This excerpt taken from the MSFG 8-K filed Jan 20, 2009.
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On January 16, 2009, MainSource Financial Group, Inc. (the Company) entered into a Letter Agreement with the United States Department of Treasury (the Treasury Department) as part of the Treasury Departments Capital Purchase Program under the Emergency Economic Stabilization Act of 2008 (EESA). Pursuant to the Securities Purchase Agreement-Standard Terms (Securities Purchase Agreement) attached to the Letter Agreement, the Company issued to the Treasury Department 57,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (Designated Preferred Stock), having a liquidation amount per share of $1,000, for a total price of $57,000,000 and a warrant (Warrant) to purchase up to 571,906 shares (Warrant Shares) of the Companys common stock, at an initial per share exercise price of $14.95, for an aggregate purchase price of $8,549,994.70. The Designated Preferred Stock and the Warrant were issued in a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.
The Designated Preferred Stock pays cumulative dividends at a rate of 5% per year for the first five years and 9% per year thereafter. The Company may not redeem the Designated Preferred Stock during the first three years except with the proceeds from one or more Qualified Equity Offerings (as defined in the Articles of Amendment of the Companys Restated Articles of Incorporation described in Item 5.03). After three years, the Company may, at its option, redeem the Designated Preferred Stock for the liquidation amount of $1,000 per share, plus any accrued and unpaid dividends. The restrictions on redemption of the Designated Preferred Stock are described in Item 3.03 below. The Designated Preferred Stock is generally non-voting.
Pursuant to the Securities Purchase Agreement, until the Department of Treasury no longer owns any shares of the Designated Preferred Stock, the Warrant or Warrant Shares, the Companys employee benefit plans and other executive compensation arrangements for the Senior Executive Officers must continue to comply in all respects with Section 111(b) of the EESA. The Companys Senior Executive Officers are Archie M. Brown, Jr., President and Chief Executive Officer, James M. Anderson, Senior Vice President and Chief Financial Officer, Jeffrey C. Smith, Chief Operating Officer, Jennifer Bullard, Director of Human Resources, and Daryl R. Tressler, Chairman, President and Chief Executive Officer of MainSource Bank. As described in Item 5.02 below, each of the Senior Executive Officers entered into a Senior Executive Officer Letter Agreement and Waiver on January 16, 2009.
As part of its purchase of the Designated Preferred Stock, the Treasury Department received the Warrant to purchase 571,906 shares of the Companys Common Stock at an initial per share exercise price of $14.95. The Warrant provides for the adjustment of the exercise price and the number of shares of the Companys common stock issuable upon exercise pursuant to customary anti-dilution provisions, such as upon stock splits or distributions of securities or other assets to holders of Company Common Stock, and upon certain issuances of the Company Common Stock at or below a specified price relative to the initial exercise price. The term of the Warrant is ten years. If the Company completes one or more Qualified Equity Offerings on or prior to December 31, 2009 that result in the Company receiving aggregate gross proceeds equal to at least $57,000,000, then the number of Warrant Shares will be reduced by 50% of the original number of Warrant Shares. Pursuant to the Securities Purchase Agreement, the Treasury
Department has agreed not to exercise voting power with respect to any shares of Common Stock issued upon exercise of the Warrant.
The foregoing description of the Securities Purchase Agreement, the Designated Preferred Stock, the Warrant, the Senior Executive Officer Letter Agreement and the Waiver does not purport to be complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement, the Warrant, the Form of Senior Executive Officer Letter Agreement and the Form of Waiver which are attached hereto as Exhibits 10.1, 4.2, 10.2 and 10.3 respectively, and are incorporated into this Item 1.01 by reference.
This excerpt taken from the MSFG 8-K filed Feb 27, 2008.
Item 1.01 Entry into a Material Definitive Agreement
On February 26, 2008, MainSource Financial Group, Inc. an Indiana corporation (MainSource), entered into an Agreement and Plan of Merger (the Merger Agreement) with 1st Independence Financial Group, Inc., a Delaware corporation (1st Independence), and 1st Independence Bank, Inc., a Kentucky chartered commercial bank and a wholly owned subsidiary of 1st Independence (1st Bank). Pursuant to the Merger Agreement, 1st Independence will merge with and into MainSource (the Merger). As a result of the merger, 1st Bank will become a wholly owned subsidiary of MainSource.
A copy of the Merger Agreement is included as Exhibit 2.1 to this report. MainSource and certain shareholders of 1st Independence have entered into a voting agreement by which such shareholders have agreed to vote their shares in favor of the Merger. A copy of the voting agreement is included as Exhibit 10.1 to this report.
The Merger Agreement provides that shareholders of 1st Independence will receive cash in the amount of $5.475 per share and .881036 shares of MainSource common stock for each share of 1st Independence stock owned by them. Based on MainSources February 26, 2008 closing price of $14.60 per share and including the anticipated cashout of certain 1st Independence stock options, the transaction value is estimated at $37.0 million.
The amount of cash payable to 1st Independence shareholders may be adjusted at the time of closing based on the value of 1st Independences consolidated shareholder equity as of the end of the last day of the month prior to closing, after certain adjustments prescribed by the Merger Agreement have been made.
At the Effective Time of the Merger, each option to purchase common stock of 1st Independence shall be converted into the right to receive an amount of cash equal to $5.475 per share, plus .881036 multiplied by the average price of MainSource common stock during the ten trading days preceding the 5th calendar day prior to the closing time, less the per share exercise price for each share of 1st Independence stock option multiplied by the number of shares of common stock subject to such stock option. If the foregoing calculation results in a negative number, the 1st Independence stock option will be canceled without any cash payment.
MainSource will have the right to terminate the Merger Agreement if the average closing price of MainSource common stock during a period of twenty trading days prior to the 5th calendar day preceding the closing date is more than $16.50, unless 1st Independence were to elect to make a compensating adjustment to the exchange ratio. 1st Independence will have the right to terminate the Merger Agreement if the average closing price of MainSource common stock during a period of twenty trading days prior to the 5th calendar day preceding the closing date is less than $12.50, unless MainSource were to elect to make a compensating adjustment to the exchange ratio.
Upon termination of the Merger Agreement because 1st Independence willfully and intentionally breaches any of its representations, warranties or covenants in the Merger Agreement or 1st Independence following an acquisition proposal from a third party withdraws, modifies or changes its recommendation of this transaction or elects to terminate the Merger Agreement, 1st
Independence has agreed to pay MainSource a termination fee equal to $1.1 million plus its documented out-of-pocket expenses up to $250,000.
Upon termination of the Merger Agreement because MainSource willfully and intentionally breaches any of its representations, warranties or covenants in the Merger Agreement, MainSource has agreed to pay 1st Independence a termination fee equal to $1.1 million plus its documented out-of-pocket expenses up to $250,000.
The Merger will be accounted for as a reorganization and is expected to close in the third quarter of 2008. The Merger Agreement has been approved by the boards of directors of MainSource and 1st Independence. However, the closing of the Merger is subject to certain other conditions, including the approval of the Merger by the shareholders of 1st Independence and the approval of regulatory authorities.
The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of such Merger Agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement, and are subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of MainSource, or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in MainSources or 1st Independences respective public disclosures.
Pursuant to General Instruction F to Form 8-K, a press release issued jointly by MainSource and 1st Independence is attached hereto as Exhibit 99.1 and is incorporated herein by reference.