SECTION 6.03 Service Recognition............................................................25
SECTION 6.04 Severance Upon Termination of a Transferred Employee...........................25
SECTION 6.05 Performance Bonus..............................................................25
SECTION 6.06 COBRA..........................................................................25
SECTION 6.07 Earned Vacation................................................................25
ARTICLE VII TAX MATTERS.................................................................................26
SECTION 7.01 Tax Returns for Periods Through the Effective Time.............................26
SECTION 7.02 Cooperation on Tax Matters.....................................................27
SECTION 7.03 Certain Taxes..................................................................27
ARTICLE VIII CONDITIONS TO EFFECT THE MERGER............................................................28
SECTION 8.01 Conditions to Each Party's Obligation to Effect the Merger.....................28
SECTION 8.02 Conditions to Obligations of National City.....................................28
(a) Representations, Warranties and Covenants................................................28
(b) Merger Consideration.....................................................................28
SECTION 8.03 Condition to Obligations of Purchaser..........................................29
(a) Representations, Warranties and Covenants................................................29
(b) Termination of Contract..................................................................29
ARTICLE IX POST-MERGER COVENANTS........................................................................29
SECTION 9.01 Further Action.................................................................29
SECTION 9.02 Record Retention...............................................................29
SECTION 9.03 Covenant Not To Compete; Non-Solicitation......................................29
ARTICLE X INDEMNIFICATION...............................................................................30
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SECTION 10.01 Survival of Representations and Warranties....................................30
SECTION 10.02 National City's Indemnification...............................................30
SECTION 10.03 MainSource Group Members Indemnification......................................30
SECTION 10.04 Third-Party Claims............................................................31
SECTION 10.05 Direct Claims.................................................................31
SECTION 10.06 Limits on Indemnification.....................................................32
SECTION 10.07 Exclusive Remedy..............................................................32
ARTICLE XI TERMINATION AND WAIVER.......................................................................33
SECTION 11.01 Termination...................................................................33
SECTION 11.02 Effect of Termination.........................................................33
SECTION 11.03 Waiver........................................................................34
SECTION 11.04 Termination Fee...............................................................34
ARTICLE XII GENERAL PROVISIONS..........................................................................34
SECTION 12.01 Expenses......................................................................34
SECTION 12.02 Notices.......................................................................34
SECTION 12.03 Public Announcements..........................................................35
SECTION 12.04 Severability..................................................................35
SECTION 12.05 Entire Agreement..............................................................35
SECTION 12.06 Assignment....................................................................36
SECTION 12.07 No Third-Party Beneficiaries..................................................36
SECTION 12.08 Amendment.....................................................................36
SECTION 12.09 Binding Effect................................................................36
SECTION 12.10 Governing Law.................................................................36
SECTION 12.11 Counterparts..................................................................36
SECTION 12.12 Waiver of Jury Trial..........................................................36
Exhibits
Exhibit A December 2004 Balance Sheet
Exhibit B December 2004 Income Statement
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of March 10, 2005 (the "Agreement Date"), by and among NATIONAL CITY
CORPORATION, a Delaware corporation ("National City"), THE MADISON BANK & TRUST
COMPANY, an Indiana state chartered bank and a direct and a wholly-owned
subsidiary of National City ("Madison"), MAINSOURCE FINANCIAL GROUP, INC., an
Indiana corporation ("MainSource Financial"), and MAINSOURCE BANK, an Indiana
state chartered bank and a wholly-owned subsidiary of MainSource Financial
("Purchaser"). MainSource Financial and Purchaser are sometimes referred to
individually herein as a "MainSource Group Member" and together as the
"MainSource Group Members". National City, Madison, MainSource Financial and
Purchaser are sometimes referred to herein individually as a "Party" and
collectively as the "Parties".
RECITALS
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A. National City is the legal and beneficial owner of 110,000
shares (the "Shares") of capital stock, $10.00 par value per share, of Madison,
which constitutes one hundred percent (100%) of the issued and outstanding
shares of capital stock and the rights to purchase capital stock of Madison.
B. It is the desire of the Parties for Madison to merge with and
into Purchaser, in a transaction in which the separate corporate existence of
Madison will thereupon cease with Purchaser surviving (the "Merger"), upon the
terms and subject to the conditions set forth herein.
C. In order to induce National City to cause Madison to merge
with and into Purchaser, MainSource Financial has agreed jointly and severally
with Purchaser, to be a party to the undertakings, covenants, representations
and warranties of Purchaser contained herein, and MainSource Financial will
benefit as the principal owner of Purchaser from the transactions contemplated
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained, and intending to be legally bound
hereby, the Parties agree as follows:
ARTICLE I
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DEFINITIONS
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SECTION 1.01 Certain Defined Terms. As used in this Agreement, in addition
to the terms defined elsewhere herein, the following terms shall have the
meanings ascribed to them in this Section 1.01:
(a) "Action" shall mean any action, suit, arbitration, inquiry, proceeding,
hearing or investigation by or before any court, arbitration, tribunal or panel
or any Governmental Authority.
(b) "Affiliate" means, with respect to any specified Person, any other
Person that directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such specified Person.
(c) "Business Premises Lease" means a lease identified on Schedule 1.01(c)
attached to the National City Disclosure Letter, whereby Madison is a tenant.
(d) "COBRA" shall mean Section 601 et seq. of ERISA and Section 4980B of
the Code.
(e) "Call Report" means a report called "Consolidated Reports of Condition
and Income" on the FFIEC Form 031, consisting of a balance sheet, income
statement and changes in equity capital as of the end of the period to which
such Call Report relates.
(f) "Claim" shall mean a claim, demand, assessment, Governmental Order,
Action or settlement involving an Indemnifiable Loss.
(g) "Claim Notice" shall mean a notice specifying in reasonable detail (i)
the nature of a Claim, (ii) each applicable provision of this Agreement or
Related Agreement under which such Claim arises, (iii) if then known, the amount
of the Indemnifiable Loss incurred, or anticipated to be incurred, as a result
of such Claim and the method of computation thereof, and (iv) if the
Indemnifiable Loss attributable to such Claim is, in whole or in part, at the
time when the Claim Notice is given, contingent, unaccrued, unasserted or
unliquidated: (A) the circumstances under which the Indemnifiable Loss
attributable to such Claim will accrue, be asserted, be liquidated or otherwise
would become certain, (B) an estimate of the amount of anticipated Indemnifiable
Loss and the basis for such estimate, (C) an estimate of the timing of the
Claim's accrual, assertion, liquidation or certainty and the basis therefore,
and (D) an estimate of the likelihood of the Claim's eventual accrual,
assertion, liquidation or certainty.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Confidentiality Agreement" means the letter agreement dated as of
February 17, 2005 between National City and MainSource Financial.
(j) "December 2004 Balance Sheet" means the balance sheet of Madison's Call
Report for the quarterly period ended as of December 31, 2004, which is attached
hereto as Exhibit A.
(k) "December 2004 Income Statement" means the income statement of
Madison's Call Report for the quarterly period ended December 31, 2004, which is
attached hereto as Exhibit B.
(l) "Deposits Premium" means 7.54%, which is the premium to be paid on the
Closing Deposits Amount.
(m) "ERISA" means Section 3.(3) of the Employee Retirement Income Security
Act of 1974, as amended.
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(n) "Encumbrance" means any lien, mortgage, pledge, claim, option, charge,
easement, security interest, right-of-way, encumbrance or other right or
restriction of any Person of any kind, including, without limitation, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership.
(o) "Environmental Laws" means any Law relating to (i) the protection or
restoration of the environment, health or safety (in each case as relating to
the environment) or natural resources; or (ii) the handling, use, presence,
disposal, release or threatened release of any Hazardous Substance.
(p) "FFIEC" means Federal Financial Institutions Examination Council.
(q) "GAAP" means United States generally accepted accounting principles as
in effect at the date of a financial statement to which it refers, and applied
consistently in the preparation of the financial statement throughout the period
involved.
(r) "Governmental Authority" means (i) any United States federal, state or
local government, governmental, regulatory or administrative authority, agency,
panel instrumentality, political subdivision, branch, department, official,
entity or commission, (ii) any court, tribunal, or judicial or arbitral body or
(iii) governmental or quasi-governmental body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature pertaining to government.
(s) "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with a Governmental
Authority.
(t) "Hazardous Substance" means (i) any substance in any concentration that
is listed, classified or regulated pursuant to any Environmental Law; (ii) any
petroleum product or by-product, polychlorinated biphenyls, radioactive
materials or radon; or (iii) any other substance which is the subject of
regulatory action against Madison by any Governmental Authority pursuant to any
Environmental Law.
(u) "Indemnifiable Loss" shall mean any and all costs, damages,
disbursements, obligations, penalties, liabilities, losses, expenses,
assessments, judgments, settlements or deficiencies (including any interest,
penalties, investigation, legal, accounting and other costs and expenses
reasonably incurred in the investigation, collection, prosecution and defense of
any Action and amounts paid in settlement), actually paid or incurred by the
Indemnitee, provided that the Indemnitee shall make commercially reasonable
efforts to minimize the amount of such Indemnifiable Loss, but excluding from
the determination of an Indemnifiable Loss, internal costs (such as employee
compensation and attributed overhead), lost interest, special and consequential
damages (including, without limitation, damages due to lost business, lost
profits and lost opportunity) and exemplary or punitive damages unless such
items are awarded as part of a Third-Party Claim and are actually paid or
incurred by the Indemnitee.
(v) "Indemnitee" shall mean any Person entitled to indemnification under
Article X below in respect of a claim for indemnity that properly may be sought
pursuant to this Agreement.
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(w) "Indemnitor" shall mean any Person required to indemnify any Indemnitee
under Article X below in respect of a claim for indemnity which properly may be
sought pursuant to this Agreement.
(x) "Knowledge of National City" means the actual knowledge of the
officers, directors and employees of National City and Madison listed on
Schedule 1.01(x) attached to the National City Disclosure Letter.
(y) "Law" means any United States federal, state, local statute, law,
ordinance, regulation, rule, code, order, other requirement or rule enacted,
adopted, issued or promulgated by any Governmental Authority.
(z) "Leased Business Premises" means the premises identified on Schedule
1.01(z) attached to the National City Disclosure Letter and more particularly
described in the related Business Premises Lease.
(aa) "Loans Premium" means 6.00%, which is the premium to be paid on the
Closing Loans Amount.
(bb) "Material Adverse Effect" means (A) any circumstance, event or
condition (individually or in the aggregate) that has a material, negative
effect on the financial condition, properties, assets, value, business or
results of operation of a Party, and its Affiliates, taken as a whole or (B)
materially impairs the ability of a Party to consummate the Merger; provided,
however, that a Material Adverse Effect shall not be deemed to include the
impact of (i) actions contemplated by this Agreement or with the prior consent
of the other Party, (ii) changes in Laws or interpretations thereof that are
generally applicable to similarly situated entities, (iii) changes attributable
to or resulting from changes in general economic conditions affecting similarly
situated entities and (iv) any change, effect, event or occurrence arising out
of the announcement or performance of this Agreement and the Merger, including
any expenses incurred in connection therewith.
(cc) "Owned Real Property" means the parcels of real land identified on
Schedule 1.01(cc) attached to the National City Disclosure Letter, together with
any buildings, improvements and fixtures located on the land and all
rights-of-way or use, easements and other rights benefiting or appurtenant to
the land.
(dd) "Permitted Personal Property Encumbrances" means any (i) Encumbrance
securing Taxes, assessments and governmental charges or levies, both general and
special, that are not yet due and payable, (ii) Encumbrances imposed by Law,
such as materialmen's, mechanics', carriers', workmen's and repairmen's liens
and other similar Encumbrances arising in the ordinary course of business
securing obligations that are not overdue, (iii) pledges or deposits made in the
ordinary course of business to secure obligations under workers' compensation
Laws or similar legislation or to secure public or statutory obligations; and
(iv) Encumbrance that individually or in the aggregate, do not materially
detract from the value of the Owned Real Property or materially interfere with
the use thereof.
(ee) "Permitted Real Property Encumbrances" means any (i) Encumbrance
securing Taxes, assessments and governmental charges or levies, both general and
special, that are not yet due and payable, (ii) zoning and land use
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restrictions, (iii) reservations, easements, covenants, conditions, restrictions
and other similar title exceptions or Encumbrances affecting an Owned Real
Property described on Schedule 1.01(ee) attached to the National City Disclosure
Letter, (iv) Encumbrances imposed by Law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar Encumbrances
arising in the ordinary course of business securing obligations that are not
overdue, (v) pledges or deposits made in the ordinary course of business to
secure obligations under workers' compensation Laws or similar legislation or to
secure public or statutory obligations; and (vi) Encumbrance that individually
or in the aggregate, do not materially detract from the value of the Owned Real
Property or materially interfere with the current use thereof.
(ff) "Person" means any Governmental Authority, individual, partnership,
firm, corporation, limited liability company, association, trust, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.
(gg) "Reference Deposits Amount" means $169,073,608.
(hh) "Reference Deposits Premium" means the product of the Reference
Deposits Amount multiplied by the Deposits Premium, namely $12,748,150.
(ii) "Reference Loans Amount" means $56,876,817.
(jj) "Reference Loans Premium" means the product of the Reference Loans
Amount multiplied by the Loans Premium, namely $3,412,609.
(kk) "Reference Total Equity Capital" means $13,000,000.
(ll) "Regulations" means the Treasury Regulations promulgated under the
Code.
(mm) "Tax" or "Taxes" means any and all federal, state, local, or foreign
income, payroll and/or withholding, gross receipts, license, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Section 59A of the Code), capital stock, franchise, profits, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
(nn) "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
(oo) "Third-Party Claim" shall mean any claim or Action asserted or filed
by a Third-Party against an Indemnitee with respect to any matter for
indemnification is owing to such Indemnitee pursuant to Article X below.
(pp) "Transaction Documents" means, collectively, this Agreement and each
agreement, instrument and document required to be executed and delivered
pursuant to the terms of this Agreement.
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SECTION 1.02 Other Definitions. The following terms shall have the
meanings defined in the Section indicated:
Articles of Merger Section 2.01(a)
Agreement Preamble
Agreement Date Preamble
BHCA Section 3.01
Basket Section 10.06(a)
Cap Section 10.06(a)
Closing Balance Sheet Section 2.03(c)(i)
Closing Deposits Amount Section 2.03(c)(i)
Closing Deposits Premium Section 2.03(a)
Closing Loans Amount Section 2.03(c)(i)
Closing Loans Premium Section 2.03(a)
Closing Payment Section 2.03(b)(i)
Closing Total Equity Capital Section 2.03(c)(i)
Conversion Section 5.06
De Minimis Claims Amount Section 10.06(a)
Direct Claim Section 10.05
Effective Time Section 2.01(c)
FDIA Section 3.16
FDIC Section 3.04
FRB Section 3.04
IBCL Section 2.01(a)
IRS Section 3.07(a)
Loan Portfolio Sale Section 5.07
Madison Preamble
Madison Classified Loans Section 3.15(a)
Madison Employee Plans Section 3.10(c)
Madison Employees Section 3.10(a)
Madison Financial Statements Section 3.05(a)
Madison Past-Due Loans Section 3.15(a)
MainSource Acquisition Section 5.07
MainSource Disclosure Letter Article IV
MainSource Financial Preamble
MainSource Group Member/MainSource Group Members Preamble
Material Contracts Section 3.12(a)
Merger Consideration Section 2.03(a)
Merger Recital B
National City Preamble
National City Disclosure Letter Article III
National City Indemnitee Section 10.03
Party/Parties Preamble
Permitted Pre-Merger Actions Section 5.07
Purchaser Preamble
Purchaser Indemnitee Section 10.02
Retirement Plans Section 6.01
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Shares Recital A
Short-Term Disability Employee Section 6.01
State Entities Section 3.04
Surviving Corporation Section 2.01(c)
Termination Fee Section 11.04
Transferred Employees Section 6.01
SECTION 1.03 Interpretation and Rules of Construction. In this Agreement,
except to the extent that the context otherwise requires:
(i) when a reference is made in this Agreement to an Article, Section,
Exhibit or Schedule, such reference is to an Article or Section of, or an
Exhibit or a Schedule to, this Agreement unless otherwise indicated;
(ii) the headings for this Agreement are for reference purposes only and do
not affect in any way the meaning or interpretation of this Agreement;
(iii) whenever the words "include," "includes" or "including" are used in
this Agreement, they are deemed to be followed by the words "without
limitation";
(iv) the words "hereof," "herein" and "hereunder" and words of similar
import, when used in this Agreement, refer to this Agreement as a whole and not
to any particular provision of this Agreement;
(v) all terms defined in this Agreement have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein;
(vi) the definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms;
(vii) any Law defined or referred to herein or in any agreement or
instrument that is referred to herein means such Law or statute as from time to
time amended, modified or supplemented, including by succession of comparable
successor Laws;
(viii) references to a Person are also to its permitted successors and
assigns;
(ix) the use of "or" means "either or both" unless expressly indicated
otherwise; and
(x) unless otherwise specified in this Agreement, all references to
currency, monetary values and dollars set forth herein shall mean United States
(U.S.) dollars.
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ARTICLE II
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THE MERGER
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SECTION 2.01 The Merger.
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(a) The Merger. Subject to the terms and conditions of this Agreement and
in reliance upon the representations, warranties, covenants and agreements
contained herein, at the Effective Time, Madison will merge with and into
Purchaser, and the separate corporate existence of Madison will thereupon cease
with Purchaser being the surviving corporation in the Merger in accordance with
the applicable provisions of the Indiana Financial Institutions Act and the
Indiana Business Corporation Law (the "IBCL").
(b) Filings. As soon as practicable after the satisfaction or waiver of all
conditions to the Merger specified in Article VIII below, and provided this
Agreement has not been terminated pursuant to Section 11.01 below, the Parties
will file articles of merger or other appropriate documents (in any such case,
the "Articles of Merger") with the Indiana Department of Financial Institutions
and the Indiana Secretary of State of the State of Indiana in such form as
required by, and executed in accordance with the provisions of, the Indiana
Financial Institutions Act and the IBCL.
(c) Effective Time. The Merger shall become effective at the time (the
"Effective Time") of the last of the ----------------------- ---------------
following events to occur: (i) the filing of the Articles of Merger; or (ii)
such later time as shall be specified in such filing.
(d) Effects of the Merger. At and after the Effective Time, the Merger will
have the effects set forth in Section 23-1-40-6 of the IBCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time
Purchaser shall be the surviving Person in the Merger (sometimes referred to
herein as the "Surviving Corporation"), and all the property, rights,
privileges, powers and franchises of Madison and Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of Madison and Purchaser shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
(e) Articles of Incorporation; Bylaws. At the Effective Time, the articles
of incorporation and bylaws of Purchaser as in effect immediately prior to the
Effective Time shall be the articles of incorporation and bylaws of the
Surviving Corporation until thereafter changed or amended as provided by
applicable Law and such articles of incorporation and bylaws.
(f) Directors and Officers. The directors and officers of Purchaser shall
be the directors and officers of the Surviving Corporation until duly changed in
accordance with applicable Law.
SECTION 2.02 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of National City, each of the
Shares will be converted into the right to receive an amount equal to the Merger
Consideration divided by the number of Shares issued and outstanding immediately
prior to the Merger, as calculated in accordance with Section 2.03 below. Any
Madison common stock that is owned by Madison as treasury stock shall be
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canceled and shall cease to exist and no cash or other consideration shall be
delivered in exchange therefor.
SECTION 2.03 Merger Consideration.
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(a) Merger Consideration Calculation. The aggregate consideration to be
paid to National City (the "Merger Consideration") shall be the sum of (i) the
Closing Total Equity Capital, plus (ii) the product of the Closing Deposits
Amount multiplied by the Deposits Premium (as to such product, the "Closing
Deposits Premium"), plus (iii) the product of the Closing Loans Amount
multiplied by the Loans Premium (as to such product, the "Closing Loans
Premium").
(b) Payment of the Merger Consideration. Purchaser shall pay the Merger
Consideration due to National City as follows:
(i) At the Effective Time, Purchaser shall pay an amount (the "Closing
Payment") equal to the sum of (A) the Reference Total Equity Capital, plus
(B) the Reference Deposits Premium, plus (C) the Reference Loans Premium,
by wire transfer or immediately available funds to such accounts and
pursuant to such wire instructions as are designated by National City in
writing.
(ii) Within three (3) Business Days of the final determinations of
"Closing Total Equity Capital," "Closing Deposits Premium," and "Closing
Loans Premium," the remaining balance of the Merger Consideration shall be
paid by Purchaser to National City, or any portion of the Closing Payment
shall be reimbursed by National City to Purchaser, as follows:
(A) If the Merger Consideration (as finally determined pursuant
to Section 2.03(c) below) is greater than the Closing Payment,
Purchaser shall make an additional payment to National City in an
amount equal to the positive difference between the final Merger
Consideration calculation and the Closing Payment.
(B) If the Merger Consideration (as finally determined pursuant
to Section 2.03(c) below) is less than the Closing Payment, then
National City shall make a payment to Purchaser in an amount equal to
the difference between the Closing Payment and the final Merger
Consideration calculation.
(c) Closing Payment Adjustment.
(i) As promptly as practicable, but in any event within forty-five
(45) Business Days following the last day of the month in which the Merger
occurs, Purchaser and National City shall agree upon the balance sheet of
Madison as of the Effective Time (the "Closing Balance Sheet") and the
corresponding "Total Equity Capital" (the "Closing Total Equity Capital"),
"Deposits" (the "Closing Deposits Amount"), and the book value of the
"Loans" (the "Closing Loans Amount") using the same accounting principles,
policies and practices used by Madison in preparation of the December 2004
Balance Sheet. For purposes of this Section 2.03(c)(i), "Deposits" shall
not include deposits of Government Authorities in excess of the amount of
deposits of Government Authority in the Madison Financial Statements.
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(ii) If Purchaser and National City are unable to agree upon the
"Closing Total Equity Capital," "Closing Deposits Amount," and "Closing
Loans Amount," calculations, then, within ten (10) Business Days of such
determination, the items in dispute shall be submitted to an independent
auditor mutually agreed upon by Purchaser and National City for final
determination. The independent auditor shall deliver its calculations of
the "Closing Total Equity Capital," "Closing Deposits Amount," and "Closing
Loans Amount," calculations to Purchaser and National City within twenty
(20) Business Days of its engagement, and the determinations of the
independent auditor shall become binding, final and conclusive upon all of
the Parties and enforceable in a court of law. The fees and expenses of any
such auditor will be shared equally between Purchaser and National City.
The independent auditor shall not render any determination on matters that
involve taking evidence from non-accounting experts, nor shall the
independent auditor determine questions of law. The independent auditor
shall make its determination as an expert notwithstanding the failure of
either Party to provide the independent auditor with comfort letters or
management representation letters.
(iii) From the Effective Time until the final determinations of
"Closing Total Equity Capital," "Closing Deposits Amount," and "Closing
Loans Amount," Purchaser and National City shall cause their respective
financial, accounting and management employees to fully cooperate with one
another in the preparation and review of the Closing Balance Sheet and
shall otherwise provide the other Party, and such other Party's respective
representatives, with reasonable access to the books, records and accounts
relating to Madison that may then be in its possession in order to assist
in the preparation and review of the Closing Balance Sheet.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF NATIONAL CITY
-----------------------------------------------
As an inducement to Purchaser to enter into this Agreement, except as set
forth in the disclosure letter of even date herewith from National City to
Purchaser (the "National City Disclosure Letter"), National City hereby
represents and warrants to Purchaser as follows:
SECTION 3.01 Organization and Authority of National City. National City is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and is registered as a financial holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA"). National
City has all necessary power and authority to enter into this Agreement and the
Transaction Documents to which National City is a party, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Transaction Documents to which National City is a party by National
City, the performance by National City of its obligations hereunder and
thereunder and the consummation by National City of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of National City. This Agreement has been, and upon its
execution the Transaction Documents to which National City is a party shall have
been, duly executed and delivered by National City, and (assuming due
authorization, execution and delivery by each MainSource Group Member) this
Agreement constitutes, and upon its execution the Transaction Documents to which
National City is a party will constitute, legal, valid and binding obligations
of National City enforceable against National City in accordance with its terms,
10
except as may be limited by bankruptcy, insolvency, moratorium, reorganization
or similar Laws affecting the rights of creditors generally and the availability
of equity remedies.
SECTION 3.02 Organization, Authority and Qualification and Capital Stock of
Madison; Ownership of Shares.
(a) Madison is a state chartered bank duly organized, validly existing and
in good standing under the laws of the State of Indiana and has all necessary
power and authority to own, operate or lease the properties and assets now
owned, operated or leased by it and to carry on its business as it has been and
is currently conducted. True and correct copies of the Articles of Incorporation
and By-laws of Madison, including all material amendments and supplements have
been made available to Purchaser.
(b) The authorized capital stock of Madison consists of 110,000 shares of
capital stock, $10.00 par value per share, of which 110,000 shares have been
issued. The Shares are the only shares of such authorized capital stock that are
issued and outstanding. National City owns directly all of the issued and
outstanding shares of common stock of Madison free and clear of all
Encumbrances. All of the Shares are validly issued, fully paid and
non-assessable. National City owns, is record holder of, and has good and
marketable title to, all of the Shares free of preemptive rights. There are no
other securities of Madison of any kind or nature issued or outstanding,
including options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character or obligating National City,
Madison or their Affiliates to issue or sell any shares of equity in Madison.
There are no voting trusts, shareholder agreements, proxies or other agreements
or understandings in effect with respect to the voting or transfer of any of the
Shares.
SECTION 3.03 Subsidiaries. Madison does not own, beneficially or otherwise,
directly or indirectly, any capital stock or other equity securities or other
ownership interest in any Person.
SECTION 3.04 No Conflict; Consents and Approvals.
(a) Assuming the making and obtaining of all filings, notifications,
consents, approvals, and authorizations, except as may result from any facts or
circumstances relating solely to a MainSource Group Member, the execution,
delivery and performance of this Agreement and the Transaction Documents by
National City and Madison do not and will not (i) violate, conflict with or
result in the breach of any provision of the Certificate of Incorporation or
By-laws of National City or the Articles of Incorporation or By-laws of Madison,
(ii) conflict with or violate any Law or Governmental Order applicable to
National City or Madison or (iii) conflict with or result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation, or cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of Madison pursuant to, any note, bond, mortgage
or indenture, contract, agreement, lease, sublease, license, permit, franchise
or other instrument or arrangement to which Madison is a party or by which any
11
of such assets or properties are bound or affected which would have a Material
Adverse Effect on the ability of National City or Madison to consummate the
transactions contemplated by this Agreement and the Transaction Documents.
(b) No consent, approval, authorization or permit of or from, or filing
with or notification to, any Governmental Authority is required by or with
respect to National City or Madison in connection with the execution or delivery
of this Agreement, or the consummation of the transactions contemplated hereby,
except (i) filings with, and approval by, the Federal Reserve Board (the "FRB")
and Federal Deposit Insurance Corporation (the "FDIC"), as applicable, (ii)
filings with, and approvals by, the Indiana Department of Financial Institutions
and such other state regulatory agencies (including, but not limited to, other
state bank and insurance regulatory agencies) as may be required (collectively,
the "State Entities"), (iii) filings and approvals pursuant to any applicable
state takeover Law, (iv) any consents, authorizations, approvals, filings or
exemptions in connection with compliance with applicable provisions of federal
and state securities Laws relating to the regulations of broker-dealers,
investment advisers or transfer agents, (v) consents, approvals, authorizations,
permits, filings or notifications which, if not obtained or made will not,
individually or in the aggregate, have a Material Adverse Effect, or (vi) as may
be necessary as a result of any facts or circumstances relating solely to a
MainSource Group Member.
SECTION 3.05 Financial Information; Absence of Changes or Events.
(a) The December 2004 Balance Sheet and December 2004 Income Statement
(together, the "Madison Financial Statements") present fairly, in all material
respects, the financial condition and results of operations of Madison as of
December 31, 2004 and for the quarterly period then ended, and were prepared in
accordance with GAAP consistently applied, subject to normal year-end adjustment
and the absence of notes.
(b) Since December 31, 2004, Madison has not (i) incurred any material
liability or obligation (indirect, direct or contingent), except in the ordinary
course of its business consistent with past practices (and except for the
entering into of this Agreement) or (ii) suffered any change, or any event
involving a prospective change, in its business, financial condition or results
of operation, which as to clauses (i) and (ii) has had, or is likely to have, a
Material Adverse Effect upon Madison.
SECTION 3.06 Litigation. (i) There is no Action pending against National
City (that arises from or relates to Madison) or Madison nor, to the Knowledge
of National City, is any such Action threatened, and (ii) there is no Action
against National City (that arises from or relates to Madison) or Madison
pending before any Governmental Authority or, to the Knowledge of National City,
threatened to be brought by or before any Governmental Authority, which, as to
clauses (i) and (ii) will, either alone or in the aggregate with all such other
matters, have a Material Adverse Effect upon Madison. Madison is not subject to
or affected by any Governmental Order, and, to the Knowledge of National City,
there are no Governmental Orders threatened to be imposed on or affecting
Madison by any Governmental Authority, which will, either alone or in the
aggregate with all such other matters, have a Material Adverse Effect upon
Madison.
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SECTION 3.07 Taxes.
(a) Madison has filed all Tax Returns that it was required to file. All
such Tax Returns were correct and complete in all material respects. All Taxes
owed by Madison (whether or not shown on any Tax Return) have been paid, and
Madison is not (i) delinquent in the payment of any Taxes shown on such returns
or reports or on any assessments received by it for such Taxes; (ii) aware of
any pending or threatened audit or examination for income taxes for any year by
the Internal Revenue Service ("IRS") or any state tax agency; or (iii) a party
to any action or proceeding with, nor has any claim been asserted against it by,
any Governmental Authority for assessment or collection of Taxes. Madison is not
currently the beneficiary of any extension of time within which to file any Tax
Return, although it is anticipated to be extended in all pertinent filing
jurisdictions for purposes of all 2004 income-based Tax Returns. No claim has
ever been made by a Governmental Authority in a jurisdiction where Madison does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. None of the Tax Returns of Madison have been audited by the IRS or
any state tax agency for any period since the 2002 Tax year of Madison. The
reserve for Taxes in the Madison Financial Statements is, in the opinion of
management, adequate in all material respects to cover all of the tax
liabilities of Madison (including, without limitation, income taxes and
franchise fees) as of such date in accordance with GAAP. Madison is not bound by
any tax indemnity, tax sharing or tax allocation agreement or arrangement.
(b) Madison has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder, or other Person.
(c) Madison has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency, except as a member of National City's consolidated or unitary group.
SECTION 3.08 Regulatory Approvals. As of the Agreement Date, National City
has no reason to believe that any Governmental Authority would oppose or not
grant or issue its consent or approval, if requested, with respect to the
Merger, other than by reason of facts or circumstances relating solely to a
MainSource Group Member and/or its Affiliates.
SECTION 3.09 Legal Compliance.
(a) Madison is in compliance with all Laws except for such non-compliance
that, either alone or in the aggregate, is not reasonably likely to have a
Material Adverse Effect upon Madison. Madison possesses and holds all licenses,
franchises, permits, certificates and other authorizations necessary for the
continued conduct of its business without interference or interruption, except
where the failure to hold such license, franchise, permit, certificate and other
authorization is not likely to have a Material Adverse Effect upon Madison.
(b) Neither National City nor Madison is a party to any written agreement
or memorandum of understanding with, or a party to any commitment letter or
similar undertaking to, or is subject to any Governmental Order or directive by,
or is a recipient of any extraordinary supervisory letter from, a Governmental
Authority that would reasonably be expected to have the effect of preventing,
13
delaying, making illegal or otherwise interfering with the consummation of the
Merger or which will, either alone or in the aggregate, have a Material Adverse
Effect upon Madison.
(c) All of the existing offices and branches of Madison have been legally
authorized and established in accordance in all material respects with all
applicable Laws. Madison has no approved but unopened offices or branches.
SECTION 3.10 Employee Matters; ERISA.
(a) Schedule 3.10(a) attached to the National City Disclosure Letter sets
forth a true, complete and accurate list of all employees of Madison (the
"Madison Employees") as of the date set forth on Schedule 3.10(a), together with
their job title, rate of salary or wages, vacation benefits, and any profit
sharing, bonus or other form of compensation paid by Madison (other than salary)
for the benefit of such person for calendar year 2005.
(b) Madison is not a party to any collective bargaining or other labor
union contract applicable to Madison Employees, Madison is not negotiating a
collective bargaining agreement, and, to the Knowledge of National City, there
is no present effort nor existing proposal to attempt to unionize any group of
employees of Madison. As of the Agreement Date, there is no labor dispute,
strike or work stoppage against Madison pending or, to the Knowledge of National
City, threatened in writing that may interfere with Madison's business
operations.
(c) Schedule 3.10(c) attached to the National City Disclosure Letter sets
forth a true, complete and accurate list of each employee benefit plan, as
defined in ERISA, including (without limitation) any multiemployer plan (as
defined in Section 3(37) of ERISA), and nonqualified employee benefit plans or
deferred compensation, bonus, stock or incentive plans, or other employee
benefit or fringe benefit programs for the benefit of former (currently payable
or payable in the future) or current employees or directors (or their
beneficiaries or dependents) of Madison (the "Madison Employee Plans"). To the
Knowledge of National City, since January 1, 2000 no present or former employee
of Madison has been charged with breaching nor has breached in any material
respect a fiduciary duty under any of the Madison Employee Plans. Madison does
not participate in, and has not in the past five (5) years participated in any
multiemployer plan. Except for the Madison Employee Plans, Madison does not
maintain, contribute to, or participate in, any plan that provides health, major
medical, disability or life insurance benefits to former employees or directors
of Madison. National City has provided to Purchaser a true, accurate and
complete copy of each Madison Employee Plan or a summary plan description
therefore.
(d) All liabilities of the Madison Employee Plans have been funded on the
basis of consistent methods in accordance with sound actuarial assumptions and
practices, and no Madison Employee Plan, at the end of any plan year, had or has
had an accumulated funding deficiency. No actuarial assumptions have been
changed since the last written report of actuaries on such Madison Employee
Plans. All insurance premiums (including premiums to the Pension Benefit
Guaranty Corporation) have been paid in full, subject only to normal
retrospective adjustments in the ordinary course. Except as may be noted on the
Madison Financial Statements, Madison has no contingent or actual liabilities
under Title IV of ERISA. No accumulated funding deficiency (within the meaning
14
of Section 302 of ERISA or Section 412 of the Code) has been incurred with
respect to any of the Madison Employee Plans, whether or not waived, nor does
Madison or any of its Affiliates have any liability or potential liability as a
result of the underfunding of, or termination of, or withdrawal from, any
Madison Employee Plan or by any Person which may be aggregated with Madison for
purposes of Section 412 of the Code. No reportable event (as defined in Section
4043 of ERISA) has occurred with respect to any of the Madison Employee Plans as
to which a notice would be required to be filed with the Pension Benefit
Guaranty Corporation. No claim is pending, or to the Knowledge of National City,
threatened or imminent with respect to any Madison Employee Plan (other than a
routine claim for benefits for which plan administrative review procedures have
not been exhausted) for which Madison would be liable after December 31, 2004,
except as is reflected on the Madison Financial Statements. Madison has no
liability for excise Taxes under Sections 4971, 4975, 4976, 4977, 4979 or 4980B
of the Code or for a fine under Section 502 of ERISA with respect to any Madison
Employee Plan. All Madison Employee Plans have, in all material respects, been
operated, administered and maintained in accordance with the terms thereof and
in compliance with the requirements of all applicable Laws, including, without
limitation, ERISA.
SECTION 3.11 Real Property.
(a) Except for Madison's interest as a tenant under a Business Premises
Lease and its interest as fee simple owner of the Owned Real Property, Madison
does not own any interest in real property.
(b) Each Business Premises Lease is valid and binding (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of equity
remedies and except for other customary limitations on the validity and binding
nature thereof) on Madison, and is in full force and effect, and upon
consummation of the Merger, each Business Premises Lease will continue in full
force and effect without penalty or other adverse consequence. Neither Madison
nor, to the Knowledge of National City, is the lessor of a Business Premises
Lease, in breach or default under a Business Premises Lease, which default is
reasonably likely to have either, individually or in the aggregate, a Material
Adverse Effect upon Madison. National City has made available to Purchaser a
true, correct and complete copy of each Business Premises Lease.
SECTION 3.12 Material Contracts.
(a) Except for the Business Premises Leases, Madison is not a party to or
bound by any of the following contracts (collectively, the "Material
Contracts"): ------------------
(i) for the employment, retention or engagement, or with respect to
the severance, of any officer or employee of Madison (other than pursuant
to a Madison Employee Plan) not terminable at will;
(ii) involve payment or receipt by Madison (other than agreements
entered into in the ordinary course of business, including, disbursements
of loan proceeds to customers, loan payments by customers or customer
deposits) of more than $20,000 per annum;
15
(iii) relate to the purchase of goods, products, supplies or services
in excess of $20,000 per annum; or
(iv) to which Madison is a party, on the one hand, and under which any
Affiliate of Madison, on the other hand, is a party or beneficiary that is
material to the business of Madison, to the extent the agreement may not be
terminated by Madison without penalty.
(b) Each Material Contract is valid and binding (except as may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the rights of creditors generally and the availability of equity remedies and
except for other customary limitations on the validity and binding nature
thereof) on Madison, and is in full force and effect, and upon consummation of
the Merger, each Material Contract will continue in full force and effect
without penalty or other adverse consequence that would be reasonably likely to
have a Material Adverse Effect upon Madison. Neither Madison nor, to the
Knowledge of National City, is any other party to a Material Contract, in breach
or default under the Material Contract, which is reasonably likely to have
either, individually or in the aggregate, a Material Adverse Effect upon
Madison.
(c) None of the Material Contracts requires the consent of any party to its
assignment in connection with the Merger.
SECTION 3.13 Title to Assets. Madison has good and marketable title in fee
simple absolute to all Owned Real Property free and clear of any Encumbrances
except for the Permitted Owned Real Property Encumbrances, and good title to all
personal property reflected in the Madison Financial Statements as of December
31, 2004, other than personal property disposed of in the ordinary course of
business since December 31, 2004 free and clear of all Encumbrances except for
the Permitted Personal Property Encumbrances.
SECTION 3.14 Environmental Matters. To the Knowledge of National City, (i)
Madison is in compliance with all Environmental Laws except for such
non-compliance that, either alone or in the aggregate with all such other
matters, will not reasonably likely to have a Material Adverse Effect upon
Madison; (ii) no real property (including buildings and any other structures)
currently or formerly owned in fee simple or operated by Madison has been
contaminated with, or has had any release of, any Hazardous Substance in any
material respect; (iii) Madison would not 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 real property in which it has currently or formerly
owned in fee simple; (iv) Madison is not subject to liability for any Hazardous
Substance disposal or contamination on any other third-party property, which is
likely to have a Material Adverse Effect upon Madison; (v) since January 1,
2003, Madison has not received any written notice, demand letter, claim or
request for information alleging any violation of, or liability under, any
Environmental Law; and (vi) Madison is not subject to any Governmental Order
relating to any Environmental Law. National City has delivered to Purchaser
copies of all environmental reports, studies, sampling data, correspondence,
filings and other environmental information in its possession or reasonably
available to it relating to Madison, or any currently or formerly owned or
operated property of Madison.
16
SECTION 3.15 Loans.
(a) Schedule 3.15(a)(i) attached to the National City Disclosure Letter
sets forth a true, accurate and complete list as of the date set forth on
Schedule 3.15(a)(i) of each loan by Madison having an outstanding principal
balance in excess of $100,000 that has been classified by Madison's regulators
or management as "Other Loans Specially Mentioned," "Substandard," "Doubtful" or
"Loss" or that has been identified by Madison's accountants or auditors
(internal or external) as having a significant risk of uncollectability (the
"Madison Classified Loans"). As of the Effective Time, the Madison Classified
Loans shall not, taken as a whole, have changed to cause a Material Adverse
Effect upon Madison. Schedule 3.15(a)(ii) attached to the National City
Disclosure Letter sets forth a true, accurate and complete list as of the date
set forth on Schedule 3.15(a)(ii) of all loans by Madison in excess of $100,000
which Madison has determined to be thirty (30) days or more past due with
respect to principal or interest payments or has placed on nonaccrual status
(the "Madison Past-Due Loans"). As of the Effective Time, the Madison Past-Due
Loans shall not, taken as a whole, have changed to cause a Material Adverse
Effect upon Madison.
(b) All loans reflected in the Madison Financial Statements as of December
31, 2004 and which have been made, extended, renewed, restructured, approved,
amended or acquired since December 31, 2004: (i) to the Knowledge of National
City, 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; and (ii) are evidenced by notes, instruments or other evidences of
indebtedness which are true, genuine and what they purport to be.
(c) The reserves, the allowance for possible loan and lease losses and the
carrying value for real estate owned which are shown on the Madison Financial
Statements are adequate in all material respects under the requirements of GAAP
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.
SECTION 3.16 Deposit Insurance. The deposits of Madison are insured by the
FDIC in accordance with the Federal Deposit Insurance Act, as amended (the
"FDIA"), and Madison has, in all material respects, paid or properly reserved or
accrued for all current premiums and assessments with respect to such deposit
insurance.
SECTION 3.17 Absence of Undisclosed Liabilities. Except (i) as provided in
the Madison Financial Statements, (ii) for unfunded loan commitments and
obligations on letters of credit to customers of Madison, and liabilities
incurred in the ordinary course of Madison's business, and (iii) for the
transactions contemplated by this Agreement, since December 31, 2004 Madison
does not have, and will not have at the Effective Time, any liability made
outside of the ordinary course of business, which is reasonably likely to have
either, individually or in the aggregate, a Material Adverse Effect upon
Madison.
17
SECTION 3.18 CRA Rating. Madison was rated "Satisfactory" or "Outstanding"
following its most recent Community Reinvestment Act examination by the FDIC.
SECTION 3.19 Capital Requirements. Madison is (i) at least "well
capitalized", as defined for purposes of the FDIA, and (ii) in all material
respects, compliant with all capital requirements, standards and ratios required
by the FDIC and the State Entities with jurisdiction over Madison.
SECTION 3.20 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of National City.
SECTION 3.21 National City Disclosure Letter. The National City Disclosure
Letter is arranged in a format in which the disclosures made therein are
arranged in paragraphs or sections corresponding to the numbered and lettered
sections and subsections of this Agreement. Any information expressly disclosed
in the National City Disclosure Letter shall be deemed to be disclosed for all
purposes thereunder, so long as such disclosure contains sufficient factual
detail to render its relevance to such other purposes readily apparent. The
inclusion of any matter in the National City Disclosure Letter shall not be
deemed an admission or otherwise imply that any such matter is material for
purposes of this Agreement. National City shall be permitted to update and
supplement the National City Disclosure Letter so as to disclose other
information or exceptions to one or more representations or warranties contained
in this Article III that are a result of events which occur, or knowledge first
obtained, after the date hereof up to the Effective Time; provided, however,
that, anything herein to the contrary notwithstanding, the exceptions and other
information set forth on any such updated or supplemented National City
Disclosure Letter shall not be taken into consideration in determining, for
purposes of this Agreement, whether the conditions set forth in Section 8.03(a)
hereof in the case of Purchaser shall have been satisfied or the right of
Purchaser to terminate this Agreement pursuant to Section 11.01(d) hereof.
Except as expressly set forth in this Article III or the National City
Disclosure Letter, neither National City nor any Person acting on behalf of
National City makes any representation or warranty whatsoever.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF MAINSOURCE AND PURCHASER
----------------------------------------------------------
As an inducement to National City to enter into this Agreement, except as
set forth in the disclosure letter of even date herewith from the MainSource
Group Members to National City (the "MainSource Disclosure Letter"), MainSource
and Purchaser, jointly and severally, hereby represent and warrant to National
City as follows:
SECTION 4.01 Organization and Authority. MainSource Financial is a
corporation, validly existing and in good standing under the laws of the State
of Indiana, and is registered as a financial holding company under the BHCA.
Purchaser is an Indiana state chartered bank, validly existing under the laws of
the State of Indiana, and a wholly-owned subsidiary of MainSource Financial.
18
Each MainSource Group Member has all necessary power and authority to enter into
this Agreement and the Transaction Documents to which it is a party, to carry
out its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Transaction Documents to which it is a party by each MainSource Group
Member, the performance by each MainSource Group Member of its obligations
hereunder and thereunder and the consummation by each MainSource Group Member of
the transactions contemplated hereby and thereby have been duly authorized by
all requisite action on the part of each MainSource Group Member. This Agreement
has been, and upon its execution the Transaction Documents to which it is a
party shall have been, duly executed and delivered by each MainSource Group
Member, and (assuming due authorization, execution and delivery by National
City) this Agreement constitutes, and upon its execution the Transaction
Documents to which each MainSource Group Member is a party shall constitute, a
legal, valid and binding obligation of each MainSource Group Member enforceable
against each MainSource Group Member in accordance with its terms, except as may
be limited by bankruptcy, insolvency, moratorium, reorganization or similar Laws
affecting the rights of creditors generally and the availability of equity
remedies.
SECTION 4.02 No Conflict. Assuming the making and obtaining of all filings,
notifications, consents, approvals, and authorizations, except as may result
from any facts or circumstances relating solely to National City, the execution,
delivery and performance of this Agreement and the Transaction Documents by each
MainSource Group Member do not and will not (i) violate, conflict with or result
in the breach of any provision of the Articles of Incorporation or By-laws of
such MainSource Group Member, (ii) conflict with or violate any Law or
Governmental Order applicable to such MainSource Group Member or (iii) conflict
with, result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation, or cancellation of, or result
in the creation of any Encumbrance on any of the assets or properties of such
MainSource Group Member pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which such MainSource Group Member is a party or by
which any of such assets or properties are bound or affected which would have a
material adverse effect on the ability of such MainSource Group Member to
consummate the transactions contemplated by this Agreement and the Transaction
Documents.
SECTION 4.03 Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement and the Transaction Documents by each
MainSource Group Member do not and will not require any consent, approval,
authorization or other order of, action by, filing with, or notification to, any
Governmental Authority, except (i) filings with, and approval by, the FRB and
FDIC, (ii) filings with, and approvals by, the State Entities, (iii) filings and
approvals pursuant to any applicable state takeover Law, (iv) any consents,
authorizations, approvals, filings or exemptions in connection with compliance
with applicable provisions of federal and state securities Laws relating to the
regulations of broker-dealers, investment advisers or transfer agents, (v)
consents, approvals, authorizations, permits, filings or notifications which, if
not obtained or made will not, individually or in the aggregate, have a Material
Adverse Effect, or (vi) as may be necessary as a result of any facts or
circumstances relating solely to National City.
19
SECTION 4.04 Litigation. No Action by or against a MainSource Group Member
is pending or, to the knowledge of the MainSource Group Members after due
inquiry, threatened, that (i) could affect the legality, validity or
enforceability of this Agreement or the Transaction Documents to which it is a
party or (ii) seeks to delay or prevent the consummation of, or that would be
reasonably likely to materially adversely affect a MainSource Group Member's
ability to consummate, the Merger and the Transaction Documents.
SECTION 4.05 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of a MainSource Group Member. SECTION 4.06 Regulatory Approvals.
Neither MainSource Group Member has reason to believe that any Governmental
Authority would oppose or not grant or issue its consent or approval, if
requested, with respect to the Merger, other than by reason of facts or
circumstances relating solely to National City and/or Madison.
SECTION 4.07 Available Funds. Neither MainSource Group Member has any
reason to believe that MainSource Group Member will be unable to close on
financing in amounts sufficient (A) to provide for the funding of the Closing
Payment and Merger Consideration and (B) to enable each MainSource Group Member,
as of the Effective Time, to be "well capitalized" within the meaning the
regulations applicable to the MainSource Group Member by July 31, 2005. For
purposes of this Section 4.07, "financing" shall not include any credit facility
with National City or any of its affiliates.
SECTION 4.08 Compliance With Laws.
(a) Each MainSource Group Member is in compliance with all Laws except for
such non-compliance that, either alone or in the aggregate, will not reasonably
likely to affect each MainSource Group Member's ability to receive regulatory
approval or consummate the Merger. Purchaser possesses and holds all licenses,
franchises, permits, certificates and other authorizations necessary for the
continued conduct of its business without interference or interruption.
(b) Each MainSource Group Member is in compliance with all Laws except for
such non-compliance that, either alone or in the aggregate, will not adversely
affect a MainSource Group Member's ability to obtain consent, approval,
authorization or permit of or from any Governmental Authority with respect to
the Agreement or any transaction contemplated by the Agreement.
(c) No MainSource Group Member is a party to any agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or is subject to any Governmental Order or directive by, or is a recipient
of any extraordinary supervisory letter from, a Governmental Authority that
would (i) reasonably be expected to have the effect of preventing, delaying,
making illegal or otherwise interfering with the consummation of the Merger or
(ii) adversely affect a MainSource Group Member's ability to obtain consent,
20
approval, authorization or permit of or from any Governmental Authority with
respect to the Merger or any transaction contemplated by this Agreement.
SECTION 4.09 CRA Rating. Purchaser was rated "Satisfactory" or
"Outstanding" following its most recent Community Reinvestment Act examination
by the FDIC.
SECTION 4.10 Capital Requirements. Purchaser 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 the FDIC and the
State Entities with jurisdiction over Purchaser.
SECTION 4.11 MainSource Disclosure Letter. The MainSource Disclosure Letter
is arranged in a format in which the disclosures made therein are arranged in
paragraphs or sections corresponding to the numbered and lettered sections and
subsections of this Agreement. Any information expressly disclosed in the
MainSource Disclosure Letter shall be deemed to be disclosed for all purposes
thereunder, so long as such disclosure contains sufficient factual detail to
render its relevance to such other purposes readily apparent. The inclusion of
any matter in the MainSource Disclosure Letter shall not be deemed an admission
or otherwise imply that any such matter is material for purposes of this
Agreement. The MainSource Group Members shall be permitted to update and
supplement the MainSource Disclosure Letter so as to disclose other information
or exceptions to one or more representations or warranties contained in this
Article IV that are a result of events which occur, or knowledge first obtained,
after the date hereof up to the Effective Time; provided, however, that,
anything herein to the contrary notwithstanding, the exceptions and other
information set forth on any such updated or supplemented MainSource Disclosure
Letter shall not be taken into consideration in determining, for purposes of
this Agreement, whether the conditions set forth in Section 8.02(a) hereof in
the case of National City shall have been satisfied, or the right of National
City to terminate this Agreement pursuant to Section 11.01(e) hereof.
ARTICLE V
---------
PRE-MERGER AGREEMENTS
---------------------
SECTION 5.01 Conduct of Business Prior to the Effective Time. Except as set
forth in Schedule 5.01 attached to the National City Disclosure Letter, National
City covenants and agrees that between the Agreement Date and the Effective Time
(unless Purchaser shall otherwise agree in writing and except as otherwise
contemplated by this Agreement), National City shall cause Madison to conduct
its business operations in the ordinary and usual course of business consistent
with past practice and, to the extent consistent therewith, use reasonable
efforts to preserve intact its current business organization, keep available the
service of its current directors, officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that goodwill and ongoing business shall not be impaired in any
material aspect at the Effective Time. Without limiting the generality of the
foregoing, and except as otherwise permitted in this Agreement prior to the
Effective Time or except as contemplated by Section 5.07 below, National City
will cause Madison not to, without the prior written consent of Purchaser:
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(i) issue, sell, grant, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of Madison capital stock of any class,
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for any shares of capital stock, or any rights, warrants,
options, calls, commitments or any other agreements of any character to purchase
or acquire any shares of capital stock or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), or (B) any other securities in respect of, in lieu of, or
in substitution for, shares of Madison common stock;
(ii) redeem, purchase or otherwise acquire, or propose to redeem, purchase
or otherwise acquire, any of its outstanding shares of common stock;
(iii) split, combine, subdivide or reclassify any shares of common stock or
declare, set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution, whether in cash, stock, property or
otherwise, in respect of any shares of common stock or otherwise make any
payments to shareholders in their capacity as such (other than as contemplated
by Section 5.07 below);
(iv) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
Madison (other than the Merger);
(v) adopt any amendments to its articles of incorporation or by-laws;
(vi) make any acquisition or disposition of assets or securities in excess
of $10,000, except in the ordinary course of business consistent with past
practices;
(vii) incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other Person, other than in the ordinary course of business
consistent with past practices, it being understood and agreed that the
incurrence of indebtedness in the ordinary course of business shall include the
creation of deposit liabilities, purchases of federal funds, sales of
certificates of deposit and entering into repurchase agreements;
(viii) offer any new deposit, loan or investment product or service or
change its lending, investment, liability management, loan loss provision, loan
loss charge-off or other material banking policies;
(ix) grant any increases in the compensation of any of its directors,
officers or employees except for normal increases in compensation to the
employees in the ordinary course of business consistent with past practice;
(x) pay or agree to pay any pension, retirement allowance, severance or
other employee benefit not required or contemplated by any of the existing
Madison Employee Plans or any agreements or arrangements as in effect on the
Agreement date to any such director, officer or employee, whether past or
present, except as required by Law;
22
(xi) enter into any new or amend any Material Contract with any director,
officer or employee;
(xii) except in the ordinary course of business consistent with past
practice or as may be required to comply with applicable Law, become obligated
under any new benefit plan or amend any Madison Employee Plan in existence on
the date hereof if such amendment would have the effect of materially enhancing
any benefits thereunder;
(xiii) make any capital expenditures or commitments for any capital
expenditures in excess of $10,000.
(xiv) make any material changes in its customary methods of marketing;
(xv) take, or agree to commit to take, any action that would make any
representation or warranty of National City contained herein inaccurate in any
material respect at, or as of any time prior to, the Effective Time; or
(xvi) change its method of accounting in effect at December 31, 2004,
except as required by changes in GAAP or change its fiscal year;
(xvii) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or arrangement
to do any of the foregoing.
SECTION 5.02 Confidentiality. The terms of the Confidentiality Agreement
are hereby incorporated herein by reference and shall continue in full force and
effect until the Merger, at which time such Confidentiality Agreement and the
obligations of Purchaser under this Section 5.02 shall terminate. Subject to the
terms of the Confidentiality Agreement, if this Agreement is, for any reason,
terminated prior to the Merger, the Confidentiality Agreement shall continue in
full force and effect.
SECTION 5.03 Regulatory Applications. The MainSource Group Members shall
use their respective reasonable best efforts to prepare as promptly as possible
all documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all Governmental Authorities necessary to
consummate the transactions contemplated by this Agreement, and shall make all
necessary regulatory filings within twenty-one (21) days of the Agreement Date.
The MainSource Group Members shall keep National City appraised of the status of
such filings. Subject to the Confidentiality Agreement and applicable Laws,
National City agrees, upon reasonable request, to furnish the MainSource Group
Members with all information concerning itself and Madison as may be reasonably
necessary or advisable in connection with any such filing, notice or
application.
SECTION 5.04 Exclusivity. Except as otherwise permitted by this Agreement,
with the prior written consent of Purchaser, National City shall refrain, and
shall cause its Affiliates, officers, directors, employees and any investment
banker, attorney, accountant or other agent retained by it or them to refrain,
from initiating or soliciting any inquiries or making any proposals with respect
to, or engaging in negotiations concerning, or providing any confidential
information or data to or having any discussions with any Person relating to,
23
any merger, consolidation, share exchange, liquidation, dissolution or sale of
the Shares or sale of substantially all of the assets of Madison or any other
business combination or transaction involving a potential change in control of
Madison.
SECTION 5.05 Notification. To the extent a Party becomes aware of the
occurrence after the Agreement Date of any fact or condition that would (except
as expressly contemplated by this Agreement) cause or constitute a material
breach of any representation or warranty of such Party as of the time of
occurrence or discovery of such fact or condition, such Party shall promptly
notify the other Party of such fact or condition, and should any such fact or
condition require any change in any Schedule or Exhibit to this Agreement, shall
promptly deliver a supplement to such Schedule or Exhibit specifying such
change. Each Party acknowledges (i) that no such disclosure or Schedule update
shall impair the other Party's rights as otherwise set forth in Article VIII
below and (ii) that no such Schedule update that related to any event,
circumstance or condition on or prior to the date hereof shall impair a Party's
rights as otherwise set forth in Article X below.
SECTION 5.06 Conversion. National City and the MainSource Group Members
shall cooperate and employ their respective reasonable efforts (i) to jointly
develop a conversion and transition plan for the database information for
Madison customers maintained by National City to be converted to Purchaser's
data processing system (the "Conversion"), which shall address, among other
matters, the items identified on Schedule 5.06 attached to the National City
Disclosure Letter, and (ii) to complete the Conversion prior to the start of
business day immediately following the Effective Time.
SECTION 5.07 MainSource Acquisitions. Except for the permitted transaction
described on Schedule 5.07 attached to the National City Disclosure Letter or in
the ordinary course of business consistent with the past practice, during a
period commencing on the Agreement Date and terminating on the date Section
8.01(a) hereof is satisfied, no MainSource Group Member or any of their
affiliates shall, directly or indirectly, announce, enter into an agreement or
consummate a merger, consolidation or reorganization (other than with another
MainSource Financial Affiliate), asset or stock purchase transaction involving
any MainSource Group Member (a "MainSource Acquisition").
ARTICLE VI
----------
EMPLOYEE MATTERS
----------------
SECTION 6.01 Transferred Employees. For purposes of this Article VI,
"Transferred Employees" are defined as those employees who are employed by
Madison at the Effective Time, but excluding those employees who are receiving
benefits at the Effective Time (i) under the long-term disability plan sponsored
by National City, or (ii) under the short-term disability program sponsored by
National City (a "Short-Term Disability Employee"). If a Short Term Disability
Employee becomes eligible to work prior to termination of his short term
disability benefit, Purchaser will offer employment to such Short Term
Disability Employee that are comparable in pay and benefits enjoyed by such
Short-Term Disability Employee prior to the Effective Time. If the Short-Term
Disability Employee accepts the Purchaser's offer of employment, the Short-Term
24
Disability Employee will become a Transferred Employee and will be entitled to
all benefits provided to Transferred Employees under this agreement.
SECTION 6.02 Retirement. Prior to the Effective Time, National City shall
take all necessary action to amend any pension benefit plan sponsored by
National City (the "Retirement Plans") effective as of the Effective Time to
remove Madison as a participating employer in the Retirement Plans effective as
of the Effective Time. Further, National City shall, effective as of the
Effective Time, take all necessary actions to terminate participation of
Transferred Employees in any medical, life insurance, long term disability,
short term disability and accidental death and dismemberment insurance plans
covering Transferred Employees, and National City will make all required
payments due for periods through the Effective Time.
SECTION 6.03 Service Recognition. Purchaser shall provide each Transferred
Employee with credit for past service years at Madison, National City and any
Affiliates, or any of them, for purposes of calculating eligibility to
participate, vesting and eligibility to receive benefits under any of
Purchaser's medical, dental, life insurance, long-term disability, 401(k) plan,
pension plan and vacation program or arrangement established or maintained for
the benefit of Transferred Employees after the Effective Time by Purchaser or
Madison for service accrued or deemed accrued prior to the Effective Time with
Purchaser and shall cause any pre-existing conditions or limitations,
eligibility waiting periods or required physical examinations under any welfare
benefit plans of Purchaser to be waived with respect to the Transferred
Employees and their eligible dependents.
SECTION 6.04 Severance Upon Termination of a Transferred Employee. If a
Transferred Employee's employment is terminated on or prior to the first
anniversary of the Effective Time, such Transferred Employee shall be entitled
to severance benefits on the same terms and conditions of the National City
Severance Benefit Plan. Such severance benefits shall be based on the
Transferred Employees service with Madison, National City or any of its
Affiliates, and such severance benefits shall be at least as great as those
benefits payable to such Transferred Employee under the National City Severance
Benefit Plan effective at the Effective Time.
SECTION 6.05 Performance Bonus. National City shall reimburse Purchaser for
the payment of any performance related bonus to a Transferred Employees that was
earned and not accrued prior to the Effective Time.
SECTION 6.06 COBRA. National City shall be responsible for the
administration of and shall retain any and all obligations and liabilities for
COBRA continuation coverage with respect to Transferred Employees and their
dependents and beneficiaries whose medical and/or dental coverage terminates
prior to the Effective Time, and Purchaser shall be responsible for all
obligations and liabilities for COBRA continuation coverage for Transferred
Employees and their dependents and beneficiaries for periods beginning on and
after the Effective Time.
SECTION 6.07 Earned Vacation. Madison shall pay all earned, but unused
vacation to Transferred Employees as of the Effective Time.
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ARTICLE VII
-----------
TAX MATTERS
-----------
SECTION 7.01 Tax Returns for Periods Through the Effective Time.
(a) National City shall include the income of Madison (including any
deferred income triggered into income by Sections 1.1502-13 and 1.1502-14 of the
Regulations and any Excess Loss Accounts taken into income under Section
1.1502-19 of the Regulations) on the consolidated federal (and state) income Tax
Returns which includes National City for all periods through the Effective Time
and pay any federal (and state) income Taxes attributable to such income.
Purchaser shall cause Madison to furnish Tax information to National City for
inclusion in National City's federal (and state) consolidated income Tax Return
for the period that includes the Effective Time in accordance with Madison's
past custom and practice. National City shall allow Purchaser an opportunity to
review and comment upon such Tax Returns (including any amended returns) to the
extent that they relate to Madison. National City shall take no position on such
returns that relate to Madison that would have a Material Adverse Effect on
Madison (unless otherwise required under applicable law) on and after the
Effective Time. The income of Madison shall be apportioned to the period up to
the Effective Time and the period on and after the Effective Time by closing the
books of Madison as of the Effective Time.
(b) Purchaser shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of Madison for Tax periods that begin before the Effective
Time and end after the Effective Time. Purchaser shall allow National City an
opportunity to review and comment upon such Tax Returns (including any amended
returns) to the extent they relate to pre-Effective Time periods). National City
shall pay to Purchaser within thirty (30) days after the date on which Taxes are
paid with respect to such periods an amount equal to the portion of such Taxes
which relates to the portion of such Taxable period ending on the Effective Time
to the extent such Taxes are not reflected in the reserve for Tax liability
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) shown on the face of the Closing
Balance Sheet. For purposes of this Section 7.01(b), in the case of any Taxes
that are imposed on a periodic basis and are payable for a Taxable period that
includes (but does not end on) the Effective Time, the portion of such Tax that
relates to the portion of such Taxable period ending on the Effective Time shall
(i) in the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Effective Time and the denominator of which is the
number of days in the entire Taxable period, and (ii) in the case of any Tax
based upon or related to income or receipts be deemed equal to the amount which
would be payable if the relevant Taxable period ended on the Effective Time.
Notwithstanding the above, since the State of Indiana imposes taxes on personal
and real property which are not payable until the year subsequent to the year
assessed, National City shall be responsible for all Indiana property taxes
assessed as to Madison for the year 2004 payable in 2005 while Indiana property
taxes assessed as to Madison for the year 2005 payable in 2006 shall be
pro-rated as otherwise provided in this paragraph, but only to the extent such
Taxes were not accrued in the reserve for Tax liability of Madison on the
Closing Balance Sheet. Any credits relating to a Taxable period that begins
before and ends after the Effective Time shall be taken into account as though
26
the relevant Taxable period ended on the Effective Time. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practice of Madison.
SECTION 7.02 Cooperation on Tax Matters.
(a) Purchaser and National City shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax
Returns pursuant to this Article VII and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other Party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Purchaser and National City agree (i) to retain all books and records with
respect to Tax matters pertinent to Madison relating to any taxable period
beginning before the Effective Time until the expiration of the statute of
limitations (and, to the extent notified by Purchaser or National City, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (ii) to
give the other Party reasonable written notice prior to transferring, destroying
or discarding any such books and records, and, if the other Party so requests,
Purchaser or National City, as the case may be, shall allow the other Party to
take possession of such books and records.
(b) Purchaser and National City further agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other document from
any Governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
(c) Purchaser and National City further agree, upon the reasonable request
of the other Party, to provide the other Party with all information that either
Party may be required to report pursuant to Section 6043 of the Code and all
Regulations promulgated thereunder.
(d) Any Tax-sharing agreement between Madison and National City or any
National City subsidiaries shall be terminated as of the Effective Time and
shall have no further effect for any taxable year.
SECTION 7.03 Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other similar Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any transfer Tax
and any similar tax imposed in other states or subdivisions), shall be paid by
National City when due, and National City shall, at its own expense, file all
necessary Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other similar Taxes and fees,
and, if required by applicable Law, Purchaser shall, and shall cause its
Affiliates to, join in the execution of any such Tax Returns and other
documentation.
27
ARTICLE VIII
------------
CONDITIONS TO EFFECT THE MERGER
-------------------------------
SECTION 8.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each of Purchaser and National City to consummate
the Merger is subject to the fulfillment or written waiver by Purchaser and
National City prior to the Effective Time of each of the following conditions:
(a) Governmental and Regulatory Consents. All statutory waiting periods
applicable to the consummation of the Merger shall have expired or been
terminated, and all notices, reports and other filings required to be made prior
to the Effective Time by Purchaser or National City or any of their respective
Affiliates with, and all regulatory consents, registrations, approvals, permits
and authorizations required to be obtained prior to the Effective Time by
Purchaser or National City or any of their respective Affiliates from, any
Governmental Authority in connection with the consummation of the Merger, the
Merger and the other transactions contemplated hereby by Purchaser and National
City shall have been made or obtained (as the case may be) and become final,
unless the failure to obtain any such consent or approval would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on Purchaser or National City.
(b) No Prohibitions. No United States or state court or other Governmental
Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) which is in effect and prohibits consummation of the Merger.
SECTION 8.02 Conditions to Obligations of National City. The obligations of
National City to consummate the Merger shall be subject to the fulfillment, at
or prior to the Effective Time, of each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of each MainSource Group Member contained in this Agreement shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Effective Time with the same
force and effect as if made as of the Effective Time (other than such
representations and warranties as are made as of another date, which shall be
true and correct as of such date), (ii) the covenants and agreements contained
in this Agreement to be complied with by each MainSource Group Member on or
before the Effective Time shall have been complied with in all material
respects, and (iii) National City shall have received a certificate from each
MainSource Group Member certifying the matters set forth in clauses (i) and (ii)
above signed by a duly authorized officer thereof.
(b) Merger Consideration. National City receives the Closing Payment, by
wire transfer or transfers in immediately available funds, as instructed by
National City in a written notice to Purchaser.
28
SECTION 8.03 Condition to Obligations of Purchaser. The obligations of
Purchaser to consummate the Merger shall be subject to the fulfillment, at or
prior to the Effective Time, of the following condition:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of National City contained in this Agreement shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects as of the Effective Time, with the same force and effect as if
made as of the Effective Time (other than such representations and warranties as
are made as of another date which shall be true and correct as of such date),
(ii) the covenants and agreements contained in this Agreement to be complied
with by National City on or before the Effective Time shall have been complied
with in all material respects and (iii) Purchaser shall have received a
certificate from National City certifying the matters set forth in clauses (i)
and (ii) above signed by a duly authorized officer thereof.
(b) Termination of Contract. The contract set forth in the National City
Disclosure Letter as item 1 in Section 3.12, Material Contracts, has been
terminated on or before the Effective Time.
ARTICLE IX
----------
POST-MERGER COVENANTS
---------------------
SECTION 9.01 Further Action. At any time and from time to time after the
Effective Time, each Party shall use all reasonable efforts to take, or cause to
be taken, all appropriate action, do or cause to be done all things necessary,
proper or advisable under applicable Law, and execute and deliver such documents
and other papers as may be required to carry out the provisions of this
Agreement, to satisfy the conditions to the Merger and consummate and make
effective the transactions contemplated by this Agreement.
SECTION 9.02 Record Retention. In order to facilitate the resolution of any
claims made against or incurred by National City prior to or after the Effective
Time, for a period of seven (7) years after the Effective Time, Purchaser shall
(i) cause Madison to retain its books and records relating to periods prior to
the Effective Time in a manner reasonably consistent with the prior practice of
Madison and (ii) upon reasonable notice, afford the officers, employees and
authorized agents and representatives of National City reasonable access
(including the right to make, at National City's expense, photocopies), during
normal business hours, to such books and records, and cause those officers,
employees and authorized agents, accountants, counsel and representatives of
Madison who have any knowledge relating to Madison to reasonably cooperate with
National City in respect of any such claims made against or incurred by National
City.
SECTION 9.03 Covenant Not To Compete; Non-Solicitation.
(a) Beginning at the Effective Time and for a period of one (1) year
thereafter, National City will not directly market or solicit depositor or loan
relationships with customers of Madison except (i) as may occur as a result of
advertising or solicitations directed to the public generally, (ii) with respect
29
to the financial products identified on Schedule 9.03(a) attached to the
National City Disclosure Letter, (iii) as may occur as a result of a
solicitation by National City of deposits, lending or other business from or to
a major or statewide customer such as a Person with more than one location or a
Government Authority, (iv) was or is a customer of another Affiliate of National
City except, with respect to this clause (iv), a customer arising solely from
the Loan Portfolio Sale and (v) as may occur as a result of National City's
acquisition of or merger with a financial institution having a relationship with
any such customer. For purposes of this Section 9.03, the phrase, "customers of
Madison," means the customers identified in the tape-to-tape transfer at
conversion.
(b) National City agrees that beginning at the Effective Time and for a
period of one (1) year thereafter, it shall not directly or indirectly solicit
for employment any Madison Employees, except this prohibition shall not apply to
(i) employment advertisements placed in publications of general circulation or
in trade journals, (ii) contact initiated by a Madison Employee, and (iii)
contacts made by a placement agency or service not as a result of any direction
of National City to target any Madison Employees.
ARTICLE X
---------
INDEMNIFICATION
---------------
SECTION 10.01 Survival of Representations and Warranties. The
representations and warranties set forth in this Agreement or any certificate
delivered pursuant hereto shall survive for a period of eighteen (18) months
following the Effective Time; provided, however, (i) the representations and
warranties in Sections 3.01, 3.02, 3.03, 3.04, 3.20, 4.01, 4.02, 4.04 and 4.05
shall continue in full force and effect indefinitely thereafter, and (ii) the
representations and warranties in Section 3.07 shall continue in full force and
effect for the applicable statute of limitations.
SECTION 10.02 National City's Indemnification. Subject to Section 10.06
below, from and after the Effective Time, National City shall indemnify and hold
harmless Purchaser and its Affiliates, officers, directors, employees, agents,
successors and assigns (each a "Purchaser Indemnitee") from and against all
Indemnifiable Losses arising from or in connection with (i) the breach of any
representation or warranty made by National City contained in this Agreement and
(ii) the breach of any covenant or agreement by National City.
SECTION 10.03 MainSource Group Members Indemnification. From and after the
Effective Time, Purchaser and MainSource Financial, jointly and severally, shall
indemnify and hold harmless National City and its Affiliates, officers,
directors, employees, agents, successors and assigns (each a "National City
Indemnitee") from and against any and all Indemnifiable Losses arising from or
in connection with (i) the breach of any representation or warranty made by a
MainSource Group Member contained in this Agreement and (ii) the breach of any
covenant or agreement by a MainSource Group Member contained in this Agreement.
30
SECTION 10.04 Third-Party Claims.
(a) Within twenty (20) days following the date on which an Indemnitee
receives a Third-Party Claim, the Indemnitee shall give deliver a Claim Notice
regarding such Third-Party Claim, together with copies of all notices,
pleadings, correspondence and other documents asserting or otherwise relating to
such Third-Party Claim, to the Indemnitor, in accordance with the provisions of
Section 11.01 below. The Indemnitor shall have no liability for any
Indemnifiable Loss arising from any Third-Party Claim in respect of which a
Claim Notice is not timely delivered in accordance with the preceding sentence,
unless the Indemnitor has not been materially prejudiced in any material respect
to such failure to deliver the Claim Notice within the twenty (20)-day period.
(b) The Indemnitor shall have the right, at its option, to assume the
defense of, at its own expense and by its own counsel, a Third-Party Claim.
Assumption of the defense of a Third-Party Claim by the Indemnitor shall not
prejudice the right of the Indemnitor to claim at a later date that the
Third-Party Claim is not a proper matter for indemnification pursuant to this
Article X. If the Indemnitor shall undertake to compromise or defend a
Third-Party Claim, it shall promptly notify the Indemnitee of its intention to
do so within thirty (30) days after receipt of a Claim Notice, and the
Indemnitee agrees to cooperate with the Indemnitor and its counsel in the
compromise of, or defense against, the Third-Party Claim as reasonably requested
by the Indemnitor; provided, however, that the Indemnitor shall not settle the
Third-Party Claim without the prior written consent of the Indemnitee (which
consent will not be unreasonably withheld) unless the relief consists solely of
money damages and includes a provision whereby the plaintiff or claimant in the
matter releases the Indemnitee from all liability with respect thereto.
Notwithstanding an election to assume the defense of such action or proceeding,
the Indemnitee shall have the right to employ separate counsel and to
participate in the defense of such action or proceeding, and the Indemnitor
shall bear the reasonable fees, costs and expenses of such separate counsel if
(i) the Indemnitee shall have determined in good faith that an actual or
potential conflict of interest makes representation by the same counsel or the
counsel selected by the Indemnitor inappropriate or (ii) the Indemnitor shall
have authorized the Indemnitee to employ separate counsel at the Indemnitor's
expense. In any event, the Indemnitee and its counsel shall cooperate with the
Indemnitor and its counsel and keep such person informed of all developments
relating to the Third-Party Claim, provide copies of all relevant correspondence
and documentation relating thereto, and shall not assert any position in any
proceeding inconsistent with that asserted by the Indemnitor. All reasonable
costs and expenses incurred in connection with the Indemnitee's cooperation
shall be borne by the Indemnitor. In any event, the Indemnitee shall have the
right at its own expense to participate in the defense of such asserted
liability. In no event shall the Indemnitee settle the Third-Party Claim without
the written consent of the Indemnitor (which consent will not be unreasonably
withheld).
SECTION 10.05 Direct Claims. An Indemnitee may assert a claim not involving
a Third-Party Claim (a "Direct Claim") by delivering a Claim Notice to the
Indemnitor in accordance with Section 12.02 below, within twenty (20) days
following the date on which the Indemnitee becomes aware of the circumstances or
occurrence giving rise to the Direct Claim. The Indemnitor shall have no
liability for any Indemnifiable Loss arising from a Direct Claim in respect of
which a Claim Notice is not timely delivered in accordance with the preceding
sentence, unless the Indemnitor has not been materially prejudiced in any
material respect to such failure to deliver the Claim Notice with the twenty
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(20)-day period. If the Indemnitor does not notify the Indemnitee within twenty
(20) days following its receipt of such Claim Notice that the Indemnitor
disputes its liability to the Indemnitee, the Direct Claim specified by the
Indemnitee in the Claim Notice shall be conclusively deemed an Indemnifiable
Loss, and hereunder, subject to the provisions of this Article X, the Indemnitor
shall pay the amount of the Indemnifiable Loss to the Indemnitee within ten (10)
Business Days or, in the case of any Direct Claim as to which the amount of the
Indemnifiable Loss arising therefrom is estimated, within ten (10) Business Days
after such later date on which the amount of such Indemnifiable Loss is finally
determined.
SECTION 10.06 Limits on Indemnification.
(a) No Purchaser Indemnitee shall make any claim against National City for
any breach of National City's representations and warranties under this
Agreement unless (i) the amount of the Indemnifiable Loss suffered by a
Purchaser Indemnitee related to each individual claim exceeds $5,000 (the "De
Minimis Claims Amount"), and (ii) until the dollar amount of all claims in
excess of the De Minimis Claims Amount, together with any indemnification amount
payable by National City under this Article X, after deducting the credits
described in Section 10.06(b), shall exceed, in the aggregate (under all such
agreements), the amount of $300,000 (the "Basket"), and, if the Basket is
exceeded, shall be required to pay only the amount of any excess over the
Basket; provided that National City's obligation and liability for any and all
breaches of its representations and warranties set forth in this Agreement shall
not exceed, in the aggregate (under all such agreements), the amount of the sum
of the Closing Deposits Premium plus the Closing Loans Premium (the "Cap").
Notwithstanding the prior sentence, neither the Basket nor the Cap shall apply
to any claim against National City for any breach of representations and
warranties under Sections 3.01, 3.02, 3.03, 3.04 and 3.20.
(b) In any case where an Indemnitee recovers from third Persons any amount
in respect of a matter to which an Indemnitor has indemnified it pursuant to
this Article X, such Indemnitee shall promptly pay over to the Indemnitor the
amount so recovered. In calculating the amount of an Indemnifiable Loss under
this Article X, the Indemnifiable Loss shall be net of and reduced by the amount
the Indemnitee recovers from third Persons, including any guarantee payments or
insurance proceeds realized by the Indemnitee.
SECTION 10.07 Exclusive Remedy. Except for remedies that cannot be waived
as a matter of Law, willful breach of this Agreement and injunctive relief, if
the Merger occurs, the rights under this Article X shall be the exclusive remedy
for breaches of this Agreement or any Transaction Document (including any
covenant, obligation, representation or warranty contained herein or therein).
In furtherance of the foregoing, each Party hereby waives, to the fullest extent
permitted by applicable Law, any and all claims it may have against the other
Party or its Affiliates arising under or based upon any applicable Law
(including any claims arising under or based upon common law).
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ARTICLE XI
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TERMINATION AND WAIVER
----------------------
SECTION 11.01 Termination. Anything herein or elsewhere to the contrary,
this Agreement may be terminated by written notice of termination at any time
prior to the Effective Time only as follows:
(a) by either National City or Purchaser if the Merger shall not have
occurred by September 30, 2005; provided, however, that the right to terminate
this Agreement under this Section 11.01(a) shall not be available to any Party
whose failure to fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Merger to occur on or
prior to such date;
(b) by either Purchaser or National City in the event that any Governmental
Authority shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
(c) by the mutual written consent of National City and Purchaser;
(d) by Purchaser, (i) at any time if the representations and warranties of
National City contained in Article III were incorrect in any respect (in the
case of any representation or warranty containing any materiality qualification)
or otherwise in any material respect when made or at any time thereafter and
such breach cannot be or is not cured within thirty (30) days after written
notice of such breach is given, or (ii) if National City or Madison breaches any
material covenant hereunder and such breach cannot be or is not cured within
thirty (30) days after written notice of such breach is given by Purchaser to
National City; and
(e) by National City (i) at any time if the representations and warranties
of a MainSource Group Member contained in Article IV were incorrect in any
material respect when made or at any time thereafter and such breach cannot be
or is not cured within thirty (30) days after written notice of such breach is
given, (ii) if a MainSource Group Member has breached any material covenant
hereunder and such breach cannot be or is not cured within thirty (30) days
after written notice of such breach is given by National City to Purchaser, or
(iii) by July 31, 2005, if the MainSource Group Members have not closed on
financing in amounts sufficient (A) to provide for the funding of the Closing
Payment and Merger Consideration and (B) to enable each MainSource Group Member,
as of the Effective Time, to be "well capitalized" within the meaning of the
regulations applicable to the MainSource Group Member. For purposes of this
Section 11.01(e), "financing" shall not include any credit facility with
National City or any of its affiliates.
SECTION 11.02 Effect of Termination. In the event of termination of this
Agreement as provided in Section 11.01 above, this Agreement shall forthwith
become void and there shall be no liability on the part of any Party except (i)
as set forth in Sections 3.11, 4.06, 5.02, 11.04 and 12.01 and (ii) that nothing
herein shall relieve a Party from liability for any willful breach of this
Agreement. In the event of termination of this Agreement for any reason other
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than pursuant to Sections 11.01(d) or 11.01(e) above, each Party shall bear all
expenses incurred by it in connection with this Agreement.
SECTION 11.03 Waiver. The Parties may (i) extend the time for the
performance of any of the obligations or other acts of the other Party, (ii)
waive any inaccuracies in the representations and warranties of the other Party
contained herein or in any document delivered by the other Party pursuant hereto
or (iii) waive compliance with any of the agreements or conditions of the other
Party contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the Party to be bound thereby. Any
waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure of any
Party to assert any of its rights hereunder shall not constitute a waiver of any
of such rights.
SECTION 11.04 Termination Fee. In recognition of the efforts, expenses and
other opportunities foregone by Purchaser and National City while structuring
and pursuing the Merger, the Parties agree that a termination fee of $1,000,000
(the "Termination Fee") shall be paid by the applicable Party if this Agreement
is terminated:
(a) by Purchaser pursuant to Section 11.01(d) above and Purchaser is
not in breach of this Agreement, National City shall pay the Termination
Fee to Purchaser.
(b) (i) by National City pursuant to Section 11.01(e) above and
National City is not in breach of this Agreement, Purchaser and MainSource
Financial shall, jointly and severally, pay the Termination Fee to National
City.
Each Party acknowledges that the agreements contained in this Section 11.04 are
an integral part of the transactions contemplated by this Agreement, and that,
without these agreements, each Party would not have entered into this Agreement;
accordingly, if a Party fails promptly to pay the amount due pursuant to this
Section 11.04, and, in order to obtain such payment, the other Party commences
an Action which results in a judgment against the other Party for the
Termination Fee, the payor Party shall pay to the payee Party its costs and
expenses (including attorneys' fees and expenses) in connection with such
Action, together with interest on the amount of the Termination Fee at the rate
on six-month U.S. Treasury obligations plus 300 basis points in effect on the
date such payment was required to be made.
ARTICLE XII
-----------
GENERAL PROVISIONS
------------------
SECTION 12.01 Expenses. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby, shall be paid by the Party
incurring such costs and expenses, whether or not the Merger shall have
occurred.
SECTION 12.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
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person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
12.02):
To MainSource Group Members: To National City:
MainSource Bank National City Corporation
201 North Broadway, P.O. Box 87 1900 East Ninth Street
Greensburg, Indiana 47240 Cleveland, Ohio 44114
Attn.: James L. Saner, Jr. Attn: Thomas C. Kaylor
Telephone: (812) 663-0157 Telephone: (216) 222-2534
Facsimile: (812) 663-4812 Facsimile: (216) 222-
E-mail: jsaner@mainsourcefinancial.com E-mail: Thomas.kaylor@nationalcity.com
with copies to: with copies to:
Bose McKinney & Evans LLP National City Corporation
2700 First Indiana Plaza 1900 East 9th Street, Locator 01-2174
135 North Pennsylvania Street Cleveland, Ohio 44114
Indianapolis, Indiana 46204 Attn: Patrick J. Flynn
Attn.: Karen Ball Woods Vice President, Senior Attorney
Telephone: (317) 684-5000 Telephone: 216-222-8014
Facsimile: (317) 223-0376 Facsimile: 216-222-2336
E-mail: kwoods@boselaw.com E-mail: patrick.flynn@nationalcity.com
SECTION 12.03 Public Announcements. No Party shall make, or cause to be
made, any press release or public announcement in respect of this Agreement or
the transactions contemplated hereby or otherwise communicate with any news
media without the prior written consent of the other Party unless required by
Law or stock exchange regulation (in which case the disclosing Party shall
advise the other Party prior to making the disclosure and allow the other Party
to comment upon the disclosure), and the Parties shall cooperate as to the
timing and contents of any such press release or public announcement.
SECTION 12.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 12.05 Entire Agreement. This Agreement, the National City
Disclosure Letter, Transaction Documents and the Confidentiality Agreement
constitute the entire agreement of the Parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
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and oral, between the Parties, with respect to the subject matter hereof and
thereof.
SECTION 12.06 Assignment. This Agreement may not be assigned by operation
of Law or otherwise without the express written consent of National City and
Purchaser (which consent may be granted or withheld in the sole discretion of
National City or Purchaser) and any attempted assignment without such prior
written consent shall be null and void.
SECTION 12.07 No Third-Party Beneficiaries. Except for the provisions of
Article X relating to Indemnities, this Agreement shall be binding upon and
inure solely to the benefit of the Parties and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 12.08 Amendment. This Agreement may not be amended or modified
except (i) by an instrument in writing signed by, or on behalf of, the Parties
or (ii) by a waiver in accordance with Section 11.03 above.
SECTION 12.09 Binding Effect. This Agreement and the covenants, terms and
conditions set forth herein shall be binding upon and inure to the benefit of
the Parties and their respective successors and permitted assigns.
SECTION 12.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Indiana.
SECTION 12.11 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 12.12 Waiver of Jury Trial. Each Party acknowledges and agrees that
any controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each Party hereby irrevocably
and unconditionally waives any right such Party may have to a trial by jury in
respect of any litigation, directly or indirectly, arising out of, or relating
to, this Agreement, or the transactions contemplated by this Agreement. Each
Party certifies and acknowledges that (i) no representative, agent or attorney
of any other Party has represented, expressly or otherwise, that such other
Party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each Party understands and has considered the implications of this
waiver, (iii) each Party makes this waiver voluntarily, and (d) each Party has
been induced to enter into this Agreement by, among other things, the mutual
waivers and certifications in this Section 12.12.
[Remainder of this page left intentionally blank]
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Agreement and Plan of Merger Signature Page
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.
MAINSOURCE FINANCIAL GROUP, INC.
By:
----------------------------------------------
James. L. Saner, Sr., President
MAINSOURCE BANK
By:
----------------------------------------------
Daryl Tressler, Chief Executive Officer
NATIONAL CITY CORPORATION
By:
----------------------------------------------
J. Armando Ramirez, Executive Vice President
THE MADISON BANK & TRUST COMPANY
By:
----------------------------------------------
J. Scott Borowick, President
Schedule of Exhibits
Exhibit A - December 2004 Balance Sheet
Exhibit B - December 2004 Income Statement
[MainSource Financial Group, Inc. agrees to furnish supplementally a copy of
any omitted exhibits or attachments to the Agreement and Plan of Merger.]