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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT
AND PLAN OF MERGER (this "Agreement") is dated to be
effective as of September 28, 2005, by and
among MAINSOURCE FINANCIAL GROUP,
INC. ("MainSource"), PEOPLES OHIO FINANCIAL
CORPORATION ("POHF") and PEOPLES
SAVINGS BANK OF TROY ("Peoples
Savings").
WITNESSETH:
WHEREAS,
MainSource is an Indiana corporation registered as a financial
holding company under the federal Bank
Holding Company Act of 1956, as amended
(the "BHC Act"), with its principal office
located in Greensburg, Decatur
County, Indiana; and
WHEREAS, POHF is
an Ohio corporation registered as a savings and loan
holding company under the Home Owners' Loan
Act, as amended ("HOLA"), with its
principal office located in Troy, Miami
County, Ohio; and
WHEREAS, POHF's
principal operating subsidiary is Peoples Savings, an
Ohio-chartered savings and loan
association; and
WHEREAS,
MainSource and POHF seek to affiliate through a corporate
reorganization whereby POHF will first
merge with and into MainSource and
Peoples Savings will immediately thereafter
merge with and into MainSource Bank
- Ohio ("Merger Corp"), a to-be-formed
interim Ohio commercial bank with its
principal offices located in Troy, Miami
County, Ohio, and the wholly-owned
subsidiary of MainSource, as a result of
which merger Peoples Savings will
become a wholly owned subsidiary of
MainSource; and
WHEREAS, the
Boards of Directors of each of the parties hereto have
determined that it is in the best interests
of their respective corporations or
banks and their respective shareholders to
consummate the mergers provided for
herein and have approved this Agreement,
authorized its execution and designated
this Agreement a plan of merger.
NOW, THEREFORE,
in consideration of the foregoing premises, the
representations, warranties, covenants and
agreements herein contained and other
good and valuable consideration, the
receipt and sufficiency of which is hereby
acknowledged, the parties hereby make this
Agreement and prescribe the terms and
conditions of the merger of POHF with and
into MainSource, and the merger of
Peoples Savings with and into Merger Corp,
and the mode of carrying such mergers
into effect as follows:
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ARTICLE I
THE COMPANY MERGER
1.01. The
Company Merger.
(a) General
Description. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as
defined in Article X hereof), POHF
shall merge with and into and under the
Articles of Incorporation of MainSource
(the "Company Merger"). The Company Merger
is subject to the Subsidiary Merger
(as defined in Section 2.01 hereof)
occurring immediately after the Company
Merger, and if the Subsidiary Merger will
not close immediately thereafter, the
Company Merger shall not occur. MainSource
shall survive the Company Merger
(sometimes hereinafter referred to as the
"Surviving Corporation") and shall
continue its corporate existence under the
laws of the State of Indiana pursuant
to the provisions of and with the effect
provided in the Indiana Business
Corporation Law, as amended (the
"IBCL").
(b) Name,
Officers and Directors. The name of the Surviving Corporation
shall be "MainSource Financial Group, Inc."
Its principal office shall be
located at 201 North Broadway, Greensburg,
Decatur County, Indiana. The officers
of MainSource serving at the Effective Time
shall continue to serve as the
officers of the Surviving Corporation,
until such time as their successors shall
have been duly elected and have qualified
or until their earlier resignation,
death or removal from office. The directors
of the Surviving Corporation
following the Effective Time shall be those
individuals of MainSource serving as
directors at the Effective Time until such
time as their successors have been
duly elected and have qualified or until
their earlier resignation, death, or
removal as a director.
(c) Articles of
Incorporation and By-Laws. The Articles of Incorporation
and By-Laws of MainSource in existence at
the Effective Time shall remain the
Articles of Incorporation and By-Laws of
the Surviving Corporation following the
Effective Time, until such Articles of
Incorporation and By-Laws shall be
further amended as provided by applicable
law.
(d) Effect of
the Company Merger. At the Effective Time, the title to all
assets, real estate and other property
owned by POHF shall vest in Surviving
Corporation as set forth in Indiana Code
Section 23-1-40-6, as amended, and Ohio
Revised Code Section 1701.82, as amended,
without reversion or impairment. At
the Effective Time, all liabilities of POHF
shall be assumed by Surviving
Corporation.
(e) Integration.
At the Effective Time and subject to and upon the terms
and conditions set forth in this Agreement,
the parties hereto currently intend
to effectuate, or cause to be effectuated,
the Company Merger, pursuant to the
Indiana Articles of Merger, substantially
in the form attached hereto as EXHIBIT
1.01(e)(I), a Plan of Merger substantially
in the form attached hereto as
EXHIBIT 1.01(e)(II), an Ohio Certificate of
Merger, substantially in the form
attached hereto as EXHIBIT 1.01(e)(III),
and the applicable provisions of the
IBCL and the Ohio General Corporation Law
(the "OGCL"). The parties agree to
cooperate and to take all reasonable
actions prior to or following the Effective
Time, including executing all requisite
documentation, as may be reasonably
necessary to effect the Company Merger.
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1.02.
Reservation of Right to Revise Structure. At MainSource's
election,
the Company Merger may alternatively be
structured so that (a) POHF is merged
with and into any other direct or indirect
wholly owned subsidiary of MainSource
or (b) any direct or indirect wholly owned
subsidiary of MainSource is merged
with and into POHF; provided, however, that
no such change shall (x) alter or
change the amount or kind of the Merger
Consideration (as hereinafter defined)
or the treatment of the holders of common
stock, without par value, of POHF
("POHF Common Stock") or options for POHF
Common Stock ("POHF Stock Options"),
(y) prevent the parties from obtaining the
opinion of Bose McKinney & Evans LLP
referred to in Sections 8.01 and 8.02, or
(z) materially impede or delay
consummation of the transactions
contemplated by this Agreement. In the event of
such an election, the parties agree to
execute an appropriate amendment to this
Agreement in order to reflect such
election.
ARTICLE II
THE SUBSIDIARY MERGER
2.01. The
Subsidiary Merger.
(a) General
Description. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time,
Peoples Savings shall merge with and into
and under the Articles of Incorporation of
Merger Corp (the "Subsidiary
Merger"). Merger Corp shall survive the
Subsidiary Merger (the "Surviving Bank")
and shall continue its corporate existence
under the laws of the State of Ohio
pursuant to the provisions of and with the
effect provided in Chapters 11 and 17
of the Ohio Revised Code.
(b) Name,
Offices, Officers and Directors. The name of the Surviving Bank
shall be "MainSource Bank - Ohio". Its
principal office shall be located at 635
South Market Street, Troy, Miami County,
Ohio, and its branches shall consist of
the branch offices of Peoples Savings as of
the Effective Time. The officers of
Merger Corp at the Effective Time shall
continue to serve as the officers of the
Surviving Bank until such time as their
successors shall have been duly elected
and have qualified or until their earlier
resignation, death or removal from
office. In addition, immediately following
the Effective Time, Ronald B. Scott
shall be appointed the Chairman, President
and Chief Executive Officer of the
Surviving Bank. The directors of the
Surviving Bank following the Effective Time
shall consist of Ronald B. Scott and four
(4) other individuals mutually
acceptable to MainSource and POHF, until
such time as their successors have been
duly elected and have qualified or until
their earlier resignation, death, or
removal as a director.
(c) Articles of
Incorporation and Regulations. The Articles of
Incorporation and Code of Regulations of
Merger Corp in existence at the
Effective Time shall remain the Articles of
Incorporation and Code of
Regulations of the Surviving Bank following
the Effective Time, until such
Articles of Incorporation and Code of
Regulations shall be further amended as
provided by applicable law.
(d) Effect of
the Subsidiary Merger. At the Effective Time, the title to
all assets, real estate and other property
owned by Peoples Savings shall vest
in Surviving Bank as set forth in
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Ohio Revised Code Sections 1115.11 and
1701.82, as amended, without reversion or
impairment. At the Effective Time, all
liabilities of Peoples Savings shall be
assumed by Surviving Bank.
(e) Integration.
At the Effective Time, the parties hereto currently intend
to effectuate, or cause to be effectuated,
the Subsidiary Merger, pursuant to an
Ohio Certificate of Merger, substantially
in the form attached hereto as EXHIBIT
2.01(E); and the applicable provisions of
the IBCL, the OGCL and the Ohio
statutes applicable to mergers of financial
institutions. The parties agree to
cooperate and to take all reasonable
actions prior to or following the Effective
Time, including executing all requisite
documentation, as may be reasonably
necessary to effect the Subsidiary Merger.
POHF and Peoples Savings also agree
to cooperate with MainSource and to take
all reasonable restructuring steps for
regulatory purposes, as may be reasonably
requested by MainSource to effect the
Company Merger and the Subsidiary Merger
(collectively, the "Mergers"), or
otherwise consolidate such legal entities
to the extent desirable for regulatory
or other reasons.
2.02.
Reservation of Right to Revise Structure. At MainSource's
election,
the Subsidiary Merger may alternatively be
structured so that (a) Peoples
Savings is merged with and into any other
direct or indirect wholly owned
subsidiary of MainSource or (b) any direct
or indirect wholly owned subsidiary
of MainSource is merged with and into
Peoples Savings; provided, however, that
no such change shall (x) alter or change
the amount or kind of the Merger
Consideration or the treatment of the
holders of POHF Common Stock or POHF Stock
Options, (y) prevent the parties from
obtaining the opinion of Bose McKinney &
Evans LLP referred to in Sections 8.01 and
8.02, or (z) materially impede or
delay consummation of the transactions
contemplated by this Agreement. In the
event of such an election, the parties
agree to execute an appropriate amendment
to this Agreement in order to reflect such
election.
ARTICLE III
MANNER AND BASIS OF EXCHANGE OF STOCK
3.01.
Consideration. (a) Subject to the terms and conditions of this
Agreement, at the Effective Time, each
share of POHF Common Stock issued and
outstanding immediately prior to the
Effective Time (other than shares held as
treasury stock of POHF and shares held
directly or indirectly by MainSource,
except shares held in a fiduciary capacity
or in satisfaction of a debt
previously contracted, if any) shall become
and be converted into the right to
receive in accordance with this
Article:
(i) An amount of cash equal to the Purchase Price (as such amount
is
determined and adjusted in accordance with
Section 3.02 below) divided by the
number of shares of POHF Common Stock
outstanding as of the Effective Time (such
amount is the "Cash Consideration"), or
(ii) Such number of shares of common stock, without par value
but
$0.50 stated value, of MainSource
("MainSource Common Stock") equal to the
quotient (the "Exchange Ratio") arrived at
by dividing:
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A. the Cash Consideration,
by
B. the average of the daily
high and low sales prices of a share of
MainSource Common Stock as quoted on the Nasdaq Stock Market
during
the ten trading days preceding the fifth (5th) calendar day
preceding
the Effective Time (the "MainSource Average Stock Price"), subject
to
adjustment, if any, pursuant to Sections 3.02 and 3.06 hereof
(the
"Stock Consideration").
The Cash
Consideration and the Stock Consideration are sometimes
referred
to herein collectively as the "Merger
Consideration."
(b) Subject to
any consents required by law and Section 6.15 hereof, at the
Effective Time, outstanding POHF Stock
Options will be treated as follows:
(i) With respect to a POHF Stock Option held by any person other
than
Ronald B. Scott, such POHF Stock Option,
without any action on the part of any
holder thereof, shall be converted into the
right to receive from MainSource, at
the Effective Time, an amount in cash equal
to the excess of the Cash
Consideration over the per share exercise
price for each share of POHF Common
Stock subject to such POHF Stock Option;
provided, however, that the payer shall
withhold from such cash payment those taxes
required to be withheld by
applicable law, if any. Each POHF Stock
Option to which this paragraph applies
will be cancelled and shall cease to exist
by virtue of such payment.
(ii) Each POHF Stock Option held by Ronald B. Scott, whether or
not
vested, shall be amended (thereafter, an
"Amended Option" so that it will
provide for the acquisition of, on the same
terms and conditions as were
applicable under such POHF Stock Option
(substituting MainSource, where
applicable), a specified number of shares
of MainSource Common Stock, at a
specified exercise price per share. In
respect of each option outstanding to
Ronald B. Scott, such number shall be
determined by multiplying the number of
shares of POHF Common Stock subject to such
POHF Stock Option by the Exchange
Ratio and rounding such product to the
nearest whole number, and such exercise
price per share shall be determined by
dividing the per share exercise price
under such POHF Stock Option by the
Exchange Ratio and rounding such quotient to
the nearest whole cent. Notwithstanding the
foregoing, each POHF Stock Option
which is intended to be an "incentive stock
option" (as defined in Section 422
of the Code) shall be adjusted in
accordance with the requirements of Section
424 of the Code. Accordingly, with respect
to "incentive stock options,"
fractional shares will be rounded down to
the nearest whole number of shares and
where necessary the per share exercise
price will be rounded up to the nearest
cent. At the Effective Time, MainSource
shall assume all POHF stock option plans
pursuant to which any POHF Stock Options
held by Ronald B. Scott were issued. At
all times after the Effective Time,
MainSource shall reserve for issuance such
number of shares of MainSource Common Stock
as are needed to permit the Amended
Options to be exercised in the manner
contemplated by this Agreement and the
instruments pursuant to which such options
were granted. MainSource shall file
with the SEC a registration statement on an
appropriate form under the
Securities Act with respect to the shares
of MainSource Common Stock subject to
the Amended Options (or, if such shares
have been included on the registration
statement for the Stock Consideration,
shall file a post-effective amendment to
such registration
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statement to maintain its effectiveness
with respect to such shares) and shall
use its reasonable best efforts to maintain
the current status of the prospectus
contained therein, as well as comply with
any applicable state securities or
"blue sky" laws, for so long as such
Amended Options remain outstanding.
(c) Each share
of POHF Common Stock that, immediately prior to the
Effective Time, is held as treasury stock
of POHF or held directly or indirectly
by MainSource (other than shares held in a
fiduciary capacity or in satisfaction
of a debt previously contracted) shall by
virtue of the Company Merger be
canceled and retired and shall cease to
exist, and no exchange or payment shall
be made therefor.
3.02. Purchase Price;
Adjustments to Purchase Price.
(a) Purchase
Price. Subject to the adjustments in this Section 3.02, the
Purchase Price shall be equal to
$41,057,122.
(b) Adjustment
Based Upon POHF's Consolidated Shareholders' Equity.
(i) Unless waived by MainSource pursuant to Section 12.02 of
this
Agreement, if as of the last business day
of the month preceding the month in
which the Effective Time occurs (the
"Computation Date") the POHF Consolidated
Shareholders' Equity, as determined by
POHF's independent registered public
accounting firm in accordance with Section
3.02(b)(ii), is less than
$23,250,000, the Purchase Price shall be
reduced on a dollar-for-dollar basis by
an amount equal to the difference between
$23,250,000 and the actual POHF
Consolidated Shareholders' Equity as of the
Computation Date determined in
accordance with Section 3.02(b)(ii). If at
the Computation Date POHF's
Consolidated Shareholders' Equity is
greater than $23,750,000, the Purchase
Price shall be increased on a
dollar-for-dollar basis by an amount equal to the
difference between $23,750,000 and the
actual POHF Consolidated Shareholders'
Equity as of the Computation Date
determined in accordance with Section
3.02(b)(ii).
(ii) The POHF Consolidated Shareholders' Equity shall be
determined,
for purposes of this Agreement, based upon
the balance sheet of POHF as of the
Computation Date, prepared in accordance
with generally accepted accounting
principles consistently applied, adjusted
(unless such adjustments were already
made in preparing such balance sheet) for
the following items and tax effecting
those adjustments, using a 34% tax rate,
where appropriate:
(A) the accrual of any dividends
scheduled to be declared after the
Computation Date
(including but not limited to a prorated dividend
declared in accordance with Section 6.03(a)(iii);
(B) the accrual of any fees payable to
a broker or investment advisor by
POHF as a result of the consummation of the transactions
contemplated
herein;
(C) the accrual of the payments
contemplated by Section 6.18 hereof;
(D) the funding in full of the POHF
defined benefit pension plan upon its
termination;
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(E) the accrual of all compensable
vacation and sick days for employees of
POHF as of the Computation Date;
(F) write off of the net book value of
POHF's imaging hardware and
software;
(G) the accrual of an additional
$750,000 balance in the allowance for
loan loss above the amount calculated in accordance with
Section
6.03(xiv); and
(H) any change arising from the
purchase, or anticipated purchase, of POHF
Common Stock from the portion of the Peoples Savings Bank of Troy
Ohio
401(k) Plan (the "401(k) Plan") that consists of the assets and
liabilities (as adjusted) of the Peoples Savings Bank of Troy
Ohio
Employee Stock Ownership Plan that were merged with and into
the
401(k) Plan as of July 1, 2003 (the "POHF ESOP") will be
disregarded
or reversed.
The application of the adjustments to the
POHF Consolidated Shareholders' Equity
as contemplated in subsections (A) through
(H) above is illustrated by way of
the example attached hereto as EXHIBIT
3.02(B)(II), which shall be used only to
demonstrate the method for applying such
adjustments.
(c) Adjustment
Based on Market Price of MainSource Common Stock.
(i) If the MainSource Average Stock Price is less than $16.50
per
share, the Exchange Ratio shall be equal to
the Cash Consideration divided by
$16.50 (as further adjusted pursuant to
Section 3.06, as necessary).
(ii) If the MainSource Average Stock Price is greater than $21.50
per
share, the Exchange Ratio shall be equal to
the Cash Consideration divided by
$21.50 (as further adjusted pursuant to
Section 3.06, as necessary).
3.03. Fractional
Shares. Notwithstanding any other provision in this
Agreement, no fractional shares of
MainSource Common Stock and no certificates
or scrip therefor, or other evidence of
ownership thereof, will be issued in the
Company Merger; instead, MainSource shall
pay to each holder of POHF Common
Stock who otherwise would be entitled to a
fractional share of MainSource Common
Stock an amount in cash (without interest)
determined by multiplying such
fraction by the MainSource Average Stock
Price.
3.04. Election
and Proration Procedures.
(a) An election
form and letter of transmittal (the "Election Form") shall
be mailed to each record holder of POHF
Common Stock along with the proxy
materials for the special shareholders'
meeting at which the Company Merger will
be submitted to a vote of POHF's
shareholders. The shareholders of POHF entitled
to receive the Election Form shall be those
shareholders of record as of the
record date fixed for the special
shareholders' meeting at which the Company
Merger will be submitted to a vote of
POHF's shareholders (the "Special Record
Date"). POHF and MainSource shall also
establish a deadline for receipt of such
Election Forms (the "Election Deadline"),
which deadline shall be the close of
business on the date of the special
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meeting at which the Company Merger will be
submitted to a vote of POHF's
shareholders, unless MainSource elects to
establish a later Election Deadline
not later than the close of business on the
last date that POHF shareholders are
permitted to give notice of their exercise
of statutory dissenter's rights.
MainSource shall also use commercially
reasonable efforts to provide the
Election Form to shareholders of record who
become such after the record date
and before the Election Deadline. The
Election Forms POHF shall provide to
MainSource shall include all information
reasonably necessary for POHF to
perform its obligations as specified
herein.
(b) Each
Election Form shall entitle the holder of shares of POHF Common
Stock to:
(i) elect to receive the Cash Consideration for all of such
holder's
shares (a "Cash Election");
(ii) elect to receive the Stock Consideration for all of such
holder's
shares (a "Stock Election");
(iii) elect to receive the Cash Consideration with respect to some
of
such holder's shares and the Stock
Consideration with respect to such holder's
remaining shares (a "Mixed Election");
or
(iv) make no election or to indicate that such holder has no
preference as to the receipt of the Cash
Consideration or the Stock
Consideration (a "Non-Election").
Shares of POHF
Common Stock as to which a Cash Election has been made
(including pursuant to a Mixed Election)
are referred to herein as "Cash
Election Shares." Shares of POHF Common
Stock as to which a Stock Election has
been made (including pursuant to a Mixed
Election) are referred to herein as
"Stock Election Shares." Shares of POHF
Common Stock as to which no election has
been made (other than shares as to which
the holder has given notice of exercise
of dissenter's rights) are referred to
herein as "Non-Election Shares." The
aggregate number of Stock Election Shares
and Non-Election Shares are referred
to herein as the "Stock Election
Number."
(c) An election
shall be duly made by completing the Election Form and any
other required documents in accordance with
the instructions set forth therein
and delivering them to MainSource (or, at
the election of MainSource, the
Exchange Agent, as defined below) before
5:00 p.m., E.S.T., on the Election
Deadline. An election shall have been
properly made only if MainSource shall
have actually received a properly completed
Election Form by the Election
Deadline. An Election Form shall be deemed
properly completed only if
accompanied by one or more certificates
therefor representing POHF Common Stock
("Certificates") (or customary affidavits
and, if required by MainSource
pursuant to Section 3.05(g), a bond or
other indemnity satisfactory to
MainSource against any claim that may be
made with respect to such Certificates
or the guaranteed delivery of such
Certificates) representing all shares of POHF
Common Stock covered by such Election Form,
together with duly executed
transmittal materials included with the
Election Form. Subject to the terms of
this Agreement and of the Election Form,
MainSource shall have reasonable
discretion to determine whether any
election, revocation, or change has
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been properly or timely made and to
disregard immaterial defects in any Election
Form, and any good faith decisions of
MainSource regarding such matters shall be
binding and conclusive.
(d)
Notwithstanding any other provision contained in this
Agreement,
seventy-five percent (75%) of the total
number of shares of POHF Common Stock
outstanding at the Effective Time (the
"Stock Conversion Number") shall be
converted into the Stock Consideration and
the remaining outstanding shares of
POHF Common Stock shall be converted into
the Cash Consideration; provided,
however, that for federal income tax
purposes, it is intended that the Mergers
will qualify as an integrated plan of
reorganization under the provisions of
Section 368(a)(1)(A) and/or (F) of the Code
and, notwithstanding anything to the
contrary contained herein, in order that
the aforementioned integrated plan of
reorganization will not fail to satisfy
continuity of interest requirements
under applicable federal income tax
principles relating to reorganizations under
Section 368(a)(1)(A) and/or (F) of the
Code, MainSource reserves the right to
increase the number of shares of POHF
Common Stock that will be converted into
Stock Consideration and reduce the number
of shares of POHF Common Stock that
will be converted into the right to receive
the Cash Consideration to ensure
that the Stock Consideration will represent
at least fifty percent (50%) of the
value of the total of the aggregate Merger
Consideration plus any amount treated
as merger consideration for federal income
tax purposes.
(e) Within five
(5) business days after the Effective Time, MainSource
shall effect the allocation among holders
of POHF Common Stock of rights to
receive the Cash Consideration and the
Stock Consideration and to distribute
such consideration as follows:
(i) if the Stock
Election Number equals the Stock Conversion Number,
then (A) all Cash Election Shares shall be
converted into the right to receive
the Cash Consideration, and (B) all Stock
Election Shares and Non-Election
Shares shall be converted into the right to
receive the Stock Consideration;
(ii) if the Stock Election Number is less than the Stock
Conversion
Number, the Cash Elections shall be
eliminated (each in its entirety) and
converted to Stock Elections (each in its
entirety) by first eliminating and
converting the Cash Election which covers
the largest number of shares of POHF
Common Stock, and then eliminating and
converting the Cash Election which covers
the next largest number of shares and
continuing this process until the total
remaining number of outstanding POHF shares
covered by Cash Elections is such
that seventy-five percent (75%) of the
total number of shares of POHF Common
Stock outstanding at the Effective Time
shall be converted into the Stock
Consideration, subject to MainSource's
reserved right in Section 3.04(d) to
increase the number of shares of POHF
Common Stock that will be converted into
Stock Consideration to ensure that the
Company Merger is a tax-free
reorganization; and
(iii) if the Stock Election Number exceeds the Stock Conversion
Number, the Non-Elections shall be
eliminated (each in its entirety) and
converted to Cash Elections (each in its
entirety) by first eliminating and
converting the Non-Election which covers
the smallest number of shares of POHF
Common Stock, and then eliminating and
converting the Non-Election which covers
the next smallest number of shares and
continuing this process until either
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all Non-Elections are converted into the
Cash Consideration or the total
remaining number of outstanding POHF shares
covered by Non-Elections (when added
to all Stock Elections) is such that 75% of
the total number of shares of POHF
Common Stock outstanding at the Effective
Time shall be converted into the Stock
Consideration, subject to MainSource's
reserved right in Section 3.04(d) to
increase the number of shares of POHF
Common Stock that will be converted into
Stock Consideration to ensure that the
Company Merger is a tax-free
reorganization. In the event that,
following the elimination and conversion of
all Non-Elections to Cash Elections, the
Stock Election Number still exceeds the
Stock Conversion Number, the Stock
Elections will be eliminated (each in its
entirety) and converted to Cash Elections
(each in its entirety) in the same
manner as the Non-Elections in this Section
3.04(e)(iii), until such time as the
total remaining number of POHF Common
Shares covered by Stock Elections is such
that 75% of the total number of shares of
POHF Common Stock outstanding at the
Effective Time shall be converted into the
Stock Consideration, subject to
MainSource's reserved right in Section
3.04(d), as provided herein.
For purposes of
this Section 3.04(e), if MainSource is obligated to
increase the number of shares of POHF
Common Stock to be converted into shares
of MainSource Common Stock as a result of
the application of the last clause of
Section 3.04(d) hereof, then the higher
number shall be substituted for the
Stock Conversion Number in the calculations
set forth in this Section 3.04(e).
(f) A holder of
POHF's shares that is a bank, trust company, security
broker-dealer or other recognized nominee,
may submit one or more Election Forms
for the persons for whom it holds shares as
nominee provided that such bank,
trust company, security broker-dealer or
nominee certifies to the satisfaction
of POHF and MainSource the names of the
persons for whom it is so holding shares
(the "Beneficial Owners"). In such case,
each Beneficial Owner for whom an
Election Form is submitted shall be treated
as a separate owner for purposes of
the election procedure and allocation of
shares set forth herein.
3.05. Exchange
Procedures.
(a)
Distributions by MainSource of the Merger Consideration shall be
made
in accordance with Section 3.04. At and
after the Effective Time, each
certificate representing shares of POHF
Common Stock shall represent only the
right to receive the Merger Consideration
in accordance with the terms of this
Agreement.
(b) At or prior
to the Effective Time, MainSource shall reserve a
sufficient number of shares of MainSource
Common Stock to be issued as part of
the Merger Consideration and shall deposit
with MainSource Bank an estimated
amount of cash to be issued as part of the
Merger Consideration.
(c) MainSource
shall cause a certificate representing that number of whole
shares of MainSource Common Stock that each
holder of POHF Common Stock has the
right to receive pursuant to Section 3.04,
if any, and a check in the amount of
any cash that such holder has the right to
receive pursuant to Section 3.04, if
any, including any cash in lieu of
fractional shares, or dividends or
distributions which such person shall be
entitled to receive, to be delivered to
such
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shareholder upon delivery (if not
previously delivered) to MainSource of
certificates representing such shares of
POHF Common Stock ("Old Certificates")
(or bond or other indemnity satisfactory to
MainSource if any of such
certificates are lost, stolen or destroyed)
owned by such shareholder. No
interest will be paid on any Merger
Consideration that any such person shall be
entitled to receive pursuant to this
Article III upon such delivery.
(d) No dividends
or other distributions on MainSource Common Stock with a
record date occurring after the Effective
Time shall be paid to the holder of
any unsurrendered Old Certificate
representing shares of POHF Common Stock
converted in the Company Merger into the
right to receive shares of such
MainSource Common Stock until the holder
thereof surrenders such Old
Certificates in accordance with this
Section 3.05. After becoming so entitled in
accordance with this Section 3.05, the
record holder thereof also shall be
entitled to receive any such dividends or
other distributions, without any
interest thereon, which theretofore had
become payable with respect to shares of
MainSource Common Stock such holder had the
right to receive upon surrender of
the Old Certificate.
(e) The stock
transfer books of POHF shall be closed immediately upon the
Effective Time and from and after the
Effective Time there shall be no transfers
on the stock transfer records of POHF of
any shares of POHF Common Stock. If,
after the Effective Time, Old Certificates
are presented to MainSource, they
shall be canceled and exchanged for the
Merger Consideration deliverable in
respect thereof pursuant to this Agreement
in accordance with the procedures set
forth in this Section 3.05.
(f) MainSource
shall be entitled to rely upon POHF's stock transfer books
to establish the identity of those persons
entitled to receive the Merger
Consideration, which books shall be
conclusive with respect thereto. In the
event of a dispute with respect to
ownership of stock represented by any
Certificate, MainSource shall be entitled
to deposit any Merger Consideration
represented thereby in escrow with an
independent third party and thereafter be
relieved with respect to any claims
thereto.
(g) If any Old
Certificate shall have been lost, stolen, or destroyed, upon
the making of an affidavit of that fact by
the person claiming such Old
Certificate to be lost, stolen, or
destroyed and, if required by MainSource, the
posting by such person of a bond or other
indemnity satisfactory to MainSource
in such amount as MainSource may reasonably
direct as indemnity against any
claim that may be made against it with
respect to such Old Certificate,
MainSource will issue in exchange for such
lost, stolen, or destroyed Old
Certificate the Merger Consideration
deliverable in respect thereof pursuant to
Section 3.04 hereof.
(h)
Notwithstanding the foregoing, neither the Exchange Agent nor any
party
hereto shall be liable to any former holder
of POHF Common Stock for any amount
properly delivered to a public official
pursuant to applicable abandoned
property, escheat or similar laws.
3.06.
Anti-Dilution Adjustments. Should MainSource change (or establish
a
record date for changing) the number of
shares of MainSource Common Stock issued
and outstanding prior to the Effective Time
by way of a stock split, stock
dividend, recapitalization or similar
transaction with respect to the
outstanding MainSource Common Stock, and
the record date
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therefor shall be prior to the Effective
Time, the Stock Consideration shall be
adjusted so the shareholders shall receive,
in the aggregate, such number of
shares of MainSource Common Stock
representing the same percentage of
outstanding shares of MainSource Common
Stock at the Effective Time as would
have been represented by the number of
shares of MainSource Common Stock the
shareholders of POHF would have received if
any of the foregoing actions had not
occurred.
3.07. Exchange
Agent. On or before the date that the registration statement
contemplated by Section 7.02 is declared
effective, MainSource shall either
appoint an agent (the "Exchange Agent") for
purposes of mailing and receiving
the Election Forms, tabulating the results
and distributing the Merger
Consideration pursuant to the terms and
conditions of this Agreement or elect to
perform such functions itself.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF POHF
On or prior to
the date hereof, POHF has delivered to MainSource a schedule
(the "POHF Disclosure Schedule") setting
forth, among other things, items the
disclosure of which is necessary or
appropriate either in response to an express
disclosure requirement contained in a
provision hereof or as an exception to one
or more representations or warranties
contained in this Article IV or to one or
more of its covenants contained in Article
VI; provided that the mere inclusion
of an item in the POHF Disclosure Schedule
as an exception to a representation
or warranty shall not be deemed an
admission by POHF that such item represents a
material exception or fact, event or
circumstance or that such item is
reasonably likely to result in a Material
Adverse Effect (as defined below).
For the purpose
of this Agreement, and in relation to POHF, a "Material
Adverse Effect" means any effect that (i)
is material and adverse to the
financial position, results of operations
or business of POHF and its
subsidiaries taken as a whole, or (ii)
would materially impair the ability of
POHF to perform its obligations under this
Agreement or otherwise materially
threaten or materially impede the
consummation of the Mergers and the other
transactions contemplated by this
Agreement; provided, however, that Material
Adverse Effect shall not be deemed to
include the impact of (a) changes in
banking and similar laws of general
applicability to banks or savings
associations or their holding companies or
interpretations thereof by courts or
governmental authorities, (b) changes in
generally accepted accounting
principles or regulatory accounting
requirements applicable to banks, savings
associations, or their holding companies
generally, (c) any modifications or
changes to valuation policies and practices
in connection with the Mergers or
restructuring charges taken in connection
with the Mergers, in each case in
accordance with generally accepted
accounting principles, (d) effects of any
action taken with the prior written consent
of MainSource, (e) changes in the
general level of interest rates (including
the impact on POHF's or Peoples
Savings' securities portfolios) or
conditions or circumstances relating to or
that affect the United States economy,
financial or securities markets or the
banking industry, generally, (f) reasonable
and customary expenses incurred in
connection with the Mergers and all
expenses related to any employment or
severance contract as provided
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<PAGE>
in Section 6.18 and 7.05 of this Agreement
and any benefit or retirement plan
disclosed on the POHF Disclosure Schedule,
(g) the impact of the announcement of
this Agreement and the transactions
contemplated hereby, and compliance with
this Agreement on the business, financial
condition or results of operations of
POHF or Peoples Savings, and (h) the
occurrence of any military or terrorist
attack within the United States or any of
its possessions or offices.
For the purpose
of this Agreement, and in relation to POHF, "knowledge"
means the actual knowledge of Ronald B.
Scott, Richard J. Dutton, Anne Mercer,
John Wannemacher, Linda Daniel or Richard
K. Bender of a particular fact.
Accordingly,
POHF and Peoples Savings hereby represent and warrant to
MainSource as follows:
4.01.
Organization and Authority. (a) POHF is a corporation duly
organized
and validly existing under the laws of the
State of Ohio and is a registered
savings and loan holding company under the
HOLA. POHF has full power and
authority (corporate and otherwise) to own
and lease its properties as presently
owned and leased and to conduct its
business in the manner and by the means
utilized as of the date hereof. Except as
set forth in the POHF Disclosure
Schedule, Peoples Savings is POHF's only
direct or indirect subsidiary and POHF
owns no voting stock or equity securities
of any corporation, partnership,
association or other entity.
(b) Peoples
Savings is an Ohio savings and loan association duly
incorporated and organized and existing
pursuant to the laws of the State of
Ohio. Peoples Savings has full power and
authority (corporate and otherwise) to
own and lease its properties as presently
owned and leased and to conduct its
business in the manner and by the means
utilized as of the date hereof. Except
as set forth in the POHF Disclosure
Schedule, Peoples Savings has no
subsidiaries and owns no voting stock or
equity securities of any corporation,
partnership, association or other
entity.
(c) Each
subsidiary listed in the POHF Disclosure Schedule pursuant to
Section 4.01(a) or (b) is a corporation
duly organized and validly existing
under the laws of the jurisdiction of its
incorporation as listed in the POHF
Disclosure Schedule, with full power and
authority (corporate and otherwise) to
own and lease its properties as presently
owned and leased and to conduct its
business in the manner and by the means
utilized as of the date hereof.
4.02.
Authorization. (a) POHF has the requisite corporate power and
authority to enter into this Agreement and
to perform its obligations hereunder,
subject to the fulfillment of the
conditions precedent set forth in Sections
8.02(d), (e) and (f) hereof. As of the date
hereof, POHF is not aware of any
reason why the approvals set forth in
Section 8.02(e) will not be received in a
timely manner and without the imposition of
a condition, restriction or
requirement of the type described in
Section 8.02(e). This Agreement and its
execution and delivery by POHF have been
duly authorized and approved by the
Board of Directors of POHF and, assuming
due execution and delivery by
MainSource, constitutes a valid and binding
obligation of POHF, subject to the
fulfillment of the conditions precedent set
forth in Section 8.02 hereof, and is
enforceable in accordance with its terms,
except to the extent limited by
general principles of equity and public
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<PAGE>
policy and by bankruptcy, insolvency,
fraudulent transfer, reorganization,
liquidation, moratorium, readjustment of
debt or other laws of general
application relating to or affecting the
enforcement of creditors' rights.
(b) Neither the
execution of this Agreement nor consummation of the Mergers
contemplated hereby: (i) conflicts with or
violates the Articles of
Incorporation or Code of Regulations of
POHF or the Articles of Incorporation or
Code of Regulations of Peoples Savings;
(ii) conflicts with or violates in any
material respect any local, state, federal
or foreign law, statute, ordinance,
rule or regulation (provided that the
approvals of or filings with applicable
government regulatory agencies or
authorities required for consummation of the
Mergers are obtained) or any court or
administrative judgment, order,
injunction, writ or decree; (iii) conflicts
with, results in a breach of or
constitutes a default under any note, bond,
indenture, mortgage, deed of trust,
license, lease, contract, agreement,
arrangement, commitment or other instrument
to which POHF or Peoples Savings is a party
or by which POHF or Peoples Savings
is subject or bound; (iv) results in the
creation of or gives any person,
corporation or entity the right to create
any lien, charge, claim, encumbrance
or security interest, or results in the
creation of any other rights or claims
of any other party (other than MainSource)
or any other adverse interest, upon
any right, property or asset of POHF or
Peoples Savings which would be material
to POHF; or (v) terminates or gives any
person, corporation or entity the right
to terminate, accelerate, amend, modify or
refuse to perform under any note,
bond, indenture, mortgage, agreement,
contract, lease, license, arrangement,
deed of trust, commitment or other
instrument to which POHF or Peoples Savings
is bound or with respect to which POHF or
Peoples Savings is to perform any
duties or obligations or receive any rights
or benefits.
(c) Other than
in connection or in compliance with the provisions of the
applicable federal and state banking,
securities, antitrust and corporation
statutes, all as amended, and the rules and
regulations promulgated thereunder,
no notice to, filing with, exemption by or
consent, authorization or approval of
any governmental agency or body is
necessary for consummation of the Mergers by
POHF or Peoples Savings.
4.03.
Capitalization. (a) The authorized capital stock of POHF as of
the
date hereof consists, and at the Effective
Time will consist, of 15,000,000
shares of POHF Common Stock, 7,331,629 of
which shares are issued and
outstanding, and 1,000,000 shares of
preferred stock, no par value, none of
which preferred shares are issued and
outstanding. Such issued and outstanding
shares of POHF Common Stock have been duly
and validly authorized by all
necessary corporate action of POHF, are
validly issued, fully paid and
nonassessable and have not been issued in
violation of any pre-emptive rights of
any present or former POHF shareholder.
Except as set forth in the POHF
Disclosure Schedule, POHF has no capital
stock authorized, issued or outstanding
other than as described in this Section
4.03(a) and has no intention or
obligation to authorize or issue any other
capital stock or any additional
shares of POHF Common Stock. Each share of
POHF Common Stock is entitled to one
vote per share. A description of the POHF
Common Stock is contained in the
Articles of Incorporation of POHF, as set
forth in the POHF Disclosure Schedule
pursuant to Section 4.04 hereof.
(b) The
authorized capital stock of Peoples Savings as of the date
hereof
consists, and at the Effective Time will
consist, of 90,000,000 shares of common
stock, $1.00 par value per
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<PAGE>
share, 7,439,650 of which shares are
validly issued and outstanding (such issued
and outstanding shares are referred to
herein as "Peoples Savings Common Stock")
and 10,000,000 shares of preferred stock,
$1.00 par value per share, none of
which preferred shares are issued and
outstanding. Such validly issued and
outstanding shares of Peoples Savings
Common Stock have been duly and validly
authorized by all necessary corporate
action of Peoples Savings, are validly
issued, fully paid and nonassessable, and
have not been issued in violation of
any pre-emptive rights of any present or
former Peoples Savings stockholder. All
of the issued and outstanding shares of
Peoples Savings Common Stock are owned
by POHF free and clear of all liens,
pledges, charges, claims, encumbrances,
restrictions, security interests, options
and pre-emptive rights and of all
other rights or claims of any other person,
corporation or entity with respect
thereto. Peoples Savings has no capital
stock authorized, issued or outstanding
other than as described in this Section
4.03(b) and has no intention or
obligation to authorize or issue any other
capital stock or any additional
shares of Peoples Savings Common Stock.
(c) Except as
set forth in the POHF Disclosure Schedule, there are no
options, warrants, commitments, calls,
puts, agreements, understandings,
arrangements or subscription rights
relating to any shares of POHF Common Stock
or Peoples Savings Common Stock, or any
securities convertible into or
representing the right to purchase or
otherwise acquire any common stock or debt
securities of POHF or Peoples Savings, by
which POHF is or may become bound.
POHF does not have any outstanding
contractual or other obligation to
repurchase, redeem or otherwise acquire any
of the issued and outstanding shares
of POHF Common Stock. To the knowledge of
POHF and Peoples Savings, there are no
voting trusts, voting arrangements,
buy-sell agreements or similar arrangements
affecting the capital stock of either POHF
or Peoples Savings.
(d) Except as
set forth in the statements on Schedules 13D and 13G that
have been filed by certain persons with the
Securities and Exchange Commission
(the "SEC"), POHF has no knowledge of any
person or entity which beneficially
owns 5% or more of its outstanding shares
of common stock within the meaning of
the rules of the SEC promulgated under
Section 13(d) of the Securities Exchange
Act of 1934, as amended.
4.04.
Organizational Documents. The Articles of Incorporation and Code
of
Regulations of POHF and of Peoples Savings,
representing true, accurate and
complete copies of such corporate documents
in effect as of the date of this
Agreement, have been delivered to
MainSource and are included in the POHF
Disclosure Schedule.
4.05. Compliance
with Law. (a) Neither POHF nor Peoples Savings has engaged
in any activity or taken or omitted to take
any action which has resulted in the
violation of any local, state, federal or
foreign law, statute, regulation,
rule, ordinance, order, restriction or
requirement, and neither is in violation
of any order, injunction, judgment, writ or
decree of any court or government
agency or body, except where such activity,
omission to act or violation would
not have a Material Adverse Effect. POHF
and Peoples Savings possess and hold
all licenses, franchises, permits,
certificates and other authorizations
necessary for the continued conduct of
their business without interference or
interruption, and such licenses,
franchises, permits, certificates and
authorizations are transferable (to the
extent required) to MainSource or to
Merger Corp at the Effective Time without
any restrictions or limitations
thereon or the need
15
<PAGE>
to obtain any consents of government
agencies or other third parties other than
as set forth in this Agreement.
(b) POHF has
provided MainSource with, or given MainSource access to, all
agreements, understandings and commitments
with, and all orders and directives
of, all government regulatory agencies or
authorities with respect to the
financial condition, results of operations,
business, assets or capital of POHF
or Peoples Savings which presently are
binding upon or require action by, or at
any time during the last three (3) years
have been binding upon or have required
action by, POHF or Peoples Savings,
including, without limitation, all
correspondence, written communications and
written commitments related thereto.
All such agreements, understandings,
commitments, orders, directives,
correspondence and written communications
which presently are binding upon or
require action by, or at any time during
the last five (5) years have been
binding upon or have required action by,
POHF or Peoples Savings are set forth
in the POHF Disclosure Schedule. There are
no refunds or restitutions required
to be paid as a result of any criticism of
any regulatory agency or body cited
in any examination report of POHF or
Peoples Savings as a result of an
examination by any regulatory agency or
body, or set forth in any accountant's
or auditor's report to POHF or Peoples
Savings.
(c) All of the
existing offices and branches of Peoples Savings have been
legally authorized and established in
accordance with all applicable federal,
state and local laws, statutes,
regulations, rules, ordinances, orders,
restrictions and requirements, except such
as would not have a Material Adverse
Effect. Peoples Savings has no approved but
unopened offices or branches.
4.06. Accuracy
of Statements Made and Materials Provided to MainSource. No
representation, warranty or other statement
made, or any information provided,
by POHF or Peoples Savings in this
Agreement or the POHF Disclosure Schedule
(and any update thereto) and no written
information which has been or shall be
supplied by POHF or Peoples Savings with
respect to its financial condition,
results of operations, business, assets,
capital or directors and officers for
inclusion in the proxy statement-prospectus
relating to the Mergers, contains or
shall contain (in the case of information
relating to the proxy
statement-prospectus at the time it is
first mailed to POHF's shareholders) any
untrue statement of material fact or omits
or shall omit to state a material
fact necessary to make the statements
contained herein or therein, in light of
the circumstances in which they are made,
not false or misleading, except that
no representation or warranty has been made
by POHF or Peoples Savings with
respect to statements made or incorporated
by reference in the Form S-4 or the
proxy statement-prospectus therein based on
information supplied by MainSource
specifically for inclusion or incorporation
by reference in the Form S-4 or the
proxy statement-prospectus therein.
4.07. Litigation
and Pending Proceedings. Except as set forth in the POHF
Disclosure Schedule and except for any
lawsuits involving collection by POHF or
Peoples Savings of delinquent accounts as
to which no counterclaims are asserted
against POHF or Peoples Savings:
(a) There are no
claims, actions, suits, proceedings, mediations,
arbitrations or investigations pending or,
to the knowledge of POHF, threatened
in any court or before any government
agency or authority, arbitration panel or
otherwise (nor does POHF have any
16
<PAGE>
knowledge of a basis for any such claim,
action, suit, proceeding, litigation,
arbitration or investigation) against POHF.
There are no claims, actions, suits,
proceedings, mediations, arbitrations or
investigations pending or, to the
knowledge of POHF, threatened in any court
or before any government agency or
authority, arbitration panel or otherwise
(nor does POHF have any knowledge of a
basis for any such claim, action, suit,
proceeding, litigation, arbitration or
investigation) against Peoples Savings that
would result in a Material Adverse
Effect.
(b) Neither POHF
nor Peoples Savings is: (i) subject to any outstanding
judgment, order, writ, injunction or decree
of any court, arbitration panel or
governmental agency or authority; (ii)
presently charged with or, to the
knowledge of POHF, under governmental
investigation with respect to any actual
or alleged violations of any law, statute,
rule, regulation or ordinance; or
(iii) the subject of any pending or, to the
knowledge of POHF, threatened
proceeding by any government regulatory
agency or authority having jurisdiction
over their respective business, assets,
capital, properties or operations.
4.08. Financial
Statements and Reports. (a) POHF has previously delivered
to MainSource copies of the following
financial statements and reports of POHF
and Peoples Savings, including the notes
thereto (collectively, the "POHF
Financial Statements"):
(i) Consolidated Balance Sheets and the related Consolidated
Statements of Income and Consolidated
Statements of Changes in Shareholders'
Equity of POHF as of and for the fiscal
years ended June 30, 2005 and 2004;
(ii) Consolidated Statements of Cash Flows of POHF for the
fiscal
years ended June 30, 2005 and 2004;
(iii) Thrift financial Reports ("TFRs") for Peoples Savings as of
and
for the fiscal years ended the close of
business on June 30, 2005 and 2004;
(b) The POHF
Financial Statements present fairly the consolidated financial
position of POHF as of and at the dates
shown and the consolidated results of
operations for the periods covered thereby
and to the knowledge of POHF and
Peoples Savings are complete, correct,
represent bona fide transactions, and
have been prepared from the books and
records of POHF and its subsidiaries. The
POHF Financial Statements described in
clauses (i) and (ii) above for completed
fiscal years are audited financial
statements and have been prepared in
conformance with generally accepted
accounting principles applied on a
consistent basis, except as may otherwise
be indicated in any accountants' notes
or reports with respect to such financial
statements.
(c) Since June 30,
2005 on a consolidated basis POHF and its subsidiaries
have not incurred any material liability
other than in the ordinary course of
business consistent with past practice.
4.09.
Properties, Contracts, Employees and Other Agreements. (a) Set
forth
in the POHF Disclosure Schedule are true,
accurate and complete copies of the
following:
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(i) A brief description and the location of all real property owned
by
POHF or Peoples Savings (other than Other
Real Estate Owned ("OREO")) and the
principal buildings and structures located
thereon, together with a legal
description of such real property and,
within forty-five (45) days of the date
of this Agreement, a commitment for a title
insurance policy (obtained at the
expense of MainSource) insuring the same
and a survey drawing (obtained at the
expense of MainSource) of each parcel of
real property owned by POHF or Peoples
Savings, and each lease of real property to
which POHF or Peoples Savings is a
party, identifying the parties thereto, the
annual rental payable, the
expiration date of the lease and a brief
description of the property covered;
(ii) All conditional sales contracts or other title retention
agreements relating to POHF or Peoples
Savings and agreements for the purchase
of federal funds;
(iii) All agreements, contracts, leases, licenses, lines of
credit,
understandings, commitments or obligations
of POHF or Peoples Savings which
individually or in the aggregate:
(A) involve payment or receipt by POHF
or Peoples Savings (other than as
disbursements of loan proceeds to customers, loan payments by
customers or customer deposits) of more than $25,000;
(B) involve payments based on profits
of POHF or Peoples Savings;
(C) relate to the purchase of goods,
products, supplies or services in
excess of $15,000;
(D) were not made in the ordinary
course of business;
(E) may not be terminated without
penalty at will or upon notice of ninety
(90) days or less; or
(F) involve the employment of, or
payment to, any present or former
directors, officers, employees or consultants relating to their
services as such with POHF; and
(iv) The name and current annual salary of each director, officer
and
employee of POHF or Peoples Savings whose
current annual salary is in excess of
$50,000, and the profit sharing, bonus or
other form of compensation (other than
salary) paid or payable by POHF or Peoples
Savings to or for the benefit of each
such person for the fiscal year ended June
30, 2005, and any employment,
severance or deferred compensation
agreement or arrangement with respect to each
such person.
(b) POHF has,
prior to the date of this Agreement, provided or given access
to MainSource to the files and
documentation of all borrowers of Peoples
Savings, or persons or entities that are or
may become obligated to Peoples
Savings under an existing letter of credit,
line of credit, loan transaction,
loan agreement, promissory note or other
commitment of Peoples
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<PAGE>
Savings, in excess of $15,000 individually
or in the aggregate, whether in
principal, interest or otherwise, and
including all guarantors of such
indebtedness.
(c) Each of the
agreements, contracts, commitments, leases, instruments and
documents set forth in the POHF Disclosure
Schedule relating to this Section
4.09 is valid and enforceable in accordance
with its terms, except to the extent
limited by general principles of equity and
public policy or by bankruptcy,
insolvency, fraudulent transfer,
readjustment of debt or other laws of general
application relative to or affecting the
enforcement of creditor's rights. POHF
and Peoples Savings are, and to the
knowledge of POHF, all other parties thereto
are, in material compliance with the
provisions thereof, and neither POHF nor
Peoples Savings is, and to the knowledge of
POHF, no other party thereto is, in
default in the performance, observance or
fulfillment of any material
obligation, covenant or provision contained
therein. Except as set forth in the
POHF Disclosure Schedule, none of the
foregoing requires the consent of any
party to its assignment in connection with
the Mergers contemplated by this
Agreement. Other than as disclosed pursuant
to this Section 4.09, to the
knowledge of POHF, no circumstances exist
resulting from transactions effected
or to be effected, from events which have
occurred or may occur or from any
action taken or omitted to be taken which
could reasonably be expected to result
in the creation of any agreement, contract,
obligation, commitment, arrangement,
lease or document described in or
contemplated by this Section 4.09.
(d) Neither POHF nor
Peoples Savings is in material default under or in
material breach of or, to the knowledge of
POHF or Peoples Savings, alleged to
be in material default under or in material
breach of, any loan or credit
agreement, conditional sales contract or
other title retention agreement,
security agreement, bond, indenture,
mortgage, license, contract, lease,
commitment or any other instrument or
obligation.
4.10. Absence of
Undisclosed Liabilities. Except as provided in the POHF
Financial Statements and in the POHF
Disclosure Schedule, except for unfunded
loan commitments and obligations on letters
of credit to customers of Peoples
Savings made in the ordinary course of
business, except for trade payables
incurred in the ordinary course of Peoples
Savings' business, except for the
transactions contemplated by this Agreement
and obligations for services
rendered pursuant thereto, and except for
liabilities which would not,
individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect upon POHF or Peoples
Savings, neither POHF nor Peoples Savings
has, nor will have at the Effective Time,
any obligation, agreement, contract,
commitment, liability, lease or license
which exceeds $10,000 individually, or
any obligation, agreement, contract,
commitment, liability, lease or license
made outside of the ordinary course of
business, nor does there exist any
circumstances resulting from transactions
effected or events occurring on or
prior to the date of this Agreement or from
any action omitted to be taken
during such period which could reasonably
be expected to result in any such
obligation, agreement, contract,
commitment, liability, lease or license.
Neither POHF nor Peoples Savings is
delinquent in the payment of any amount due
pursuant to any trade payable, and each has
properly accrued for such payables
in accordance with generally accepted
accounting principles.
4.11. Title to
Assets. Except as described in this Section 4.11 or the POHF
Disclosure Schedule:
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<PAGE>
(a) POHF or
Peoples Savings, as the case may be, has good and marketable
title in fee simple absolute to all real
property (including, without
limitation, all real property used as bank
premises and all other real estate
owned) which is reflected in the POHF
Financial Statements as of June 30, 2005;
good and marketable title to all personal
property reflected in the POHF
Financial Statements as of June 30, 2005,
other than personal property disposed
of in the ordinary course of business since
June 30, 2005; good and marketable
title to or right to use by valid and
enforceable lease or contract all other
properties and assets (whether real or
personal, tangible or intangible) which
POHF or Peoples Savings purports to own or
which POHF or Peoples Savings uses in
its respective business; good and
marketable title to, or right to use by terms
of a valid and enforceable lease or
contract, all other property used in its
respective business; and good and
marketable title to all property and assets
acquired and not disposed of or leased
since June 30, 2005. All of such
properties and assets are owned by POHF or
Peoples Savings free and clear of all
land or conditional sales contracts,
mortgages, liens, pledges, restrictions,
security interests, charges, claims, rights
of third parties or encumbrances of
any nature except: (i) as set forth in the
POHF Disclosure Schedule; (ii) as
specifically noted in reasonable detail in
the POHF Financial Statements; (iii)
statutory liens for taxes not yet
delinquent or being contested in good faith by
appropriate proceedings; (iv) pledges or
liens required to be granted in
connection with the acceptance of
government deposits or granted in connection
with repurchase or reverse repurchase
agreements; and (v) easements,
encumbrances and liens of record,
imperfections of title and other limitations
which are not material in amounts to POHF
on a consolidated basis and which do
not materially detract from the value or
materially interfere with the present
or contemplated use of any of the
properties subject thereto or otherwise
materially impair the use thereof for the
purposes for which they are held or
used. All real property owned or leased by
POHF or Peoples Savings is in
compliance with all applicable zoning and
land use laws. All real property,
machinery, equipment, furniture and
fixtures owned or leased by POHF or Peoples
Savings is structurally sound, in good
operating condition, ordinary wear and
tear excepted, and has been and is being
maintained and repaired in the ordinary
condition of business in all material
respects.
(b) With respect
to all real property presently or formerly owned, leased
or used by POHF or Peoples Savings, POHF
and Peoples Savings and to POHF's
knowledge each of the prior owners, have
conducted their respective business in
material compliance with all federal,
state, county and municipal laws,
statutes, regulations, rules, ordinances,
orders, directives, restrictions and
requirements relating to, without
limitation, responsible property transfer,
underground storage tanks, petroleum
products, air pollutants, water pollutants
or storm water or process waste water or
otherwise relating to the environment,
air, water, soil or toxic or hazardous
substances or to the manufacturing,
recycling, handling, processing,
distribution, use, generation, treatment,
storage, disposal or transport of any
hazardous or toxic substances or petroleum
products (including polychlorinated
biphenyls, whether contained or uncontained,
and asbestos-containing materials, whether
friable or not), including, without
limitation, the Federal Solid Waste
Disposal Act, the Hazardous and Solid Waste
Amendments, the Federal Clean Air Act, the
Federal Clean Water Act, the
Occupational Health and Safety Act, the
Federal Resource Conservation and
Recovery Act, the Toxic Substances Control
Act, the Federal Comprehensive
Environmental Response, Compensation and
Liability Act of 1980 and the Superfund
Amendments and Reauthorization Act of 1986,
all as amended, and regulations of
20
<PAGE>
the Environmental Protection Agency, the
Nuclear Regulatory Agency, the Army
Corp of Engineers, the Department of
Interior, the United States Fish and
Wildlife Service and any state department
of natural resources or state
environmental protection agency now or at
any time thereafter in effect
(collectively, "Environmental Laws"). There
are no pending or, to the knowledge
of POHF or Peoples Savings, threatened,
claims, actions or proceedings by any
local municipality, sewage district or
other governmental entity against POHF or
Peoples Savings with respect to the
Environmental Laws, and to POHF's knowledge
there is no reasonable basis or grounds for
any such claim, action or
proceeding. No environmental clearances or
other governmental approvals related
to Environmental Laws are required for the
conduct of the business of POHF or
Peoples Savings or the consummation of the
Mergers contemplated hereby. To
POHF's knowledge, neither POHF nor Peoples
Savings is the owner, or has been in
the chain of title or the operator or
lessee, of any property on which any
substances regulated by Environmental Laws
have been used, stored, deposited,
treated, recycled or disposed of in
violation of Environmental Laws. To POHF's
knowledge, neither POHF nor Peoples Savings
has any liability for any clean-up
or remediation under any of the
Environmental Laws with respect to any real
property.
4.12. Loans and
Investments.
(a) Except as
set forth in the POHF Disclosure Schedule, there is no loan
by Peoples Savings in excess of $10,000
that has been classified by regulatory
examiners or management as "Other Loans
Specially Mentioned," "Substandard,"
"Doubtful" or "Loss" or in excess of
$10,000 that has been identified by
accountants or auditors (internal or
external) as having a significant risk of
uncollectability. The most recent loan
watch list of Peoples Savings and a list
of all loans in excess of $10,000 which
Peoples Savings has determined to be
thirty (30) days or more past due with
respect to principal or interest payments
or has placed on nonaccrual status are set
forth in the POHF Disclosure
Schedule.
(b) All loans
reflected in the POHF Financial Statements as of June 30,
2005, and which have been made, extended,
renewed, restructured, approved,
amended or acquired since June 30, 2005:
(i) have been made for good, valuable
and adequate consideration in the ordinary
course of business; (ii) constitute
the legal, valid and binding obligation of
the obligor and any guarantor named
therein, except to the extent limited by
general principles of equity and public
policy or by bankruptcy, insolvency,
fraudulent transfer, reorganization,
liquidation, moratorium, readjustment of
debt or other laws of general
application relative to or affecting the
enforcement of creditors' rights; (iii)
are evidenced by notes, instruments or
other evidences of indebtedness which are
true, genuine and what they purport to be;
and (iv) are secured, to the extent
that Peoples Savings has a security
interest in collateral or a mortgage
securing such loans, by perfected security
interests or recorded mortgages
naming Peoples Savings as the secured party
or mortgagee (unless by written
agreement to the contrary).
(c) The
reserves, the allowance for possible loan and lease losses and
the
carrying value for real estate owned which
are shown on the POHF Financial
Statements are, in the judgment of
management of POHF and Peoples Savings,
adequate in all material respects under the
requirements of generally accepted
accounting principles applied on a
consistent basis to provide for possible
losses on items for which reserves were
made, on loans and leases outstanding
and real estate owned as of the respective
dates.
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<PAGE>
(d) Except as
set forth in the POHF Disclosure Schedule, none of the
investments reflected in the POHF Financial
Statements as of and for the period
ended June 30, 2005, and none of the
investments made by Peoples Savings since
June 30, 2005 are subject to any
restriction, whether contractual or statutory,
which materially impairs the ability of
Peoples Savings to dispose freely of
such investment at any time. Peoples
Savings is not a party to any repurchase
agreements with respect to securities.
(e) Set forth in
the POHF Disclosure Schedule is a true, accurate and
complete list of all loans in which Peoples
Savings has any participation
interest or which have been made with or
through another financial institution
on a recourse basis against Peoples
Savings.
(f) Except as
set forth in the POHF Disclosure Schedule, and except for
customer deposits and ordinary trade
payables, Peoples Savings has not, nor will
it have at the Effective Time, any
indebtedness for borrowed money.
4.13. State
Takeover Laws. The Board of Directors of POHF has approved this
Agreement and the transactions contemplated
hereby as required to render
inapplicable to such agreements and
transactions the provisions of Chapter 1704
and Section 1707.43 of the OGCL, and all
other similar "takeover" or "interested
shareholder" laws.
4.14. Employee
Benefit Plans.
(a) With respect
to the employee benefit plans, as defined in Section 3(3)
of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"),
sponsored or otherwise maintained by POHF
or Peoples Savings, whether written or
oral, in which POHF or Peoples Savings
participates as a participating employer,
to which POHF or Peoples Savings
contributes, with respect to which POHF or
Peoples Savings acts as administrator,
trustee or fiduciary, or any nonqualified
employee benefit plans or deferred
compensation, bonus, stock or incentive
plans, or other employee benefit or fringe
benefit programs for the benefit of
former or current employees or directors
(or their beneficiaries or dependents)
of POHF or Peoples Savings, and including
any such plans, to POHF's knowledge,
which have been terminated, merged into
another plan, frozen or discontinued
since January 1, 2000 (collectively, "POHF
Plans"), except as set forth in the
POHF Disclosure Schedule:
(i) all such POHF Plans have, on a continuous basis since their
adoption, been, in all material respects,
maintained and administered in
compliance with applicable POHF Plan
documents and with the requirements
prescribed by all applicable statutes,
orders and governmental rules or
regulations, including, without limitation,
ERISA, the Code, and the Department
of Labor (the "Department") and Treasury
Regulations promulgated thereunder;
(ii) all POHF Plans intended to constitute tax-qualified plans
under
Section 401(a) of the Code that have not
received a "GUST" (as defined in
Section 2 of Rev. Proc. 2002-6)
determination letter have received an opinion
letter from the Internal Revenue Service
(the "Service") covering the qualified
status of each such POHF Plan in its
current form;
22
<PAGE>
(iii) all POHF Plans intended to constitute tax qualified plans
under
Section 401(a) of the Code have received a
favorable determination letter
required from the Service with respect to
"GUST" (as defined in Section 2 of
Rev. Proc. 2002-6), and the document has
been amended by the adoption of a "good
faith EGTRRA amendment" as that phrase is
defined in IRS Notice 2001-42, as well
as amendments incorporating the final
Treasury Regulations to Code Section
401(a)(9) and the mandatory distribution
provisions of Code Section 401(a)(31),
and POHF is not aware of any circumstances
likely to result in revocation of any
such favorable determination letter;
(iv) except for the POHF ESOP, no POHF Plan (or its related
trust)
holds any stock or other securities of POHF
or any related or affiliated person
or entity;
(v) Neither POHF nor Peoples Savings has any liability to the
Department or the Service with respect to
any POHF Plan;
(vi) Neither POHF nor Peoples Savings has engaged in any
transaction
that may subject POHF or Peoples Savings,
or any POHF Plan, to a civil penalty
imposed by Section 502 or any other
provision of ERISA or excise taxes under
Sections 4971, 4975, 4976, 4977, 4979 or
4980B of the Code or for a fine under
Section 502 of ERISA with respect to any
POHF Plan;
(vii) no
prohibited transaction (as defined in Section 406 of ERISA or
as defined in Section 4975(c) of the Code)
has occurred with respect to any POHF
Plan;
(viii) each POHF Plan subject to ERISA or intended to be
qualified
under Section 401(a) of the Code has been
and, if applicable, is being operated
in all material respects in accordance with
the applicable provisions of ERISA
and the Code and the Department and
Treasury Regulations promulgated thereunder;
(ix) no participant or beneficiary or non-participating employee
has
been denied (in violation of ERISA, the
Code, other applicable law or the
applicable POHF Plan document) any benefit
due or to become due under any POHF
Plan or has been misled as to his or her
rights under any POHF Plan;
(x) all obligations required to be performed by POHF or Peoples
Savings under any provision of any POHF
Plan have been performed by it in all
material respects and it is not in default
under or in violation of any
provision of any POHF Plan;
(xi) no event has occurred which would constitute grounds for
an
enforcement action by any party under Part
5 of Title I of ERISA under any POHF
Plan;
(xii) there are no actions, suits, proceedings or claims
pending
(other than routine claims for benefits)
or, to the knowledge of POHF or Peoples
Savings, threatened, against POHF or
Peoples Savings, any POHF Plan or the
assets of any POHF Plan;
(xiii) with respect to any POHF Plan sponsored, participated in
or
contributed to by POHF or Peoples Savings,
or with respect to which POHF or
Peoples Savings is responsible
23
<PAGE>
for complying with the reporting and
disclosure requirements of ERISA or the
Code, there has been no violation of the
reporting and disclosure requirements
imposed either under ERISA or the Code for
which a penalty has been or may be
imposed;
(xiv) with respect to any POHF Plan there has been no breach of
the
fiduciary provisions of ERISA or other
applicable federal or state law and there
is no known outstanding fiduciary
liability; and
(xv) any POHF Plan may be terminated at any time in accordance
the
provisions of ERISA or the Code, and the
transactions contemplated by this
Agreement do not eliminate the right of
termination except as otherwise
specifically provided herein.
(b) With regard
to any POHF Plan intended to be qualified under Section
401(a) of the Code, no director, officer,
employee or agent of POHF or Peoples
Savings has engaged in any action or failed
to act in such a manner that, as a
result of such action or failure to act,
the Service could revoke or deny that
plan's qualification under Section 401(a)
of the Code or the exemption under
Section 501(a) of the Code for any trust
related to such Plan.
(c) POHF has
provided to MainSource true, accurate and complete copies and,
in the case of any POHF Plan which has not
been reduced to writing, a materially
complete summary, of all of the following,
as applicable:
(i) all POHF Plans, including amendments thereto, and, if subject
to
the reporting and disclosure requirements
of ERISA, all summary plan
descriptions thereof (including any
modifications thereto);
(ii) all employment, salary continuation, consulting, severance
and
collective bargaining agreements,
arrangements or understandings;
(iii) all group insurance and health insurance contracts and
policies;
(iv) all reports filed with the Service or Department of Labor
within
the preceding three years by POHF or
Peoples Savings with respect to any POHF
Plan;
(v) descriptions of all current participants in POHF Plans and
all
participants with benefit entitlements
under such POHF Plans; and
(vi) valuations and testings for any POHF Plan that is a
defined
benefit plan or defined contribution plan,
including the POHF ESOP, as of the
most recent valuation date for that
plan.
(d) Except as
set forth on the POHF Disclosure Schedule, no current or
former director, officer or employee of
POHF or Peoples Savings (i) is entitled
to or may become entitled to any benefit
under any POHF Plan that is a welfare
benefit plan (as defined in Section 3(1) of
ERISA) after termination of
employment with POHF or Peoples Savings,
except that such individuals may be
entitled to continue their group health
care coverage pursuant to Section 4980B
of the
24
<PAGE>
Code under the applicable POHF Plan if they
pay the cost of such coverage
pursuant to the applicable requirements of
that plan or of the Code with respect
thereto, or (ii) is currently receiving, or
entitled to receive, a disability
benefit under a POHF Plan that is a long
term or short term disability plan.
(e) The Peoples
Savings Bank of Troy Defined Benefit Pension Plan ("Benefit
Plan") is the only defined benefit pension
plan maintained by POHF or Peoples
Savings which is subject to Title IV of
ERISA, and such Defined Benefit Plan is
not a multiemployer plan (as that term is
defined in Sections 4001(a)(3) and
3(37) of ERISA). Other than the Benefit
Plan, no POHF Plan is, and neither POHF
nor Peoples Savings has any liability with
respect to any plan that is (i) a
defined benefit pension plan subject to
Title IV of ERISA, (ii) a pension plan
subject to Section 302 of ERISA or Section
412 of the Code, or (iii) a
multiemployer pension plan (as that term is
defined in Sections 4001(a)(3) and
3(37) of ERISA).
(f) With respect
to all POHF Plans that include a group health plan (as
defined in Section 607(1) of ERISA) all
applicable provisions of Section 4980B
of the Code and Section 601 of ERISA have
been complied with in all material
respects by POHF or Peoples Savings.
(g) Except as
otherwise provided in the POHF Disclosure Schedule, there are
no collective bargaining, employment,
management, consulting, deferred
compensation, reimbursement, indemnity,
retirement, early retirement, severance
or similar plans or agreements, commitments
or understandings, or any employee
benefit or retirement plan or agreement,
binding upon POHF or Peoples Savings
and no such agreement, commitment,
understanding or plan is under discussion or
negotiation by management with any employee
or group of employees, any member of
management or any other person.
(h) Except as
otherwise provided in the POHF Disclosure Schedule, no
Voluntary Employees' Beneficiary
Association ("VEBA") as defined in Code Section
501(c)(9) is sponsored or maintained by
POHF or Peoples Savings.
(i) Except as
otherwise provided in the POHF Disclosure Schedule, there are
no benefits or liabilities under any
employee benefit plan or program that will
be accelerated as a result of the
transactions contemplated by the terms of this
Agreement.
(j) Except as
may be disclosed in the POHF Disclosure Schedule, POHF and
Peoples Savings are and have been in
material compliance with all applicable
laws respecting employment and employment
practices, terms and conditions of
employment and wages and hours, including,
without limitation, any such laws
respecting employment discrimination and
occupational safety and health
requirements.
(k) All
liabilities of the POHF Plans have been funded in accordance
with
sound actuarial assumptions and practices,
and no POHF Plan subject to the
funding requirements of part 3 of ERISA had
or has had an accumulated funding
deficiency as of the end of any plan year
ending on or after December 31, 2002,
other than as set forth in the POHF
Disclosure Schedule. No actuarial
assumptions have been changed since the
last written report of actuaries on such
POHF Plans. All insurance premiums
(including premiums to the Pension Benefit
Guaranty
25
<PAGE>
Corporation) have been paid in full,
subject only to normal retrospective
adjustments in the ordinary course. POHF
and Peoples Savings have no contingent
or actual liabilities under Title IV of
ERISA. No accumulated funding deficiency
(within the meaning of Section 302 of ERISA
or Section 412 of the Code) has been
incurred within the past three years with
respect to any of the POHF Plans
subject to Section 302 of ERISA or Section
412 of the Code, whether or not
waived, nor does POHF or any of its
affiliates have any liability or potential
liability as a result of the underfunding
of, or termination of, or withdrawal
from, any plan by POHF or by any person
which may be aggregated with POHF 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 POHF 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 POHF threatened or
imminent with respect to any POHF Plan
(other than a routine claim for benefits
for which plan administrative review
procedures have not been exhausted) for
which POHF or Peoples Savings would be
liable after June 30, 2005, except as is
reflected on the POHF Financial
Statements.
(l) As a result,
directly or indirectly, of the transactions contemplated
by this Agreement (including, without
limitation, any termination of employment
relating thereto and occurring prior to, at
or following the Effective Time),
POHF, Peoples Savings, and their respective
successors will not be obligated to
make a payment that would be characterized
as an "excess parachute payment" to
an individual who is a "disqualified
individual" (as such terms are defined in
Section 280G of the Code). Among the
nonexclusive list of payments to be
considered are, to the extent required by
Section 280G of the Code, those
payments referred to under Sections
3.01(b), 6.14, 6.15, 6.17, 6.18, 7.03(b),
7.05, and 8.01(i) of the Agreement, as well
as any other payments made under the
POHF Plans because of the transactions
contemplated herein.
4.15.
Obligations to Employees. All accrued obligations and liabilities
of
and all payments by POHF or Peoples
Savings, whether arising by operation of
law, by contract or by past custom, for
payments to trusts or other funds, to
any government agency or authority or to
any present or former director,
officer, employee or agent (or his or her
heirs, legatees or legal
representatives) have been and are being
paid to the extent required by
applicable law or by the plan, trust,
contract or past custom or practice, and
adequate actuarial accruals and reserves
for such payments have been and are
being made by POHF or Peoples Savings in
accordance with generally accepted
accounting principles and applicable law
applied on a consistent basis and
actuarial methods with respect to the
following: (a) withholding taxes,
unemployment compensation or social
security benefits; and (b) all POHF Plans
for its current or former directors,
officers, employees and agents, including,
without limitation, all liabilities and
obligations to the POHF Plans (as
defined in Section 4.14(a) hereof). All
obligations and liabilities of POHF or
Peoples Savings, whether arising by
operation of law, by contract or by past
custom or practice, for all other forms of
compensation which are or may be
payable to its current or former directors,
officers, employees or agents or to
any POHF Plan have been and are being paid
to the extent required by applicable
law or by the plan or contract, and
adequate actuarial accruals and reserves for
payment therefor have been and are being
made by POHF or Peoples Savings in
accordance with generally accepted
accounting and actuarial principles applied
on a consistent basis. All accruals and
reserves referred to in this Section
4.15 are correctly and accurately reflected
and accounted for in all material
respects in the POHF Financial Statements
and the books, statements and records
of POHF.
26
<PAGE>
4.16. Taxes,
Returns and Reports. Except as set forth in the POHF
Disclosure Schedule, each of POHF and
Peoples Savings has since January 1, 2000
(a) duly and timely filed all federal,
state, local and foreign tax returns of
every type and kind required to be filed,
and each such return is true, accurate
and complete in all material respects; (b)
paid or otherwise adequately reserved
in accordance with generally accepted
accounting principles for all taxes,
assessments and other governmental charges
due or claimed to be due upon it or
any of its income, properties or assets;
and (c) not requested an extension of
time for any such payments (which extension
is still in force). POHF has
established, and shall establish in the
Subsequent POHF Financial Statements (as
hereinafter defined), in accordance with
generally accepted accounting
principles, a reserve for taxes in the POHF
Financial Statements adequate to
cover all of POHF's and Peoples Savings'
tax liabilities (including, without
limitation, income taxes, payroll taxes and
withholding, and franchise fees) for
the periods then ending. Neither POHF nor
Peoples Savings has, nor will either
have, any liability for taxes of any nature
for or with respect to the operation
of its business, from the date hereof up to
and including the Effective Time,
except to the extent set forth in the
Subsequent POHF Financial Statements (as
hereinafter defined) or as accrued or
reserved for on the books and records of
POHF or Peoples Savings. Neither POHF nor
Peoples Savings is currently under
audit by any state or federal taxing
authority. No federal, state or local tax
returns of POHF or Peoples Savings have
been audited by any taxing authority
during the past five (5) years.
4.17. Deposit
Insurance. The deposits of Peoples Savings are insured by the
Federal Deposit Insurance Corporation in
accordance with the Federal Deposit
Insurance Act, as amended, to the fullest
extent provided by applicable law, and
POHF or Peoples Savings has paid or
properly reserved or accrued for all current
premiums and assessments with respect to
such deposit insurance.
4.18. Insurance.
Set forth in the POHF Disclosure Schedule is a list and
brief description of all policies of
insurance (including, without limitation,
bankers' blanket bond, directors' and
officers' liability insurance, property
and casualty insurance, group health or
hospitalization insurance and insurance
providing benefits for employees) owned or
held by POHF or Peoples Savings on
the date hereof or with respect to which
POHF or Peoples Savings pays any
premiums. Each such policy is in full force
and effect and all premiums due
thereon have been paid when due, and a
true, accurate and complete copy thereof
has been made available to MainSource prior
to the date hereof.
4.19. Books and
Records. The books and records of POHF are complete and
correct and accurately reflect the basis
for the financial condition, results of
operations, business, assets and capital of
POHF on a consolidated basis set
forth in the POHF Financial Statements.
4.20. Broker's,
Finder's or Other Fees. Except for reasonable fees and
expenses of POHF's attorneys, accountants
and investment bankers, all of which
shall be paid by POHF prior to the
Effective Time, except as set forth in the
POHF Disclosure Schedule, no agent, broker
or other person acting on behalf of
POHF or Peoples Savings or under any
authority of POHF or Peoples Savings is or
shall be entitled to any commission,
broker's or finder's fee or any other
27
<PAGE>
form of compensation or payment from any of
the parties hereto relating to this
Agreement and the Mergers contemplated
hereby.
4.21. POHF
Disclosure Schedule and Documents. All written data, documents,
materials and information referred to in
this Agreement and delivered by POHF or
Peoples Savings pursuant to or in
connection with the POHF Disclosure Schedule
are true, accurate and complete in all
material respects as of the date hereof
and with respect to such items delivered
subsequent to the date hereof with any
update to the POHF Disclosure Schedule,
will be true, accurate and complete in
all material respects on the date of
delivery thereof.
4.22. Interim
Events. Except as otherwise permitted hereunder, since June
30, 2005, or as set forth in the POHF
Disclosure Schedule, neither POHF nor
Peoples Savings has:
(a) Suffered any
changes having an adverse impact on the financial
condition, results of operations, business,
assets or capital of POHF on a
consolidated basis in excess of $5,000
individually or in the aggregate;
(b) Suffered any
damage, destruction or loss to any of its properties, not
fully paid by insurance proceeds, in excess
of $5,000 individually or in the
aggregate;
(c) Declared,
distributed or paid any dividend or other distribution to its
shareholders, except for payment of
dividends as permitted by Section
6.03(a)(iii) hereof;
(d) Repurchased,
redeemed or otherwise acquired shares of its common stock,
issued any shares of its common stock or
stock appreciation rights or sold or
agreed to issue or sell any shares of its
common stock or any right to purchase
or acquire any such stock or any security
convertible into such stock or taken
any action to reclassify, recapitalize or
split its stock;
(e) Granted or agreed to grant any
increase in benefits payable or to
become payable under any pension,
retirement, profit sharing, health, bonus,
insurance or other welfare benefit plan or
agreement to employees, officers or
directors of POHF or Peoples Savings except
pursuant to the express terms
thereof and except in the ordinary course
of business, provided, however, that
POHF shall provide prompt notice to
MainSource of any such increase granted or
agreed to be granted on the basis that it
is in the ordinary course of business;
(f) Increased
the salary of any director, officer or employee, except for
normal increases in the ordinary course of
business and in accordance with past
practices, or entered into any employment
contract, indemnity agreement or
understanding with any officer or employee
or installed any employee welfare,
pension, retirement, stock option, stock
appreciation, stock dividend, profit
sharing or other similar plan or
arrangement;
(g) Leased, sold
or otherwise disposed of any of its assets except in the
ordinary course of business or leased,
purchased or otherwise acquired from
third parties any assets except in the
ordinary course of business;
28
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(h) Except for
the Mergers contemplated by this Agreement, merged,
consolidated or sold shares of its common
stock, agreed to merge or consolidate
with or into any third party, agreed to
sell any shares of its common stock or
acquired or agreed to acquire any stock,
equity interest, assets or business of
any third party;
(i) Incurred,
assumed or guaranteed any obligation or liability (fixed or
contingent) other than obligations and
liabilities incurred in the ordinary
course of business;
(j) Mortgaged,
pledged or subjected to a lien, security interest, option or
other encumbrance any of its assets except
for tax and other liens which arise
by operation of law and with respect to
which payment is not past due and except
for pledges or liens: (i) required to be
granted in connection with acceptance
by Peoples Savings of government deposits;
or (ii) granted in connection with
repurchase or reverse repurchase
agreements;
(k) Except as
set forth in the POHF Disclosure Schedule, canceled, released
or compromised any loan, debt, obligation,
claim or receivable other than in the
ordinary course of business;
(l) Entered into
any transaction, contract or commitment other than in the
ordinary course of business;
(m) Agreed to
enter into any transaction for the borrowing or loaning of
monies, other than in the ordinary course
of its lending business; or
(n) Conducted
its business in any manner other than substantially as it was
being conducted through June 30, 2005.
4.23. POHF
Securities and Exchange Commission Filings. Since June 30,
2003,
POHF has filed all reports and other
documents required to be filed by it under
the Securities Exchange Act of 1934 and the
Securities Act of 1933, including
but not limited to POHF's Annual Report on
Form 10-K for the year ended June 30,
2005. All such Securities and Exchange
Commission filings were true, accurate
and complete in all material respects as of
the dates of the filings, and no
such filings contained any untrue statement
of a material fact or omitted to
state a mat
