UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant
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Filed by a Party other than the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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FIRST INDIANA CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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November 5,
2007
Dear Shareholder:
The directors and officers of First Indiana Corporation join me
in extending to you a cordial invitation to attend a special
meeting of our shareholders. This meeting will be held on
Wednesday, December 19, 2007, at 10:00 a.m. EST, in the
Conference Center on the Second Floor of First Indiana Plaza,
135 North Pennsylvania Street, Indianapolis, Indiana 46204.
At the Special Meeting, you will be asked to approve the
Agreement and Plan of Merger dated July 8, 2007, which
provides that a wholly owned subsidiary of Marshall &
Ilsley Corporation will be merged with and into First Indiana
Corporation, with First Indiana as the surviving corporation. If
the proposed merger is consummated, each share of First Indiana
common stock outstanding immediately prior to consummation of
the merger will be converted into and represent the right to
receive $32.00 in cash.
As a result of the merger, First Indiana Corporation will become
a wholly owned subsidiary of Marshall & Ilsley.
Approval by First Indianas shareholders of the Agreement
and Plan of Merger is a condition to consummation of the merger.
The terms of the merger agreement are explained in detail in the
accompanying proxy statement, which we urge you to read
carefully.
FIRST INDIANAS BOARD OF DIRECTORS HAS APPROVED THE
AGREEMENT AND PLAN OF MERGER AND RECOMMENDS THAT YOU VOTE IN
FAVOR OF THE AGREEMENT AND PLAN OF MERGER AND THE TRANSACTIONS
CONTEMPLATED IN THAT AGREEMENT, INCLUDING THE MERGER, BECAUSE
THE BOARD BELIEVES SUCH ACTIONS TO BE IN THE BEST INTERESTS OF
FIRST INDIANAS SHAREHOLDERS.
The formal notice of this special meeting and the proxy
statement appear on the following pages. Your vote is important,
regardless of the number of shares you own.
Whether or not you attend this meeting, we encourage you to
return your proxy promptly in the prepaid envelope provided, or
to register your vote by telephone or through the Internet.
After doing so, you may, of course, vote in person at the
meeting.
We look forward to seeing you on December 19.
Sincerely,
Marni McKinney,
Chairman
TABLE OF
CONTENTS
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APPENDIX A: Agreement and Plan of Merger
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A
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APPENDIX B: Opinion of First Indianas Financial
Advisor
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B
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ii
FIRST
INDIANA CORPORATION
INDIANAPOLIS, INDIANA
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS
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Time and Date
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10:00 a.m. EST on Wednesday, December 19, 2007
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Place
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First Indiana Plaza, Second Floor Conference Center, 135 North
Pennsylvania Street, Indianapolis, Indiana 46204
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Business
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(1) To consider and vote upon the Agreement and Plan of
Merger dated July 8, 2007, by and among
Marshall & Ilsley Corporation, FIC Acquisition
Corporation and First Indiana Corporation, pursuant to which
(i) FIC Acquisition Corporation will be merged with and
into First Indiana Corporation, with First Indiana Corporation
as the surviving corporation, after which First Indiana
Corporation will be a wholly-owned subsidiary of
Marshall & Ilsley Corporation; and (ii) each
share of common stock of First Indiana Corporation outstanding
immediately prior to consummation of the merger (other than
treasury shares and shares owned by Marshall & Ilsley
Corporation or any of its subsidiaries) will be converted into
and represent the right to receive $32.00 in cash, as described
in the proxy statement and in the merger agreement which is
attached as
Appendix A
thereto;
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(2) To adjourn or postpone the special meeting to permit
further solicitation of proxies in the event that an
insufficient number of shares is present in person or by proxy
to approve the merger agreement; and
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(3) To consider other business which may properly come
before the meeting.
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Adjournments and
Postponements
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Any action on the items of business described above may be
considered at the special meeting at the time and on the date
specified above or at any time and date to which the special
meeting may be properly adjourned or postponed.
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Record Date
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You are entitled to vote only if you were a First Indiana
shareholder as of the close of business on October 17, 2007.
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Voting
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Your vote is very important. Whether or not you plan to attend
the special meeting, we encourage you to read this proxy
statement and submit your proxy or voting instructions as soon
as possible. You may submit your proxy or voting instruction
card for the special meeting by completing, signing, dating, and
returning your proxy or voting instruction card in the
pre-addressed envelope provided, or, in most cases, by using the
telephone or the Internet.
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By Order of the Board of Directors,
Reagan K. Rick,
Secretary and General Counsel
This notice of special meeting and proxy statement and form
of proxy
are being distributed on or about November 5, 2007.
This summary highlights selected information in this proxy
statement and may not contain all of the information important
to you. To understand the merger more fully, you should read
this entire document carefully, including the appendices and any
documents referred to in this proxy statement.
Marshall & Ilsley Corporation
770 North Water Street
Milwaukee, Wisconsin 53202
(414) 765-7700
Marshall & Ilsley Corporation is a diversified
financial services corporation headquartered in Milwaukee,
Wisconsin, with $58.3 billion in assets as of June 30,
2007. Founded in 1847, M&I Marshall & Ilsley Bank
is the largest Wisconsin-based bank, with 192 offices throughout
the state. In addition, M&I Marshall & Ilsley
Bank has 49 locations throughout Arizona; 30 offices along
Floridas west coast and in central Florida; 14 offices in
Kansas City and nearby communities; 22 offices in metropolitan
Minneapolis/St. Paul; one office in Duluth, Minnesota; three
offices in Tulsa, Oklahoma; and one office in Las Vegas, Nevada.
Marshall & Ilsleys Southwest Bank subsidiary has 17
offices in the greater St. Louis area. M&I
Marshall & Ilsley Bank also provides trust and
investment management, equipment leasing, mortgage banking,
asset-based lending, financial planning, investments, and
insurance services from offices throughout the country and on
the Internet. As of June 30, 2007, Marshall &
Ilsleys total shareholders equity was approximately
$6.4 billion. Marshall & Ilsleys common
stock trades on the New York Stock Exchange under the symbol
MI. See Description of Marshall & Ilsley
Corporation on page 38.
First Indiana Corporation
First Indiana Plaza
135 N. Pennsylvania Street
Indianapolis, Indiana 46204
(317) 269-1290
First Indiana Corporation is a financial holding company
headquartered in Indianapolis, Indiana with $2.2 billion in
assets as of June 30, 2007. Its wholly-owned subsidiary,
First Indiana Bank, N.A., was founded in 1915 and is the largest
Indianapolis-based bank. First Indiana Bank has 32 retail
offices in Central Indiana. As of June 30, 2007, First
Indianas total shareholders equity was approximately
$178.1 million. First Indianas common stock is listed
on the NASDAQ Global Select Market under the symbol
FINB. See Description of First Indiana
Corporation on page 38.
Special
Meeting of Shareholders; Required Vote
The special meeting of First Indiana shareholders is scheduled
to be held at First Indiana Plaza, Second Floor Conference
Center, 135 North Pennsylvania Street, Indianapolis, Indiana
46204, at 10:00 a.m., EST, on December 19, 2007. At
the First Indiana special meeting, you will be asked to vote to
approve the merger agreement with Marshall & Ilsley
Corporation and the transactions contemplated by the merger
agreement, including the merger. In the event that an
insufficient number of shares is present in person or by proxy
at the special meeting to approve the merger, you may also be
asked to vote to approve a proposal to adjourn or postpone the
meeting to allow time for the solicitation of additional
proxies. Only First Indiana shareholders of record as of the
close of business on October 17, 2007 are entitled to
notice of, and to vote at, the First Indiana special meeting and
any adjournments or postponements of the First Indiana special
meeting.
Approval of the merger agreement requires the affirmative vote
of holders of at least a majority of the issued and outstanding
shares of First Indiana common stock. Broker non-votes (that is,
shares held in street name for which no voting
instructions are given) and abstentions from voting will have
the same effect as voting against the merger agreement. As of
the record date, there were 16,543,966 shares of First
Indiana common stock outstanding. The directors and executive
officers of First Indiana (and their affiliates), as a group,
beneficially owned
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3,616,568 outstanding shares of First Indiana common
stock, representing approximately 21.9% of the outstanding
shares of First Indiana common stock as of the record date. No
approval by Marshall & Ilsley shareholders is required
to complete the merger. Approval of the proposal to adjourn or
postpone the special meeting, if necessary, requires only that
more votes be cast in favor of the proposal than are cast
against it. Broker non-votes and abstentions from voting
will not be treated as NO votes on this proposal (as
they are with the approval of the merger agreement) and,
therefore, will have no effect on the outcome.
Certain First Indiana shareholders who own and have the ability
to vote, in the aggregate, approximately 16.6% of the
outstanding shares of First Indiana common stock as of the
record date have agreed to vote in favor of the merger
agreement. See The Merger Agreement
Stockholder Voting Agreement beginning on page 37.
For additional information about the special meeting, see
Special Meeting of First Indianas Shareholders
beginning on page 10.
The
Merger and the Merger Agreement
Marshall & Ilsleys acquisition of First Indiana
is governed by the merger agreement they have signed along with
FIC Acquisition Corporation. The merger agreement provides that,
if all of the conditions are satisfied or waived, a wholly-owned
subsidiary of Marshall & Ilsley will be merged with
and into First Indiana, with First Indiana surviving, after
which First Indiana will be a wholly-owned subsidiary of
Marshall & Ilsley. We encourage you to read the merger
agreement, which is included as
Appendix A
to this
proxy statement. See The Merger and The Merger
Agreement beginning on pages 11 and 25, respectively.
What
First Indiana Shareholders Will Receive in the Merger
At the effective time of the merger, the shares of common stock
of First Indiana that are issued and outstanding immediately
prior to the effective time of the merger (other than treasury
shares and any shares owned by Marshall & Ilsley or any of
its subsidiaries) will be converted into the right to receive
$32.00 per share in cash. See The Merger
Structure of the Merger beginning on page 11.
Recommendation
of First Indiana Board of Directors
The First Indiana board of directors approved the merger
agreement and the proposed merger. The First Indiana board
believes that the merger agreement and the transactions
contemplated by the merger agreement, including the merger, are
advisable and fair to, and in the best interests of, First
Indiana and its shareholders, and therefore recommends that
First Indiana shareholders vote FOR the proposal to
approve the merger agreement and the transactions contemplated
by the merger agreement, including the merger. In reaching its
decision, the First Indiana board of directors considered a
number of factors, which are described in the section titled
The Merger First Indianas Reasons for
the Merger beginning on page 13. Because of the wide
variety of factors considered, the First Indiana board of
directors did not believe it practicable, nor did it attempt, to
quantify or otherwise assign relative weight to the specific
factors it considered in reaching its decision.
Opinion
of First Indianas Financial Advisor
In connection with the merger, the First Indiana board of
directors received an oral and a written opinion, dated
July 8, 2007, from First Indianas financial advisor,
Sandler ONeill & Partners, L.P., to the effect
that, as of the date of the opinion and based on and subject to
the various considerations described in the opinion, the
consideration to be paid to holders of First Indiana common
stock pursuant to the merger agreement was fair, from a
financial point of view, to those holders. The full text of
Sandler ONeills written opinion, which sets forth,
among other things, the assumptions made, procedures followed,
matters considered and limitations on the review undertaken by
Sandler ONeill in rendering its opinion, is attached to
this document as
Appendix B
. We encourage you to
read the entire opinion carefully. The opinion of Sandler
ONeill is directed to the First Indiana board of directors
and does not constitute a recommendation to any First Indiana
shareholder as to how to vote at the First Indiana special
meeting or any other matter relating to the proposed merger. For
additional information about Sandler ONeills written
opinion, see The Merger Opinion of First
Indianas Financial Advisor beginning on page 15.
2
The First Indiana board of directors determined that the merger
is in the best interests of First Indiana and recommends that
First Indiana shareholders vote in favor of the approval of the
merger agreement and the transactions contemplated by the merger
agreement, including the merger.
In its deliberations and in making its determination, the First
Indiana board of directors considered many factors including,
without limitation, the following:
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the fact that the value of the merger consideration represented
a 45.1% premium over the $22.05 closing price of First
Indianas common stock on July 6, 2007 (the last
trading day before the merger was announced);
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the fact that the value of the merger consideration represented
367% of First Indianas March 31, 2007 tangible book value
per share;
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the 28.2% tangible book premium represented by the merger
consideration to First Indianas core deposits as of
March 31, 2007;
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the fact that the value of the merger consideration represented
a multiple of 22.1 times First Indianas earnings per share
for the 12 months ended March 31, 2007;
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the possibility that, if First Indiana remained independent, the
anticipated value of its common stock in the future, discounted
to present value, would not equal or exceed the cash amount that
its shareholders will receive upon completion of the merger;
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the increased level of competition within the banking sector
generally and within the market areas served by First Indiana
from other financial institutions and non-bank competitors;
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the current and prospective economic environment for financial
institutions generally and First Indiana specifically, including
declining net interest margins for many financial institutions,
slower deposit growth and increasing regulatory burdens and
other constraints upon financial institutions;
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the risk of accepting common stock in an uncertain market for
financial institution stocks compared to a potential tax
advantage for some shareholders of accepting an offer of stock
or stock and cash;
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the effect of the merger on First Indianas and First
Indiana Banks employees, including the prospect of
continued employment and enhanced employment opportunities with
a much larger and more diversified financial organization;
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the effect of the merger on First Indianas and First
Indiana Banks customers and community, including
Marshall & Ilsleys community banking orientation
and its compatibility with First Indiana; and
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the opinion delivered by Sandler ONeill &
Partners, L.P. that the merger consideration is fair, from a
financial point of view, to the shareholders of First Indiana.
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See The Merger First Indianas Reasons
for the Merger beginning on page 13.
Under the terms of the merger agreement, the merger cannot be
completed until, among other things, the parties receive the
approval of the Board of Governors of the Federal Reserve
System. Marshall & Ilsley received the approval of the
Board of Governors on September 26, 2007. See The
Merger Regulatory Approvals beginning on
page 24.
No
Dissenters Rights
First Indiana shareholders have no dissenters rights or
appraisal rights under Indiana law as a result of the merger.
See The Merger No Dissenters
Rights on page 25.
3
The obligation of Marshall & Ilsley, FIC Acquisition
Corporation and First Indiana to consummate the merger is
subject to the satisfaction or waiver, on or before completion
of the merger, of a number of conditions, including:
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the merger agreement must be approved at the special meeting by
the holders of at least a majority of the issued and outstanding
shares of First Indiana common stock;
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the transaction must be approved by the appropriate regulatory
authorities;
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there must not be any laws or governmental orders that prevent
or prohibit the merger or restrict the transactions contemplated
by the merger agreement in a manner that would have a material
adverse effect on First Indiana or Marshall & Ilsley;
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the representations and warranties made by the parties in the
merger agreement must be materially true and correct as of the
effective time of the merger or as otherwise required in the
merger agreement;
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the covenants made by the parties must have been fulfilled or
complied with in all material respects at or prior to the
effective time of the merger;
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each party must continue to possess all necessary approvals and
all required consents, approvals and authorizations must be
obtained and all required filings and notifications must be made
by the parties, except as would not have a material adverse
effect on First Indiana or Marshall & Ilsley;
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no challenge to the merger or the right of Marshall &
Ilsley to own or operate the business of First Indiana may be
pending which is reasonably likely to have a material adverse
effect on First Indiana or Marshall & Ilsley;
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the parties must have received legal opinions relating to the
merger;
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there must not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed
applicable to the merger, by any governmental authority which
imposes any condition or restriction upon Marshall &
Ilsley, FIC Acquisition Corporation or First Indiana or their
respective subsidiaries (or the surviving corporation or its
subsidiaries), which would materially adversely impact the
economic or business benefits of the transactions contemplated
by the merger agreement in such a manner as to render
inadvisable the consummation of the merger; and
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since July 8, 2007, the date of the merger agreement, there
must not have been any material adverse effect on either party
and its subsidiaries, taken as a whole.
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For additional information on conditions to completion of the
merger, see The Merger Agreement Conditions to
the Completion of the Merger beginning on page 34.
Termination
of the Merger Agreement
Subject to conditions and circumstances described in the merger
agreement, either Marshall & Ilsley or First Indiana
may terminate the merger agreement, in certain circumstances,
including without limitation, if the respective boards of
directors of Marshall & Ilsley and First Indiana
mutually agree to terminate the merger agreement, if the merger
has not been consummated by February 29, 2008 (or
March 31, 2008 if the reason the merger is not completed by
such date is due to the failure to obtain required regulatory
approvals or the required waiting periods have not yet expired
or been terminated), if the merger has been restrained, enjoined
or prohibited by governmental order or if the First Indiana
shareholders do not approve the merger agreement at the First
Indiana special meeting of shareholders. In addition, each of
Marshall & Ilsley and First Indiana may terminate the
merger agreement at any time prior to the effective time of the
merger upon certain conditions as described in more detail below
in The Merger Agreement Termination of the
Merger Agreement beginning on page 35.
First Indiana must pay Marshall & Ilsley an
$18.3 million termination fee, plus Marshall &
Ilsleys reimbursable expenses, if:
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First Indiana terminates the merger agreement prior to a
shareholder vote and has entered into a definitive agreement
with respect to a superior offer with a third party; or
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Marshall & Ilsley terminates the merger agreement
because First Indianas board of directors or a committee
of its board of directors has withheld, withdrawn, amended or
modified in a manner adverse to Marshall & Ilsley its
approval or recommendation of the merger agreement or the
merger, or failed to include its recommendation that First
Indiana shareholders vote for approval of the merger agreement
and the merger in this proxy statement, and within
12 months following the termination of the merger agreement
an acquisition proposal is consummated or First Indiana enters
into a contract providing for an acquisition proposal; or
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Marshall & Ilsley or First Indiana has terminated the
merger agreement because the merger has not been consummated
prior to February 29, 2008 (or March 31, 2008, if the
reason the merger is not completed by such date is due to the
failure to obtain the required regulatory approvals or the
required waiting periods have not yet expired or been
terminated) and prior to such termination First Indiana has not
held a meeting of its shareholders, an acquisition proposal has
been received by First Indiana and not withdrawn, and within
12 months following the termination of the merger
agreement, that acquisition proposal is consummated or First
Indiana enters into a contract providing for that acquisition
proposal; or
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Marshall & Ilsley or First Indiana terminates the
merger agreement because the required approval of First Indiana
shareholders was not obtained at a meeting of First Indiana
shareholders where a final vote on a proposal to adopt the
merger agreement was taken, prior to such termination an
acquisition proposal has been received by First Indiana and not
withdrawn, and within 12 months following the termination
of the merger agreement, that acquisition proposal is
consummated or First Indiana enters into a contract providing
for that acquisition proposal.
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See The Merger Agreement Termination Fee
beginning on page 36.
Treatment
of First Indiana Stock Options, Deferred Shares and Restricted
Shares
Pursuant to the merger agreement, each outstanding option to
purchase the common stock of First Indiana will be converted
into the right to receive from Marshall & Ilsley as of
the effective time of the merger an amount equal to the excess,
if any, of $32.00 per share (the merger consideration) over the
per share exercise price for each share of First Indiana common
stock subject to such option, less applicable income and
employment tax withholding. As of October 17, 2007, there
were 615,455 such options outstanding. Assuming none of the
options are exercised, expire or are forfeited before the
effective date of the merger, the holders of these options will
receive, prior to tax withholdings, an aggregate of $10,765,401.
Pursuant to the merger agreement, each outstanding deferred
share of First Indiana common stock that is unvested at the
effective time of the merger will become vested and will be
converted into the right to receive $32.00 in cash at the
effective time of the merger, less applicable income and
employment tax withholding. As of October 17, 2007, there
were 36,936 such deferred share rights outstanding. Assuming all
of these deferred share rights are outstanding at the effective
date of the merger, the holders of these share rights will
receive, prior to tax withholdings, an aggregate of $1,181,953.
As of October 17, 2007, there were 41,041 shares of
First Indianas restricted stock outstanding that were
issued pursuant to First Indianas
2006-2008
Long-Term Incentive Program and 185,272 shares of First
Indianas restricted stock outstanding that were issued
otherwise than under the
2006-2008
Long-Term Incentive Program. Vesting (that is, the right to
continued ownership) of restricted stock issued pursuant to the
Long-Term Incentive Program is subject to the performance goals
specified in the Program and certain other conditions, and
vesting of the other restricted stock is subject to the
condition that the holder maintain continuous service with First
Indiana through a specified date. Each share of restricted stock
issued pursuant to the Long-Term Incentive Program that is
unvested at the effective time of the merger will be converted
into the right to receive $32.00 in cash at the effective time
of the merger, less applicable income and employment tax
withholding. Assuming all of these restricted shares are
outstanding at the effective date of the merger, the holders of
these shares will receive, prior to tax withholdings, an
aggregate of $1,313,312. Each share of restricted stock not
issued pursuant to the Long-Term Incentive Program that is
unvested at the effective time of the merger will be converted
into the right to receive $32.00 in cash, plus
5
interest from the effective time of the merger and less
applicable income and employment tax withholding, at the
earliest of (1) the normal vesting date for the restricted
stock or an agreed retention date, provided the employee remains
continuously employed by Marshall & Ilsley or its
subsidiaries through that date, or (2) the date of
termination of employment if the employees position is
involuntarily impacted or the employee terminates employment for
certain specified reasons or (3) an accelerated date
determined by Marshall & Ilsley in its sole
discretion. Assuming all of these outstanding restricted shares
vest at the effective date of the merger (either automatically
or at Marshall & Ilsleys election), the holders of
these shares will receive, prior to tax withholdings, an
aggregate of $5,928,704.
For additional information regarding the terms of the options,
deferred shares and restricted stock and the effect of the
merger on them, see The Merger Agreement
Treatment of First Indiana Stock Options, Deferred Shares and
Restricted Shares beginning on page 33.
Interests
of Certain Persons in the Merger
You should be aware that some of First Indianas directors
and officers may have interests in the merger that are different
from, or in addition to, their interests as shareholders. First
Indianas board of directors was aware of these interests
and took them into account in approving the merger. These
interests are as follows:
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Directors and executive officers of First Indiana held stock
options that entitled them to purchase, in the aggregate, up to
476,959 shares of First Indianas common stock as of
October 17, 2007. Under the merger agreement, assuming none
of such options are exercised or forfeited, the directors and
executive officers holding these options will receive, prior to
tax withholdings, a net aggregate of $8,356,674 in cash at the
effective time of the merger.
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As of October 17, 2007, certain of the directors and
executive officers of First Indiana had a right to receive, in
the aggregate, 36,936 deferred shares of First
Indianas common stock subject to specified conditions.
Under the merger agreement, assuming all of these deferred share
rights are outstanding at the effective date of the merger, the
directors and executive officers holding these rights will
receive, prior to tax withholdings, an aggregate of $1,181,953
in cash at the effective time of the merger.
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Directors and executive officers of First Indiana held in the
aggregate 158,308 shares of First Indianas restricted
stock as of October 17, 2007. Under the merger agreement,
assuming all of these outstanding restricted shares vest at the
effective date of the merger (either automatically or at
Marshall & Ilsleys election), the directors and
executive officers holding these shares will receive, prior to
tax withholdings, an aggregate of $5,065,856 in cash at the
effective time of the merger.
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Certain executive officers of First Indiana have employment
agreements that provide for continued employment for a period
after a change in control and that provide for the executive to
receive, in the event his employment is terminated without cause
or he terminates his employment for good reason prior to the end
of that period, all the benefits he would have received during
the remainder of such term had his employment not terminated.
Under these agreements, if the employment of all six of such
executive officers were terminated without cause at the
effective time of the merger, they would be entitled to receive
an aggregate of approximately $7,224,679. Five of these
executives will also receive bonuses under First Indianas
2007 Management Incentive Plan in the aggregate amount of
$900,000 as a result of the occurrence of the merger. In
addition, certain directors and executive officers of First
Indiana are participants in a nonqualified supplemental pension
plan, the benefits under which become fully vested upon
termination of the plan or upon the occurrence of a change in
control. Under the merger agreement, this plan is to be frozen
at or before the effective time of the merger. Assuming benefit
accruals under the plan cease as of December 31, 2007 and
assuming the plan is terminated and all of such participants
elect to receive lump sum distributions on January 2, 2008
equal to the then present value of their accrued pension
benefits under the plan, these participants would receive, prior
to tax withholdings, cash distributions on January 2, 2008
in the aggregate amount of $5,685,583.
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Marshall & Ilsley has indicated its intention to enter
into consulting agreements with Marni McKinney and Robert
Warrington to be effective following the effective time of the
merger and to appoint Marni McKinney
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and Robert Warrington to Marshall & Ilsleys
Indiana community bank board. It is anticipated that each
consulting agreement will be for a term of two years and will
provide for payments of $10,000 per month during the first year
and $10,000 per quarter during the second year (a total of
$160,000) for community bank board and consulting services. At
Marshall & Ilsleys option, some of the amounts
otherwise payable to Ms. McKinney or Mr. Warrington as a result
of the termination of their employment agreements with First
Indiana may instead be paid to them as increased consulting fees
to reflect more accurately the value of their services and the
restrictions on competition to which they will be subject after
the merger.
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Marshall & Ilsley and at least three current officers
of First Indiana (David L. Maraman, Tim S. Massey and Reagan K.
Rick), will enter into employment or other agreements which will
be effective immediately following the effective time of the
merger. These new agreements will contain no material increases
in salaries, potential bonuses or aggregate benefits compared to
those officers current employment agreements with First
Indiana.
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Marshall & Ilsley has agreed that for a period after
the effective date of the merger, it will succeed to First
Indianas obligations with respect to indemnification or
exculpation now existing in favor of the directors and officers
of First Indiana and First Indiana Bank as provided in First
Indianas articles of incorporation and by-laws.
Marshall & Ilsley has also agreed to maintain
directors and officers liability insurance in force
for the directors and officers of First Indiana for a period of
six years following the effective time of the merger, subject to
certain conditions in the merger agreement.
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For additional information regarding these interests in the
proposed merger, see The Merger Interests of
Certain Persons in the Merger beginning on page 22.
Tax
Consequences of the Merger
A First Indiana shareholder exchanging all of his, her or its
shares of First Indiana common stock for cash in the merger will
recognize gain or loss in an amount equal to the difference
between the amount of cash received and the First Indiana
shareholders aggregate tax basis in the shares of First
Indiana common stock surrendered for cash. To review the tax
consequences of the merger to First Indiana shareholders in
greater detail, see The Merger Material United
States Federal Income Tax Consequences beginning on
page 23.
7
Why am I
receiving these materials?
The board of directors of First Indiana Corporation, an Indiana
corporation, is providing these proxy materials for you in
connection with First Indianas special meeting of
shareholders. The meeting will be held on Wednesday,
December 19, 2007. As a shareholder, you are entitled to
and requested to vote on the items of business described in this
proxy statement. All shareholders as of the record date may
attend the special meeting.
What am I
voting on?
You are voting on the proposed merger of First Indiana with a
subsidiary of Marshall & Ilsley Corporation, after
which First Indiana will be a wholly-owned subsidiary of
Marshall & Ilsley Corporation. In addition, you are
being asked to approve a proposal to adjourn or postpone the
special meeting to permit further solicitation of proxies in the
event that an insufficient number of shares is present in person
or by proxy to approve the merger.
How much
will I receive for each share of First Indiana Corporation
common stock that I own?
If you are a shareholder at the effective time of the merger,
you will receive a cash payment equal to $32.00 for each share
of First Indiana Corporation common stock that you properly
deliver to Marshall & Ilsley Corporations
exchange agent.
Should I
send in my stock certificates now?
No. You should not send in your stock certificates at this time.
Marshall & Ilsley Corporations exchange agent
will send you instructions for exchanging your First Indiana
common stock certificates for the merger consideration promptly
after the merger is completed.
What are
the Federal income tax consequences of the merger?
The cash that you receive in the merger in exchange for your
shares of First Indiana common stock will be subject to United
States federal income tax and also may be taxed under applicable
state, local and foreign tax laws. In general, you may recognize
gain or loss equal to the difference between the amount of cash
you receive and your adjusted tax basis in your shares of First
Indiana common stock. We recommend that you read the section
titled The Merger Material United States
Federal Income Tax Consequences in this proxy statement
for a more detailed explanation of the tax consequences of the
merger. You should consult your tax advisor regarding the
specific tax consequences of the merger applicable to you.
When is
the merger expected to be completed?
We must first obtain the necessary regulatory approvals and the
approval of shareholders at the special meeting. We currently
expect to complete the merger in early January 2008.
How does
the board recommend that I vote?
Our board recommends that you vote your shares FOR
approval of the merger agreement and the merger and
FOR the proposal to adjourn or postpone the meeting
to allow extra time to solicit proxies if necessary.
Who is
entitled to vote, and how many votes are needed for
approval?
Shareholders as of the close of business on October 17,
2007, the record date, are entitled to vote. Each shareholder is
entitled to one vote for each share of common stock held on the
record date. As of the record date, 16,543,966 shares of
First Indianas common stock were issued and outstanding.
The merger cannot be completed unless the merger agreement is
adopted and the merger and the other transactions contemplated
by the merger agreement are approved by the affirmative vote of
the holders of at least a majority of the outstanding shares of
First Indiana common stock. An abstention, non-vote, or broker
non-vote will effectively be a vote against approval of the
merger agreement.
In connection with the execution of the merger agreement,
certain officers and directors of First Indiana, including
Robert H. McKinney and Marni McKinney, have agreed to vote their
shares in favor of the adoption of the
8
merger agreement and approval of the merger. The shares subject
to this voting agreement represent in the aggregate
approximately 16.6% of the outstanding First Indiana common
stock as of the record date for the special meeting.
Approval of the proposal to adjourn or postpone the meeting to
allow extra time to solicit proxies requires more votes cast in
favor of the proposal than are cast against it.
How do I
vote?
Sign and date each proxy card you receive and return the card(s)
in the prepaid envelope, or vote your proxy by telephone or
through the Internet in accordance with the instructions on your
proxy card. If you return your signed proxy card(s) but do not
indicate your voting preferences, we will vote on your behalf
FOR approval of the merger agreement and the merger and FOR
approval of the proposal to adjourn or postpone the meeting if
necessary.
If you received more than one proxy card, it means you hold
shares registered in more than one account. Please sign and
return all proxy cards to ensure that all your shares are voted.
Can I
change my vote after I submit my proxy with voting
instructions?
Yes. There are three ways you can change your vote. First, you
may send a written notice to the person to whom you submitted
your proxy stating that you would like to revoke your proxy.
Second, you may complete and submit a new proxy card by mail or
submit your proxy with new voting instructions. Your shares will
be voted in accordance with the latest proxy actually received
by First Indiana prior to the special meeting of the
shareholders of First Indiana. Any earlier proxies will be
revoked. Third, you may attend the special meeting and vote in
person. Any earlier proxies will be revoked. Simply attending
the meeting without voting, however, will not revoke your proxy.
If you have instructed a broker to vote your shares, you must
follow directions you will receive from your broker to change or
revoke your proxy.
If my
shares are held in street name by my broker, will my
broker vote my shares for me?
Your broker will not be able to vote your shares without
instructions from you. You should instruct your broker to vote
your shares by following the directions your broker provides.
Your failure to instruct your broker to vote your shares will
result in your shares not being voted. If you fail to return a
proxy card or abstain from voting, the effect will be a vote
against the merger.
What
happens if additional matters are presented at the special
meeting?
Other than the approval of the merger agreement, as described
above, and possibly the approval of the proposal to adjourn or
postpone the meeting to solicit additional proxies, we are not
aware of any business to be acted upon at the special meeting.
If you grant a proxy, the persons named as proxies, Gerald L.
Bepko, Anat Bird, Pedro P. Granadillo, William G. Mays, Phyllis
W. Minott or Michael W. Wells (all independent directors), will
have the discretion to vote your shares on any additional
matters properly presented for a vote at the meeting.
Who will
pay for the cost of this proxy solicitation?
We will pay the cost of soliciting proxies. Proxies may be
solicited on our behalf by directors, officers, or employees in
person or by telephone, electronic transmission, or facsimile
transmission.
Who can
help answer my questions?
If you have questions or would like to receive additional copies
of this proxy statement or voting materials, please contact
First Indiana Corporation Investor Relations, 135 North
Pennsylvania Street, Indianapolis, Indiana 46204,
(317) 269-1290,
or send an email to investorrelations@firstindiana.com.
9
SPECIAL
MEETING OF FIRST INDIANAS SHAREHOLDERS
Date,
Place, Time and Purpose
First Indianas board of directors is sending you this
proxy statement and proxy to use at the special meeting. At the
special meeting, the First Indiana board of directors will ask
you to vote on a proposal to approve the merger agreement and
the transactions contemplated by the merger agreement, including
the merger. The special meeting will be held at First Indiana
Plaza, Second Floor Conference Center, 135 North Pennsylvania
Street, Indianapolis, Indiana 46204, at 10:00 a.m., EST, on
December 19, 2007.
Record
Date, Voting Rights, Quorum and Required Vote
First Indiana has set the close of business on October 17,
2007, as the record date for determining the holders of First
Indiana common stock entitled to notice of and to vote at the
special meeting. Only First Indiana shareholders at the close of
business on the record date are entitled to notice of and to
vote at the special meeting. As of the record date, there were
16,543,966 shares of First Indiana common stock outstanding
and entitled to vote at the special meeting. There must be at
least a majority of First Indianas issued and outstanding
shares present in person or by proxy at the special meeting in
order for the vote on the merger agreement to occur.
Approval of the merger agreement will require the affirmative
vote of at least a majority of First Indianas issued and
outstanding shares. Each share is entitled to one vote. Broker
non-votes and abstentions from voting will have the same effect
as voting against the merger agreement.
First Indianas Board of Directors believes that the merger
agreement and the transactions contemplated by the merger
agreement, including the merger, are in the best interests of
First Indiana and has approved the merger agreement and the
merger.
FIRST INDIANAS BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR ADOPTION AND APPROVAL OF THE MERGER
AGREEMENT AND THE MERGER.
Voting
and Revocability of Proxies
You may vote in person at the special meeting or by proxy. To
ensure your representation at the special meeting, we recommend
you vote by proxy even if you plan to attend the special
meeting. You may change your proxy vote at the special meeting.
First Indiana shareholders whose shares are held in street
name by their broker, bank or other nominee must follow
the instructions followed by their broker, bank or other nominee
to vote their shares.
Voting instructions are included on your proxy form. You may
vote your proxy by mail, by telephone or through the Internet.
If you properly complete and timely submit your proxy, your
shares will be voted as you have directed. You may vote for,
against, or abstain with respect to the approval of the merger
agreement and approval of the proposal to adjourn or postpone
the special meeting if necessary. If you are the record holder
of your shares and submit your proxy without specifying a voting
instruction, your shares will be voted FOR approval
of the merger agreement and FOR any motion to
adjourn or postpone the special meeting to solicit additional
proxies in the event that an insufficient number of shares is
present in person or by proxy to approve the merger.
You may revoke your proxy before it is voted by:
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filing with the corporate secretary of First Indiana a duly
executed revocation of proxy;
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submitting a new proxy with a later date; or
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voting in person at the special meeting.
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Attendance at the special meeting will not, in and of itself,
constitute a revocation of a proxy. All written notices of
revocation and other communication with respect to the
revocation of proxies should be addressed to: First Indiana
Corporation, 135 North Pennsylvania Street, Suite 1000,
Indianapolis, Indiana 46204, Attention: Corporate Secretary.
10
Pursuant to the merger agreement, First Indiana will pay for
this proxy solicitation. In addition to soliciting proxies by
mail, directors, officers and employees of First Indiana may
solicit proxies personally and by telephone. None of these
persons will receive additional or special compensation for
soliciting proxies. First Indiana will, upon request, reimburse
brokers, banks and other nominees for their expenses in sending
proxy materials to their customers who are beneficial owners and
obtaining their voting instructions.
Proposal
to Adjourn or Postpone the Special Meeting
In addition to the proposal to approve the merger agreement, you
are also being asked to approve a proposal to adjourn or
postpone the special meeting to permit further solicitation of
proxies in the event that an insufficient number of shares is
present in person or by proxy to approve the merger agreement.
Pursuant to Indiana law, the holders of at least a majority of
the outstanding shares of First Indianas common stock are
required to approve the merger agreement. It is rare for a
company to achieve 100% (or even 90%) shareholder participation
at a meeting of shareholders, and only a majority of the holders
of the outstanding shares of common stock of First Indiana are
required to be represented at the special meeting, in person or
by proxy, in order for a quorum to be present. In the event that
shareholder participation at the special meeting is lower than
expected, First Indiana would like the flexibility to adjourn or
postpone the special meeting in order to attempt to secure
broader shareholder participation in the decision to merge the
two companies.
Approval of the proposal to adjourn or postpone the special
meeting to allow extra time to solicit proxies (Proposal 2
on your proxy card) requires more votes to be cast in favor of
the proposal than are cast against it. Abstentions and broker
non-votes will not be treated as NO votes (as they
are with respect to the approval of the merger agreement) and,
therefore, will have no effect on this proposal.
FIRST INDIANAS BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR THIS PROPOSAL.
The purpose of the special meeting is to vote on the approval of
the merger agreement by and among Marshall & Ilsley,
First Indiana and FIC Acquisition Corporation, a wholly-owned
subsidiary of Marshall & Ilsley formed for the purpose
of effecting the merger (the Merger Sub), and the
transactions contemplated therein, including the merger of FIC
Acquisition Corporation into First Indiana. After the
consummation of the merger, First Indiana will be a wholly-owned
subsidiary of Marshall & Ilsley.
If the merger is completed, your shares of First Indiana common
stock will be converted into the right to receive cash equal to
$32.00 per share.
Under the merger agreement, the officers and directors of the
Merger Sub appointed by Marshall & Ilsley and serving
at the effective time of the merger will serve as the officers
and directors of First Indiana after the merger is consummated.
The Articles of Incorporation and By-Laws of First Indiana in
existence as of the effective time of the merger will remain the
Articles of Incorporation and By-Laws of the surviving
corporation following the effective time of the merger, until
such Articles of Incorporation and By-Laws are further amended
as provided by applicable law.
The board of directors and management of First Indiana have
periodically explored and discussed strategic options
potentially available to First Indiana in light of the
increasing competition and continuing consolidation in the
banking and financial services industry. These strategic
discussions have included the possibility of business
combinations involving First Indiana and other financial
institutions. Until mid-2007, the First Indiana board of
11
directors had concluded that First Indianas shareholders,
customers and employees were best served by First Indiana
remaining as an independent financial institution.
On Friday, June 22, 2007, Robert Warrington, First
Indianas Chief Executive Officer, Marni McKinney, First
Indianas Chairman of the Board, and Robert McKinney, the
Chairman of First Indianas Executive Committee of the
board of directors, met to consider various strategic options
available to First Indiana in light of recent changes in the
economic climate in general and in the mortgage and credit
markets in particular. Following that meeting,
Mr. Warrington placed a telephone call to Mark Furlong,
President and Chief Executive Officer of Marshall &
Ilsley, with whom he was acquainted as a result of business
transactions both prior to and during his tenure at First
Indiana. In an attempt to gauge the level of interest of other
financial institutions in a possible business combination with
First Indiana, Mr. Warrington advised Mr. Furlong that
First Indiana was considering a sale. In January 2006,
Marshall & Ilsley had purchased First Indianas
trust division for $15 million in cash. First Indiana also
maintains correspondent banking and vendor relationships with
Marshall & Ilsley subsidiaries. Mr. Warrington,
Ms. McKinney and Mr. McKinney contacted the other
members of First Indianas board of directors on June 22
and 23, 2007 to arrange a special meeting for Monday,
June 25, 2007.
In the special meeting of the First Indiana board of directors
held June 25, 2007, the board determined that due to
increasing competition from other financial institutions,
changes in the economy that would likely require increased
reserves for consumer loan losses and possible future increases
in the capital gains tax rates, among other factors, it would be
prudent at this time to explore strategic alternatives to
remaining an independent financial institution. Accordingly, the
board directed Mr. Warrington to explore the potential for
a merger of First Indiana with another financial institution.
The board also approved the engagement of Sandler
ONeill & Partners, L.P., an investment banking
firm, to assist First Indiana in exploring its strategic
alternatives and locating and evaluating potential merger
partners.
Mr. Warrington contacted Sandler ONeill and requested
Sandler ONeill to initiate a competitive auction among
probable bidders for First Indiana, while minimizing the impact
on First Indianas business, reputation, customers,
employees and the community. Between June 25 and July 3,
Sandler ONeill personally contacted the chief executive
officers of five domestic banking companies that would likely be
interested in acquiring First Indiana, as well as the United
States head of mergers and acquisitions for a large,
foreign-based financial institution and the chief executive of
domestic operations for the United States affiliate of another
foreign financial institution. In addition, Mr. Warrington
personally contacted Mr. Furlong, the president of
Marshall & Ilsley.
Of the financial institutions contacted, four elected to submit
bids to acquire First Indiana. Each was instructed to present
its highest and best bid, and these bids were received on
July 3, 2007. All four bids were for between $30.00 per
share and $31.00 per share. One of the bids was an all cash
offer, one specified it could be for any combination of cash and
stock at First Indianas election and the other two bids
were for a combination of cash and stock of the acquiring
organization.
In a later conversation with Mr. Warrington,
Mr. Furlong increased Marshall & Ilsleys
bid to an all-cash offer of $32.00 per share. Mr. Furlong
also made commitments to First Indiana regarding the treatment
of First Indianas employees, customers and local community
in a merger involving Marshall & Ilsley and First
Indiana. Mr. Warrington consulted with Robert McKinney and
Marni McKinney, and they concluded that the amount of Marshall
& Ilsleys increased offer, the impact of a
transaction with Marshall & Ilsley on First Indianas
employees, customers and community and the fact that an all-cash
transaction would allow shareholders to avoid the risks of
accepting stock in the current market for financial institution
stock, made a transaction with Marshall & Ilsley the
most favorable for First Indiana and its shareholders. The three
of them therefore decided not to seek additional bids or pursue
further discussions with the other parties and to pursue a
possible transaction with Marshall & Ilsley if
satisfactory terms could be reached.
On Thursday, July 5, 2007, First Indiana executed a
confidentiality agreement with Marshall & Ilsley. From
Thursday, July 5, 2007 to Sunday, July 8, 2007,
Marshall & Ilsley and its counsel conducted due
diligence investigations, including investigations at First
Indianas offices on July 7 and July 8.
12
On Friday, July 6, 2007, First Indiana formally engaged
Sandler ONeill to act as First Indianas strategic
advisor in connection with a possible business combination
transaction and executed a confidentiality agreement with
Sandler ONeill.
Between July 5, 2007 and July 8, 2007, First Indiana
and its counsel and Marshall & Ilsley and its counsel
negotiated the terms of a definitive merger agreement and a
stockholder voting agreement to be signed by the directors and
executive officers of First Indiana.
On Saturday, July 7, 2007, members of management and a
representative from Sandler ONeill spoke at length with
two directors who had indicated they would be unavailable for a
special board of directors meeting scheduled for the following
day, and those two directors expressed their support for the
transaction. First Indianas executive officers were also
in contact with the other members of the board of directors to
advise them of the status of negotiations with
Marshall & Ilsley and to make final arrangements for a
special board meeting the next day. Early on Sunday,
July 8, 2007, management of First Indiana delivered to the
members of the board of directors a draft of the definitive
merger agreement for their preliminary review.
On Sunday afternoon, July 8, 2007, the First Indiana board
of directors met to review and consider the merger agreement and
the transactions and agreements contemplated by it, including
the merger. At the meeting, counsel for First Indiana reviewed
for the directors their fiduciary duties to shareholders of
First Indiana. Counsel also reviewed for the board the terms and
conditions of the merger agreement, the merger, and the various
agreements to be signed in connection with the merger agreement.
As a part of the meeting, Sandler ONeill delivered to the
board its opinion that as of that date, and based upon and
subject to the considerations described in its opinion, and
other matters as Sandler ONeill considered relevant, the
per share consideration to be received by First Indiana
shareholders in the merger was fair to the holders of First
Indiana common stock from a financial point of view. The members
of the board of directors in attendance then (1) determined
that the merger agreement and the transactions contemplated
under the merger agreement, including the merger, were fair to
and in the best interests of First Indiana and its shareholders,
(2) recommended that the shareholders of First Indiana
adopt and approve the merger agreement and the merger and
(3) directed that the merger agreement and the merger be
submitted to the shareholders at a special meeting. First
Indiana and Marshall & Ilsley signed the merger
agreement after the board meeting concluded on July 8, 2007.
A joint press release announcing the signing of the merger
agreement was issued by Marshall & Ilsley and First
Indiana on the morning of Monday, July 9, 2007, which was
the first business day following the July 8, 2007 signing
of the merger agreement.
First
Indianas Reasons for the Merger
The First Indiana board of directors determined that the merger
agreement and the merger consideration were in the best
interests of First Indiana and its shareholders and recommends
that First Indiana shareholders vote in favor of the approval of
the merger agreement and the transactions contemplated by the
merger agreement, including the merger.
In its deliberations and in making its determination, the First
Indiana board of directors considered many factors including,
without limitation, the following:
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the fact that the value of the merger consideration represented
a 45.1% premium over the $22.05 closing price of First
Indianas common stock on July 6, 2007 (the last
trading day before the merger was announced);
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the fact that the value of the merger consideration represented
367% of First Indianas March 31, 2007 tangible book
value per share;
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the 28.2% tangible book premium represented by the merger
consideration to First Indianas core deposits as of
March 31, 2007;
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the fact that the value of the merger consideration represented
a multiple of 22.1 times First Indianas earnings per share
for the 12 months ended March 31, 2007;
|
13
|
|
|
|
|
the possibility that, if First Indiana remained independent, the
anticipated value of its common stock in the future, discounted
to present value, would not equal or exceed the cash amount that
its shareholders will receive upon completion of the merger;
|
|
|
|
the increased level of competition within the banking sector
generally and within the market areas served by First Indiana
from other financial institutions and non-bank competitors;
|
|
|
|
the current and prospective economic environment for financial
institutions generally and First Indiana specifically, including
declining net interest margins for many financial institutions,
slower deposit growth and increasing regulatory burdens and
other constraints upon financial institutions;
|
|
|
|
the advantage to First Indiana shareholders of receiving all
cash for their First Indiana common stock and thereby not
assuming any risk associated with the current uncertain market
for financial institution stocks;
|
|
|
|
the effect of the merger on First Indianas and First
Indiana Banks employees, including the prospect of
continued employment and enhanced employment opportunities with
a much larger and more diversified financial organization;
|
|
|
|
the effect of the merger on First Indianas and First
Indiana Banks customers and community, including
Marshall & Ilsleys community banking orientation
and its compatibility with First Indiana; and
|
|
|
|
the opinion delivered by Sandler ONeill &
Partners, L.P. that the merger consideration is fair, from a
financial point of view, to the shareholders of First Indiana.
|
The First Indiana board of directors also identified several
risks, uncertainties and disadvantages of the proposed
transaction including, without limitation, the following:
|
|
|
|
|
the tax effect of an all-cash transaction on First
Indianas shareholders compared with a transaction in which
shareholders received stock of an acquiring financial
institution on a tax-free basis;
|
|
|
|
the possibility that by remaining independent First Indiana
might obtain a higher price for shareholders at some time in the
future;
|
|
|
|
the possible negative effects of the transaction on First
Indianas employees, customers and local community;
|
|
|
|
the possible disruption to First Indianas business that
might result from the announcement of the transaction, the
distractions of its managements attention from the
day-to-day operation of First Indianas business and
certain restrictions in the merger agreement on First
Indianas operations pending the completion of the
merger; and
|
|
|
|
the termination fee to be paid by First Indiana if the merger
agreement were terminated under certain circumstances.
|
The foregoing discussion of the information and factors
considered by First Indiana is not intended to be exhaustive. In
reaching its determination to enter into the merger agreement,
First Indiana did not assign any relative or specific weights to
the foregoing factors.
Marshall & Ilsley will need cash in the amount of
approximately $541 million to fund the purchase price in
the merger. The merger is not subject to any financing
contingency.
Effective
Time of the Merger
Unless First Indiana and Marshall & Ilsley agree
otherwise, the effective time of the merger will be
contemporaneous with the closing, upon filing of articles of
merger and any other required documents with the appropriate
government officials of the State of Indiana and the State of
Wisconsin, unless a later date is specified in such articles of
merger, in which case such later date will be the effective time
of the merger. Closing will be held at a time and date mutually
agreed upon by Marshall & Ilsley and First Indiana or
on five business days notice after
14
receipt of all necessary government approvals or approval of the
merger agreement by First Indianas shareholders, whichever
is later or, at the election of Marshall & Ilsley, on
the first business day of the month following the month in which
these conditions are satisfied. First Indiana and
Marshall & Ilsley each will have the right, but not
the obligation, to terminate the merger agreement if the
effective time of the merger does not occur on or before
February 29, 2008 (or March 31, 2008, if the reason
the merger is not completed by such date is due to the failure
to obtain the required regulatory approvals or the required
waiting periods have not yet expired or been terminated), unless
the failure of the merger to occur by such date is due to the
failure of the party seeking such termination to comply with its
obligations under the merger agreement.
Marshall & Ilsley will deposit, or cause to be
deposited, from time to time, with the exchange agent, the per
share merger consideration to be paid and issued pursuant to the
merger in exchange for outstanding shares of First Indiana
common stock. Continental Stock Transfer &
Trust Company will act as the exchange agent for the
benefit of the holders of certificates of First Indiana common
stock.
After the effective time of the merger, you will cease to have
any rights as a holder of First Indiana common stock, and your
sole right will be your right to receive the per share merger
consideration into which your shares of First Indiana common
stock will have been converted by virtue of the merger. The
merger consideration will not bear interest.
As soon as reasonably practicable after the effective time of
the merger, but in no event more than ten business days after
the effective time of the merger, the exchange agent will send
to you a letter of transmittal and instructions for use in
submitting to the exchange agent certificates formerly
representing shares of your First Indiana common stock to be
exchanged for the per share merger consideration. You will also
receive instructions for handling share certificates that have
been lost, stolen or destroyed. Upon receipt of the First
Indiana common stock certificates or, in the case of lost,
stolen or destroyed share certificates, such documentation as is
required by Marshall & Ilsley, subject to any
applicable abandoned property, escheat or similar laws, the
exchange agent will forward to you the cash which you are
entitled to receive in exchange for your shares of First Indiana
common stock.
Please DO NOT return your First Indiana stock certificates
with the enclosed proxy card. You should not submit your First
Indiana stock certificates until you have received written
instructions from the exchange agent to do so.
On the business day immediately preceding the effective time of
the merger, the stock transfer books of First Indiana will be
closed and no transfer of First Indiana common stock will
thereafter be made on First Indianas stock transfer books.
If a certificate formerly representing First Indiana common
stock is presented to First Indiana or Marshall &
Ilsley, it will be forwarded to the exchange agent for
cancellation and exchange for the per share merger consideration.
Opinion
of First Indianas Financial Advisor
By letter dated July 6, 2007, First Indiana retained
Sandler ONeill to act as its financial advisor in
connection with a possible business combination. Sandler
ONeill is a nationally recognized investment banking firm
whose principal business specialty is financial institutions.
First Indiana chose Sandler ONeill because of its
reputation and abilities. In the ordinary course of its
investment banking business, Sandler ONeill is regularly
engaged in the valuation of financial institutions and their
securities in connection with mergers and acquisitions and other
corporate transactions.
Sandler ONeill acted as financial advisor to First Indiana
in connection with the proposed merger and participated in
certain of the negotiations leading to execution of the merger
agreement. At the July 8, 2007 meeting at which First
Indianas board considered and approved the merger
agreement, Sandler ONeill delivered to the board its oral
opinion, subsequently confirmed in writing, that, as of such
date, the per share merger consideration was fair to First
Indianas shareholders from a financial point of view.
The full text of Sandler ONeills opinion is
attached as
Appendix B
to this proxy statement. The
opinion outlines the procedures followed, assumptions made,
matters considered and qualifications and limitations on the
review undertaken by Sandler ONeill in
15
rendering its opinion. The description of the opinion set
forth below is qualified in its entirety by reference to the
opinion. Sandler ONeill urges First Indiana shareholders
to read the entire opinion carefully in connection with their
consideration of the proposed merger.
Sandler ONeills opinion speaks only as of the
date of the opinion. The opinion was directed to the First
Indiana board and is directed only to the fairness of the per
share merger consideration to First Indiana shareholders from a
financial point of view. It does not address the underlying
business decision of First Indiana to engage in the merger or
any other aspect of the merger and is not a recommendation to
any First Indiana shareholder as to how such shareholder should
vote at the special meeting with respect to the merger agreement
or any other matter.
In connection with rendering its July 8, 2007 opinion,
Sandler ONeill reviewed and considered, among other things:
(1) the merger agreement;
(2) certain publicly available financial statements and
other historical financial information of First Indiana that
Sandler ONeill deemed relevant;
(3) certain publicly available financial statements and
other historical financial information of Marshall &
Ilsley that Sandler ONeill deemed relevant in determining
Marshall & Ilsleys financial capacity to
undertake the merger;
(4) certain publicly available financial estimates for
First Indiana for the years ending December 31, 2007
through December 31, 2008 as published by I/B/E/S and
internal financial projections for the years ended
December 31, 2009 through December 31, 2011 as
prepared by senior management of First Indiana;
(5) to the extent publicly available, the financial terms
of certain recent business combinations in the commercial
banking industry;
(6) the current market environment generally and the
banking environment in particular; and
(7) such other information, financial studies, analyses and
investigations and financial, economic and market criteria as
Sandler ONeill considered relevant.
Sandler ONeill also discussed with certain members of
senior management of First Indiana the business, financial
condition, results of operations and prospects of First Indiana.
In performing its reviews and analyses and in rendering its
opinion, Sandler ONeill relied upon the accuracy and
completeness of all of the financial and other information that
was available to it from public sources for First Indiana and
Marshall & Ilsley, that was provided to it by First
Indiana or its representatives, or that was otherwise reviewed
by Sandler ONeill and has assumed such accuracy and
completeness for purposes of rendering the opinion. Sandler
ONeill further relied on the assurances of management of
First Indiana that they were not aware of any facts or
circumstances that would make any such information inaccurate or
misleading. Sandler ONeill has not been asked to
undertake, and has not undertaken, an independent verification
of any of such information and Sandler ONeill does not
assume any responsibility or liability for the accuracy or
completeness thereof. Sandler ONeill did not make an
independent evaluation or appraisal of the specific assets, the
collateral securing assets or the liabilities (contingent or
otherwise) of First Indiana or Marshall & Ilsley or
any of their subsidiaries, or the collectibility of any such
assets, nor has Sandler ONeill been furnished with any
such evaluations or appraisals. Sandler ONeill did not
make an independent evaluation of the adequacy of the allowance
for loan losses of First Indiana or Marshall & Ilsley
nor has Sandler ONeill reviewed any individual credit
files relating to First Indiana or Marshall & Ilsley.
Sandler ONeill assumed, with First Indianas consent,
that the respective allowances for loan losses for both First
Indiana and Marshall & Ilsley are adequate to cover
such losses.
Sandler ONeills opinion was necessarily based upon
market, economic and other conditions as they existed on, and
could be evaluated as of, the date of its opinion. Sandler
ONeill assumed, in all respects material to its analysis,
that all of the representations and warranties contained in the
merger agreement and all related agreements are true and
correct, that each party to such agreements will perform all of
the covenants required to be performed by such party under such
agreements and that the conditions precedent in the merger
agreement are not waived.
16
Sandler ONeill also assumed, with First Indianas
consent, that there has been no material change in First
Indianas and Marshall & Ilsleys assets,
financial condition, results of operations, business or
prospects since the date of the last financial statements made
available to them and that First Indiana and
Marshall & Ilsley will remain as going concerns for
all periods relevant to its analyses. Finally, with First
Indianas consent, Sandler ONeill relied upon the
advice received from its legal, accounting and tax advisors as
to all legal, accounting and tax matters relating to the merger
agreement and the other transactions contemplated by the merger
agreement.
With respect to the publicly available earnings estimates and
long-term earnings estimates for First Indiana used by Sandler
ONeill in its analyses, the senior management of First
Indiana confirmed to Sandler ONeill that those estimates
reflected the best currently available estimates and judgments
of such management of the future financial performance of First
Indiana. With respect to all estimates used in its analyses,
Sandler ONeill assumed that financial performance
reflected in those estimates would be achieved. Sandler
ONeill expressed no opinion as to such estimates or the
assumptions on which they were based. These estimates, as well
as the other estimates used by Sandler ONeill in its
analyses, were based on numerous variables and assumptions which
are inherently uncertain and, accordingly, actual results could
vary materially from those set forth in such projections.
In rendering its July 8, 2007 opinion, Sandler ONeill
performed a variety of financial analyses. The following is a
summary of the material analyses performed by Sandler
ONeill, but is not a complete description of all the
analyses underlying Sandler ONeills opinion. The
summary includes information presented in tabular format.
In
order to fully understand the financial analyses, these tables
must be read together with the accompanying text. The tables
alone do not constitute a complete description of the financial
analyses.
The preparation of a fairness opinion is a complex
process involving subjective judgments as to the most
appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances.
The process, therefore, is not necessarily susceptible to a
partial analysis or summary description. Sandler ONeill
believes that its analyses must be considered as a whole and
that selecting portions of the factors and analyses considered
without considering all factors and analyses, or attempting to
ascribe relative weights to some or all such factors and
analyses, could create an incomplete view of the evaluation
process underlying its opinion. Also, no company included in
Sandler ONeills comparative analyses described below
is identical to First Indiana and no transaction is identical to
the merger described herein. Accordingly, an analysis of
comparable companies or transactions involves complex
considerations and judgments concerning differences in financial
and operating characteristics of the companies and other factors
that could affect the public trading values or merger
transaction values, as the case may be, of First Indiana or
Marshall & Ilsley and the companies to which they are
being compared.
In performing its analyses, Sandler ONeill also made
numerous assumptions with respect to industry performance,
business and economic conditions and various other matters, many
of which cannot be predicted and are beyond the control of First
Indiana, Marshall & Ilsley and Sandler ONeill.
The analyses performed by Sandler ONeill are not
necessarily indicative of actual values or future results, which
may be significantly more or less favorable than suggested by
such analyses. Sandler ONeill prepared its analyses solely
for purposes of rendering its opinion and provided such analyses
to the First Indiana board at the boards July 8, 2007
meeting. Estimates on the values of companies do not purport to
be appraisals or necessarily reflect the prices at which
companies or their securities may actually be sold. Such
estimates are inherently subject to uncertainty and actual
values may be materially different. Accordingly, Sandler
ONeills analyses do not necessarily reflect the
value of First Indianas common stock or the price at which
First Indianas or Marshall & Ilsleys
common stock may be sold at any time.
17
Summary of the Merger.
Sandler ONeill
reviewed the financial terms of the merger agreement. Using the
$32.00 cash price for each share of First Indiana common stock
and based upon per share financial information for First Indiana
for the twelve months ended March 31, 2007, Sandler
ONeill calculated the following ratios:
Transaction
Ratios
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|
|
|
|
|
|
|
|
Deal Price / Last 12 Months Earnings Per Share
|
|
|
|
|
|
|
22.1
|
x
|
Deal Price / Projected 2007 Earnings Per Share
|
|
|
|
|
|
|
21.3
|
x
|
Deal Price / Projected 2008 Earnings Per Share
|
|
|
|
|
|
|
19.8
|
x
|
Deal Price / Book Value Per Share
|
|
|
|
|
|
|
298
|
%
|
Deal Price / Tangible Book Value Per Share
|
|
|
|
|
|
|
367
|
%
|
Tangible Book Premium / Core Deposits(1)
|
|
|
|
|
|
|
28.2
|
%
|
Deal Price / Market Value (1 day prior)(2)
|
|
|
|
|
|
|
45.1
|
%
|
Deal Price / Market Value (30 calendar days prior)(3)
|
|
|
|
|
|
|
53.5
|
%
|
Deal Price / Market Value (52-week high)(4)
|
|
|
|
|
|
|
19.0
|
%
|
|
|
|
(1)
|
|
Assumes core deposits of $1,413 million.
|
|
(2)
|
|
Based on First Indiana Corporations closing stock price of
$22.05 on July 6, 2007.
|
|
(3)
|
|
Based on First Indiana Corporations closing stock price of
$20.85 on June 6, 2007.
|
|
(4)
|
|
Based on First Indiana Corporations closing stock price of
$26.89 on July 20, 2006.
|
For purposes of Sandler ONeills analyses, earnings
per share were based on fully diluted earnings per share. The
aggregate transaction value was approximately
$541.8 million, based upon 16,523,289 shares of First
Indiana common stock outstanding and including the intrinsic
value of options to purchase 743,836 shares of First
Indiana common stock at a weighted average strike price of
$14.44.
Comparable Company Analysis.
Sandler
ONeill used publicly available information to compare
selected financial and market trading information for First
Indiana with the following group of commercial banks located in
the Midwest selected by Sandler ONeill:
|
|
|
Midwest Banc Holdings Inc.
|
|
Macatawa Bank Corp.
|
Integra Bank Corp.
|
|
Mercantile Bank Corp.
|
Old Second Bancorp Inc.
|
|
Farmers Capital Bank Corp.
|
MainSource Financial Group, Inc.
|
|
Peoples Bancorp Inc.
|
Great Southern Bancorp, Inc.
|
|
Lakeland Financial Corp.
|
First Financial Corp.
|
|
Enterprise Financial Services Corp.
|
18
The analysis compared publicly available financial and market
trading information for First Indiana and the peer group as of
and for the twelve-month period ended March 31, 2007 with
pricing data as of July 6, 2007. The data is summarized in
the table below.
Comparable
Group Analysis
|
|
|
|
|
|
|
|
|
|
|
First Indiana
|
|
Peer Group
|
|
|
Corporation
|
|
Median
|
|
|
(In millions)
|
|
Total Assets
|
|
$
|
2,124
|
|
|
$
|
2,162
|
|
Tangible Equity / Tangible Assets
|
|
|
6.88
|
%
|
|
|
7.04
|
%
|
Last Twelve Months Return on Average Assets
|
|
|
1.17
|
%
|
|
|
1.03
|
%
|
Last Twelve Months Return on Average Equity
|
|
|
13.7
|
%
|
|
|
12.0
|
%
|
Price / Tangible Book Value
|
|
|
253
|
%
|
|
|
206
|
%
|
Price / Last Twelve Months Earnings Per Share
|
|
|
15.2
|
x
|
|
|
14.4
|
x
|
Price / Estimated 2007 Earnings Per Share
|
|
|
14.7
|
x
|
|
|
13.3
|
x
|
Price / Estimated 2008 Earnings Per Share
|
|
|
13.6
|
x
|
|
|
12.3
|
x
|
Market Capitalization
(in millions)
|
|
$
|
364
|
|
|
$
|
311
|
|
Stock Trading History.
Sandler ONeill
reviewed the history of the reported trading prices and volume
of First Indianas common stock for the three-year period
ended July 6, 2007. Sandler ONeill compared the
relationship between the movements in the prices of First
Indianas common stock to movements in the prices of the
NASDAQ Bank Index and the weighted average (by market
capitalization) performance of the comparable peer group
referenced above.
In the three-year period ended July 6, 2007, First Indiana
Corporation outperformed the NASDAQ Bank Index and the Composite
Peer Group.
First
Indiana Corporations Three-Year Stock
Performance
|
|
|
|
|
|
|
|
|
|
|
Beginning Index Value
|
|
Ending Index Value
|
|
|
July 6, 2004
|
|
July 6, 2007
|
|
First Indiana Corporation
|
|
|
100.00
|
%
|
|
|
149.96
|
%
|
Composite Peer Group
|
|
|
100.00
|
|
|
|
95.37
|
|
NASDAQ Bank Index
|
|
|
100.00
|
|
|
|
110.35
|
|
19
Present Value Analysis.
Sandler ONeill
performed an analysis that estimated the net present value per
share through December 31, 2011 of First Indiana common
stock under various circumstances and assuming First Indiana
performs in accordance with analyst earnings per share estimates
for 2007 and 2008. For years after 2008, Sandler ONeill,
in accordance with First Indiana managements guidance,
assumed that First Indiana would meet its internal earnings
estimates in each of those years. To approximate the terminal
value of First Indianas common stock at December 31,
2011, Sandler ONeill applied price/earnings multiples
ranging from 12.0x to 18.0x and multiples of tangible book value
ranging from 200% to 300%. The terminal values were then
discounted to present values using different discount rates
ranging from 9.0% to 13.0% chosen to reflect different
assumptions regarding required rates of return of holders or
prospective buyers of First Indiana common stock. As illustrated
in the following tables, this analysis indicated an imputed
range of values per share for First Indiana common stock of
$15.74 to $25.78 when applying the price/earnings multiples and
$17.16 to $27.90 when applying multiples of tangible book value.
Present
Value Per Share Based on Price/Earnings
Net Present Value for Period Ending Dec. 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount Rate
|
|
12.0x
|
|
13.0x
|
|
14.0x
|
|
15.0x
|
|
16.0x
|
|
17.0x
|
|
18.0x
|
|
9.0%
|
|
$
|
18.28
|
|
|
$
|
19.53
|
|
|
$
|
20.78
|
|
|
$
|
22.03
|
|
|
$
|
23.28
|
|
|
$
|
24.53
|
|
|
$
|
25.78
|
|
10.0
|
|
|
17.60
|
|
|
|
18.80
|
|
|
|
20.00
|
|
|
|
21.20
|
|
|
|
22.40
|
|
|
|
23.60
|
|
|
|
24.80
|
|
11.0
|
|
|
16.95
|
|
|
|
18.10
|
|
|
|
19.25
|
|
|
|
20.41
|
|
|
|
21.56
|
|
|
|
22.71
|
|
|
|
23.86
|
|
12.0
|
|
|
16.33
|
|
|
|
17.44
|
|
|
|
18.54
|
|
|
|
19.65
|
|
|
|
20.76
|
|
|
|
21.86
|
|
|
|
22.97
|
|
13.0
|
|
|
15.74
|
|
|
|
16.80
|
|
|
|
17.87
|
|
|
|
18.93
|
|
|
|
19.99
|
|
|
|
21.06
|
|
|
|
22.12
|
|
Present
Value Per Share Based on Tangible Book Value
Net Present Value for Period Ending Dec. 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount Rate
|
|
200%
|
|
220%
|
|
240%
|
|
260%
|
|
280%
|
|
300%
|
|
9.0%
|
|
$
|
19.95
|
|
|
$
|
21.54
|
|
|
$
|
23.13
|
|
|
$
|
24.72
|
|
|
$
|
26.31
|
|
|
$
|
27.90
|
|
10.0
|
|
|
19.20
|
|
|
|
20.73
|
|
|
|
22.25
|
|
|
|
23.78
|
|
|
|
25.31
|
|
|
|
26.83
|
|
11.0
|
|
|
18.49
|
|
|
|
19.95
|
|
|
|
21.42
|
|
|
|
22.88
|
|
|
|
24.35
|
|
|
|
25.82
|
|
12.0
|
|
|
17.81
|
|
|
|
19.22
|
|
|
|
20.63
|
|
|
|
22.03
|
|
|
|
23.44
|
|
|
|
24.85
|
|
13.0
|
|
|
17.16
|
|
|
|
18.52
|
|
|
|
19.87
|
|
|
|
21.22
|
|
|
|
22.57
|
|
|
|
23.92
|
|
20
Analysis of Selected Merger
Transactions.
Sandler ONeill reviewed the
22 merger transactions announced in the United States (the
Nationwide Group) from January 1, 2005 through
July 6, 2007 involving commercial banks as acquired
companies with announced transaction values between
$250 million and $750 million. Sandler ONeill
also separately reviewed the 14 merger transactions announced
from January 1, 2005 through July 6, 2007 involving
commercial banks as targets with headquarters located in major
metropolitan areas (defined as metropolitan statistical areas
with populations of 750,000 or larger) in the Midwest (the
Midwest Group) with announced transaction values
greater than $100 million. Sandler ONeill reviewed
the following multiples: transaction price at announcement to
last twelve months earnings per share, transaction price
to estimated earnings per share, transaction price to book value
per share, transaction price to tangible book value per share,
tangible book value premium to core deposits, and premium to
current market price. Sandler ONeill computed a high, low,
mean, and median multiple for the transactions. The median
multiples from the Nationwide Group and the median multiples for
the Midwest Group were applied to First Indianas financial
information as of and for the twelve months ended March 31,
2007. As illustrated in the following table, Sandler
ONeill derived imputed ranges of values per share for
First Indianas common stock of $26.40 to $35.29 based upon
the median multiples for commercial banks in the Nationwide
Group and $25.59 to $31.19 based upon the median multiples for
commercial banks in the Midwest Group.
Comparable
Transaction Multiples
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Median
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Median
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Nationwide
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Midwest
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Group
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Implied
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Group
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Implied
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Multiple
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Value
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Multiple
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Value
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Transaction Price/Last Twelve Months Earnings Per Share
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21.2
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x
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$
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30.79
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20.7
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x
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$
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30.04
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Transaction Price/Est. 2007 Earnings Per Share(1)
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20.5
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x
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$
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30.68
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20.8
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x
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$
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31.19
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Transaction Price/Book Value
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254.3
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%
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$
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27.31
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268.3
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%
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$
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28.81
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Transaction Price/Tangible Book Value
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342.2
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%
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$
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29.80
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293.8
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%
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$
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25.59
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Tangible Book Premium/Core Deposits(2)
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31.1
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%
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$
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35.29
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22.0
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%
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$
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27.50
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Market Premium(3)
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19.7
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%
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$
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26.40
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26.6
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%
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$
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27.92
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(1)
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Assumes median analysts EPS estimate of $1.50.
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(2)
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Assumes First Indiana Corporations total core deposits are
$1,413 million as of 3/31/07.
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(3)
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Based on the closing price of First Indiana Corporations
common stock of $22.05 on July 6, 2007.
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First Indiana has agreed to pay Sandler ONeill a
transaction fee in connection with the merger of approximately
$5,418,070 (based on First Indianas 16,523,289 common
shares as of April 30, 2007 and 743,836 options outstanding
as of December 31, 2006), of which $250,000 has been paid
and the balance of which is contingent, and payable, upon
closing of the merger. Sandler ONeill has also received a
fee of $500,000 for rendering its fairness opinion. First
Indiana has also agreed to reimburse certain of Sandler
ONeills reasonable out-of-pocket expenses incurred
in connection with its engagement and to indemnify Sandler
ONeill and its affiliates and their respective partners,
directors, officers, employees, agents, and controlling persons
against certain expenses and liabilities, including liabilities
under securities laws.
In the ordinary course of its business as a broker-dealer,
Sandler ONeill may purchase securities from and sell
securities to First Indiana and Marshall & Ilsley and
their affiliates. During the past two years, First Indiana and
its affiliates have paid Sandler ONeill approximately
$53,000 in commissions for such securities transactions, and
Marshall & Ilsley and its affiliates have paid Sandler
ONeill approximately $62,000 in commissions for such
securities transactions. Marshall & Ilsley has not
paid any other fees to Sandler ONeill in the past two
years, and First Indiana has not paid any other fees to Sandler
ONeill in the past two years other than in connection with
the merger, as described above. Sandler ONeill may also
actively trade the debt
and/or
equity securities of First Indiana or Marshall &
Ilsley or their affiliates for its own account and for the
accounts of its customers and, accordingly, may at any time hold
a long or short position in such securities.
21
Interests
of Certain Persons in the Merger
In addition to being shareholders of First Indiana, certain
directors and executive officers of First Indiana and First
Indiana Bank have interests in the proposed merger that are in
addition to the interests they may have as shareholders
generally. These interests are as follows:
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Directors and executive officers of First Indiana held stock
options that entitled them to purchase, in the aggregate, up to
476,959 shares of First Indianas common stock as of
October 17, 2007. Of these, 419,669 were vested (currently
exercisable), and 57,290 were unvested, although options for
31,249 shares will vest prior to completion of the merger. Under
the merger agreement, all such options that remain outstanding
will become fully vested at the effective time of the merger and
will be converted into the right to receive from
Marshall & Ilsley as of the effective date of the
merger an amount equal to the excess of $32.00 per share (the
merger consideration) over the per share exercise price for each
share of First Indiana common stock subject to the option, less
applicable income and employment tax withholding. Assuming none
of such options are exercised or forfeited, the directors and
executive officers holding these options will receive, prior to
tax withholdings, an aggregate of $8,356,674.
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As of October 17, 2007, certain of the directors and
executive officers of First Indiana had a right to receive, in
the aggregate, 36,936 deferred shares of First Indianas
common stock subject to specified conditions. Each outstanding
deferred share of First Indiana common stock that is unvested at
the effective time of the merger (that is, as to which the
specified conditions have not yet occurred) will be converted
into the right to receive $32.00 in cash at the effective time
of the merger, less applicable income and employment tax
withholding. Assuming all of these deferred share rights are
outstanding at the effective date of the merger, the directors
and executive officers holding these shares will receive, prior
to tax withholdings, an aggregate of $1,181,953.
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Directors and executive officers of First Indiana held in the
aggregate 41,041 shares of First Indianas restricted
stock issued pursuant to First Indianas
2006-2008
Long-Term Incentive Program and 117,267 shares of First
Indianas restricted stock issued otherwise than under the
2006-2008
Long-Term Incentive Program as of October 17, 2007. Vesting
(that is, the right to continued ownership) of restricted stock
issued pursuant to the Long-Term Incentive Program is subject to
the performance goals specified in the Program and certain other
conditions, and vesting of the other restricted stock is subject
to the condition that the holder maintain continuous service
with First Indiana through a specified date. Each share of
restricted stock issued pursuant to the Long-Term Incentive
Program that is unvested at the effective time of the merger
will be converted into the right to receive $32.00 in cash at
the effective date of the merger, less applicable income and
employment tax withholding. Assuming all of these restricted
shares are outstanding at the effective date of the merger, the
directors and executive officers holding these shares will
receive, prior to tax withholdings, an aggregate of $1,313,312.
Each share of restricted stock not issued pursuant to the
Long-Term Incentive Program that is unvested at the effective
time of the merger will be converted into the right to receive
$32.00 in cash, plus interest from the effective time of the
merger and less applicable income and employment tax
withholding, at the earliest of (1) the normal vesting date
for the restricted stock or an agreed retention date, provided
the employee remains continuously employed by
Marshall & Ilsley or its subsidiaries through that
date, or (2) the date of termination of the employee if the
employees position is involuntarily impacted or the
employee terminates employment for certain specified reasons or
(3) an accelerated date determined by Marshall &
Ilsley in its sole discretion. Assuming all of these outstanding
restricted shares vest at or before the effective date of the
merger (either automatically or at Marshall &
Ilsleys election), the directors and executive officers
holding these shares will receive, prior to tax withholdings, an
aggregate of $3,752,544.
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Certain executive officers (William J. Brunner, David L.
Maraman, Tim S. Massey, Marni McKinney, Reagan K. Rick and
Robert H. Warrington) have employment agreements with First
Indiana that provide for continued employment for a period of
one year (three years in the case of Ms. McKinney and
Mr. Warrington) after a change in control and that provide
for the executive to receive, in the event the executives
employment is terminated without cause or the executive
terminates his employment for good reason prior to the end of
that term, all the benefits the executive would have received
during the remainder
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of the term had the executives employment not terminated.
Under these agreements, if the employment of the executives were
terminated without cause at the effective time of the merger,
they would receive, either at the effective time of the merger
or six months after their separation from service, up to the
following estimated amounts: Mr. Brunner, $545,043;
Mr. Maraman, $943,183; Mr. Massey, $403,909;
Ms. McKinney, $1,175,032; Mr. Rick, $432,629; and
Mr. Warrington, $3,724,883. Five of these executives will
also receive bonuses under First Indianas 2007 Management
Incentive Plan as a result of the occurrence of the merger, in
the following amounts: Mr. Brunner, $112,000; Mr. Maraman,
$117,000; Mr. Massey, $110,500; Mr. Rick, $110,500; and Mr.
Warrington, $450,000. In addition, these executives are also
participants in First Indianas nonqualified supplemental
pension plan, the benefits under which become fully vested upon
the occurrence of a change in control. Under the merger
agreement, this plan will be frozen at or before the effective
time of the merger. Assuming benefit accruals under the plan
cease as of December 31, 2007, and assuming the plan is
terminated and these executives elect to receive lump sum
distributions on January 2, 2008 equal to the then present
value of their accrued pension benefits under the plan, they
would receive, prior to tax withholdings, the following
estimated amounts on January 2, 2008: Mr. Brunner,
$79,700; Mr. Maraman, $181,400; Mr. Massey, $2,400;
Ms. McKinney, $1,158,800; Mr. Rick, $21,900; and
Mr. Warrington, $431,900. Robert H. McKinney also has
vested accrued pension benefits that remain payable under the
plan. Assuming the plan is terminated and Mr. McKinney
elects to receive lump sum distributions on January 2, 2008
equal to the then present value of his accrued pension benefits
under the plan, he would receive, prior to tax withholdings, an
estimated cash distribution on January 2, 2008 of
approximately $3,809,483.
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Marshall & Ilsley has indicated its intention to enter
into consulting agreements with Marni McKinney and Robert
Warrington to be effective following the effective time of the
merger and to appoint Marni McKinney and Robert Warrington to
Marshall & Ilsleys Indiana community bank board.
It is anticipated that each consulting agreement will be for a
term of two years and will provide for payments of $10,000 per
month during the first year and $10,000 per quarter during the
second year (a total of $160,000) for community bank board and
consulting services. At Marshall & Ilsleys option,
some of the amounts otherwise payable to Ms. McKinney or Mr.
Warrington as a result of the termination of their employment
agreements with First Indiana may instead be paid to them as
increased consulting fees to reflect more accurately the value
of their services and the restrictions on competition to which
they will be subject after the merger.
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Marshall & Ilsley and at least three current officers
of First Indiana (David L. Maraman, Tim S. Massey and Reagan K.
Rick) will enter into employment or other agreements, which will
be effective immediately following the effective time of the
merger. These new agreements will contain no material increases
in salaries, potential bonuses or aggregate benefits compared to
those officers current employment agreements with First
Indiana.
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Marshall & Ilsley has agreed that for a period after
the effective date of the merger, it will succeed to First
Indianas obligations with respect to indemnification or
exculpation now existing in favor of the directors and officers
of First Indiana and First Indiana Bank as provided in First
Indianas articles of incorporation and by-laws.
Marshall & Ilsley has also agreed to maintain
directors and officers liability insurance in force
for the directors and officers of First Indiana for a period of
six years following the effective time of the merger, subject to
certain conditions in the merger agreement.
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The board of directors of First Indiana was aware of these
interests and took them into account in approving the merger
agreement and the merger.
Material
United States Federal Income Tax Consequences
The following is a discussion of the material federal income tax
consequences of the merger to holders of First Indiana common
stock.
This discussion is based upon the Internal Revenue Code of 1986,
as amended, the Treasury Regulations under the Code, Internal
Revenue Service rulings and judicial and administrative
decisions in effect as of the date of this proxy statement, all
of which are subject to change, possibly with retroactive effect.
23
The following discussion is intended only as a summary of the
material federal income tax consequences of the merger and does
not purport to be a complete analysis or listing of all
potential tax effects relative to the merger. The following
discussion does not address all aspects of federal income
taxation that may be applicable to certain First Indiana
shareholders who may be subject to special treatment under the
federal income tax laws, such as insurance companies, financial
institutions, dealers in securities, tax-exempt organizations,
S corporations and taxpayers subject to the alternative
minimum tax. In addition, the following discussion may not apply
to shareholders who acquired their shares of First Indiana
common stock upon the exercise of employee stock options or
otherwise as compensation or who hold their shares as part of a
hedge, straddle or conversion transaction.
The following discussion does not address potential foreign,
state, local and other tax consequences of the merger. This
discussion assumes that First Indiana shareholders hold their
respective shares of First Indiana common stock as capital
assets within the meaning of Section 1221 of the Code
(
i.e
., property held for investment).
For federal income tax purposes, the merger will be treated as a
taxable sale or exchange of First Indiana common stock by each
First Indiana shareholder. Accordingly, the federal income tax
consequences to First Indiana shareholders receiving cash will
generally be as follows:
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The shareholder will recognize a capital gain or loss by reason
of the disposition of his, her or its shares of First Indiana
common stock pursuant to the merger agreement.
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The capital gain or loss, if any, will be long-term with respect
to shares of First Indiana common stock with a holding period of
more than 12 months as of the effective time of the merger,
and for individuals such capital gain will generally be subject
to a maximum federal income tax rate of 15%. The deductibility
of capital losses is subject to limitations for both individuals
and corporations.
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The amount of capital gain or loss to be recognized by each
shareholder will be measured by the difference between the
amount of cash received by the shareholder in connection with
the merger and the shareholders tax basis in the shares of
First Indiana common stock at the effective time of the merger.
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Cash payments made pursuant to the merger will be reported to
the extent required by the Code to First Indiana shareholders
and the Internal Revenue Service. These amounts will ordinarily
not be subject to withholding of United States federal income
tax. However, backup withholding of tax at a rate of 28% will
apply to a holder who fails to supply the exchange agent with
the shareholders correct taxpayer identification number or
has failed to report all interest and dividends required to be
shown on the shareholders federal income tax returns.
Accordingly, each First Indiana shareholder will be asked to
provide a correct taxpayer identification number on a Substitute
Form W-9
which will be included in the appropriate letter of transmittal
for the shares of First Indiana common stock. Withholding may
also apply to First Indiana shareholders who are otherwise
exempt from this withholding, such as a non-resident alien, if
that person fails to properly document its status as an exempt
recipient.
We strongly urge you to consult your tax advisor to determine
your particular United States federal, state, local or foreign
income or other tax consequences resulting from the merger, with
respect to your individual circumstances.
The merger is subject to prior approval by the Federal Reserve
Board under the Bank Holding Company Act of 1956, as amended.
The Bank Holding Company Act requires the Federal Reserve Board,
when approving a transaction such as the merger, to take into
consideration the financial and managerial resources of the
parties, including the competence, experience and integrity of
the officers, directors and principal shareholders, the future
prospects of the institutions and the convenience and needs of
the communities to be served. In addition, under the Community
Reinvestment Act of 1977, as amended, the Federal Reserve Board
must take into account the record of performance of the
acquiring institution in meeting the credit needs of the entire
community, including low- and moderate-income neighborhoods,
served by the institution.
The Bank Holding Company Act prohibits the Federal Reserve Board
from approving a merger if it would result in a monopoly or be
in furtherance of any combination or conspiracy to monopolize or
attempt to monopolize the business of banking in any part of the
United States, or if its effect in any section of the country
would be to
24
substantially lessen competition or to tend to create a
monopoly, or if it would in any other manner result in a
restraint of trade, unless the Federal Reserve Board finds that
the anticompetitive effects of the merger are clearly outweighed
in the public interest by the probable effect of the transaction
in meeting the convenience and needs of the communities to be
served.
Pursuant to the Bank Holding Company Act, the merger may not be
consummated until 30 days after Federal Reserve Board
approval, during which time the United States Department of
Justice may challenge the merger on antitrust grounds. The
commencement of an antitrust action would stay the effectiveness
of the Federal Reserve Boards approval unless a court
specifically ordered otherwise. With the approval of the Federal
Reserve Board and the concurrence of the Department of Justice,
the waiting period may be reduced to not less than 15 days.
Marshall & Ilsley filed a notice with the Federal
Reserve Board on August 17, 2007 in connection with the
merger. It received such regulatory approval on
September 26, 2007.
Under Indiana law, there are no dissenters or appraisal
rights for shareholders of a company which has shares registered
on a national securities exchange or traded through the NASDAQ
Global Select Market. Accordingly, First Indiana shareholders
have no dissenters rights or other rights to demand fair
value as a result of the merger.
Amendment
to First Indianas Rights Agreement
On November 14, 1997, First Indiana entered into a rights
agreement with Harris Trust and Savings Bank, which was
succeeded as rights agent by National City Bank in an amendment
to the rights agreement dated as of May 8, 2002. In
general, the rights agreement imposes a significant penalty upon
any person or group that acquires 15% or more of First
Indianas outstanding common stock without the approval of
First Indianas board of directors.
Effective July 8, 2007, First Indiana and National City
Bank entered into an amendment to the rights agreement which
provides that neither the execution of the merger agreement or
the stockholder voting agreement nor the consummation of the
transactions contemplated by the merger agreement or the
stockholder voting agreement will result in Marshall &
Ilsley, FIC Acquisition Corporation or any other affiliate of
Marshall & Ilsley becoming an Acquiring
Person for purposes of the rights agreement. The effect of
the amendment is that the rights agreement is inapplicable to
the merger agreement and the stockholder voting agreement and
the transactions contemplated therein, including the merger.
The following is a summary of various provisions of the merger
agreement. The merger agreement is reproduced in
Appendix A
to this proxy statement and is
incorporated by reference into this document. This summary is
qualified in its entirety by reference to the full text of the
merger agreement. You are encouraged to read the merger
agreement carefully and in its entirety because it, and not this
summary, is the legal document that governs the merger and the
other transactions contemplated by the merger agreement.
The text of the merger agreement has been included to provide
you with information regarding its terms. The terms of the
merger agreement (such as the representations and warranties)
are intended to govern the contractual rights and relationships,
and allocate risks, between the parties in relation to the
merger. The merger agreement contains representations and
warranties that Marshall & Ilsley and First Indiana
made to each other. These representations and warranties were
made as of specific dates, and the assertions embodied in those
representations and warranties are qualified by information in
confidential disclosure schedules that Marshall &
Ilsley and First Indiana have exchanged in connection with
signing of the merger agreement. In addition, certain annexes to
the merger agreement are not reproduced in
Appendix A
. While neither Marshall &
Ilsley nor First Indiana believes that the disclosure schedules
or the omitted annexes contain information that the securities
laws require to be publicly disclosed, the disclosure schedules
do contain information that modifies, qualifies and creates
exceptions to the representations and warranties set forth in
the merger agreement. Accordingly, the merger agreement is
included with this proxy statement only to provide First Indiana
shareholders with information regarding the terms of the merger
agreement, and you should not rely on the representations and
warranties as characterizations of the actual
25
state of facts, since they are modified by the underlying
disclosure schedules. First Indianas disclosure schedule
may contain information that has been included in First
Indianas prior public disclosures, as well as potential
additional non-public information. Moreover, information
concerning the subject matter of the representations and
warranties may be changed since the date of the merger
agreement, which subsequent information may or may not be fully
reflected in First Indianas public disclosures. The merger
agreement should not be read alone, but should instead be read
in conjunction with the other information regarding the
companies and the merger that is publicly available or contained
in this proxy statement.
Representations
and Warranties
The merger agreement contains representations and warranties of
First Indiana and Marshall & Ilsley to each other as
to, among other things:
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the corporate organization and existence of the parties and
their respective subsidiaries;
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the authority of each party to enter into the merger agreement
and make it valid and binding;
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the absence of any conflict between the merger agreement and:
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the articles of incorporation and by-laws or other
organizational documents of each party and its subsidiaries,
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applicable laws and orders, or
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in the case of First Indiana, other agreements, instruments and
obligations;
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required governmental and regulatory consents;
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the absence of undisclosed legal proceedings, orders and
injunctions;
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the completeness and accuracy of this proxy statement; and
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brokers fees.
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The merger agreement contains additional representations and
warranties of First Indiana to Marshall & Ilsley as
to, among other things:
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the validity of First Indianas franchises, grants,
clearances, exemptions, waivers, authorizations, licenses,
permits, easements, charters, consents, approvals and orders
necessary to own, lease and operate its properties and to carry
on its business, including authorizations from (1) the
Federal Deposit Insurance Corporation, (2) the Federal
Reserve Board and (3) the Office of Comptroller of the
Currency;
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the fact that the minute books of First Indiana and its
subsidiaries contain complete and correct records of all
meetings and other corporate actions of their respective
shareholders and boards of directors;
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the capitalization of First Indiana and each of its subsidiaries;
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the inapplicability to the merger agreement and the merger of
certain anti-takeover laws and regulations;
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compliance with applicable laws and contracts;
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the completeness and accuracy of First Indianas financial
statements and filings with the SEC
and/or
bank
regulatory agencies, as applicable;
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compliance with the applicable provisions of the Sarbanes-Oxley
Act of 2002 and the rules and regulations of the NASDAQ Stock
Market, LLC;
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the establishment and maintenance of a system of internal
control over financial reporting or process designed to
provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP, as the case may
be;
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the fact that there are no outstanding loans made by First
Indiana to any of its executive officers or directors, other
than loans that are subject to Regulation O under the
Federal Reserve Act;
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the fact that except for the liabilities reflected on First
Indianas balance sheets and liabilities incurred in the
ordinary course of business, First Indiana has not incurred any
liability that is required to be disclosed on a balance sheet or
that would have a material adverse effect on First Indiana;
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the fact that First Indiana has not been requested by its
independent public accounting firm or by the staff of the SEC to
restate any of its reports or to modify its accounting in the
future in a manner that would have a material adverse effect on
First Indiana;
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the fact that since December 31, 2006, neither First
Indiana, nor any of its subsidiaries or executive officers or,
to First Indianas knowledge, any of their auditors,
accountants or representatives, is aware of or has received any
complaint, allegation, assertion, or claim, that such party has
engaged in questionable accounting or auditing practices;
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the absence of changes in First Indianas business since
December 31, 2006, which would have a material adverse
effect on First Indiana;
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the fact that no third person has used the corporate name,
trademarks, trade names, service marks, logos, symbols or
similar intellectual property of First Indiana or its
subsidiaries and the absence of any joint marketing or other
affinity marketing program with any third person;
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compliance with the Bank Secrecy Act, USA PATRIOT Act,
Gramm-Leach-Bliley Act and the anti-money laundering laws;
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employee benefit plans, employment contracts and related matters;
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title to First Indianas property;
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the absence of environmental liabilities which would have a
material adverse effect on First Indiana;
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the absence of material restrictions on First Indianas
business;
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the filing and accuracy of First Indianas tax returns;
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material policies of insurance;
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the entry into, and the ability to terminate, material contracts;
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the receipt by First Indiana of the opinion of Sandler
ONeill as to the fairness as of the date of the merger
agreement, from a financial point of view, of the consideration
to be received in the merger by First Indianas
shareholders;
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the shareholder vote required to approve the merger;
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the inapplicability of First Indianas rights agreement to
the merger agreement, the stockholder voting agreement and the
transactions contemplated by the merger agreement, including the
merger; and
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the inapplicability of dissenters, appraisal or similar
rights to the merger.
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Conduct
of Business Pending the Merger
First Indiana has agreed, except as (1) permitted by the
merger agreement, (2) disclosed concurrently with the
signing of the merger agreement, (3) required by law or a
governmental authority or (4) consented to in writing by
Marshall & Ilsley, that it will, and it will cause
each of its subsidiaries, to:
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operate its business only in the usual, regular and ordinary
course consistent with past practices;
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use its reasonable best efforts to preserve intact its business
organization and assets, maintain its rights and franchises,
retain the services of its officers and key employees and
maintain its relationships with customers;
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use its reasonable best efforts to maintain and keep its
properties which are necessary to the operation of its business
in as good repair and condition as at present, ordinary wear and
tear excepted;
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cooperate with Marshall & Ilsley in its efforts to
obtain information and title insurance with respect to real
property owned or leased by First Indiana or any of its
subsidiaries, including, without limitation, efforts to
communicate with and obtain consents
and/or
estoppels from landlords and tenants, and the execution and
delivery as of the effective time of the merger of standard
title affidavits, deeds and other documents as may be reasonably
necessary to reflect the transaction in the real estate records
of the states in which real property is located
and/or
to
obtain title insurance;
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use its reasonable best efforts to keep in full force and effect
director and officer liability insurance comparable in amount
and scope of coverage to that now maintained by it;
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perform in all material respects all obligations required to be
performed by it under all material contracts, leases, and other
documents relating to or affecting its assets, properties, and
business;
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comply with and perform in all material respects all obligations
and duties imposed upon it by all applicable laws; and
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not take any action or fail to take any action that can be
expected to have a material adverse effect on it and its
subsidiaries, taken as a whole.
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First Indiana has also agreed:
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to maintain and cause its subsidiaries to maintain their
existing loan and investment policies and procedures designed to
insure safe and sound banking practices, which policies and
procedures govern, among other matters, (1) making or
renewing certain commitments or loans, or purchasing or renewing
certain participations in loans; (2) loans to certain
affiliates; (3) certain investments or loans in respect of
commercial real estate projects; and (4) entering into or
breaching certain contracts;
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to update the disclosure schedule provided to
Marshall & Ilsley on a regular basis to reflect any
matters which have occurred from and after the date of the
merger agreement as set forth in the merger agreement;
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to deliver to Marshall & Ilsley from time to time
prior to the effective time of the merger information about
First Indianas shareholders and the holders of its stock
options;
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to give prompt written notice to Marshall & Ilsley if
First Indiana becomes aware of the impending or threatened
occurrence of any event or condition which would cause or
constitute a material breach of any of its representations or
agreements and to use its reasonable efforts to prevent or
promptly remedy the same;
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at or prior to the closing, to deliver to Marshall &
Ilsley evidence reasonably satisfactory to Marshall &
Ilsley of the resignation, effective as of the effective time of
the merger, of those directors and officers of First Indiana and
its subsidiaries designated by Marshall & Ilsley;
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that the confidentiality agreement signed in connection with the
merger will remain in full force and effect, be binding upon
First Indiana and survive termination of the merger
agreement; and
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that its board of directors will recommend to its shareholders
to vote in favor of and to adopt and approve the merger and the
merger agreement at a shareholder meeting; that this proxy
statement will include a statement of First Indianas board
of directors recommendation; and that neither First
Indianas board of directors nor any committee thereof will
withhold, withdraw, amend or modify in a manner adverse to
Marshall & Ilsley such board of directors
recommendation, except as permitted by the merger agreement.
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Except as (1) permitted by or provided in the merger
agreement, (2) disclosed concurrently with the signing of
the merger agreement, (3) required by law or a governmental
authority or (4) consented to in writing by
Marshall & Ilsley, First Indiana has further agreed
that it and its subsidiaries will not, among other things:
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adopt, amend, renew or terminate any employee benefit plan or
any agreement, arrangement, plan or policy with any of its or
its subsidiaries current or former directors, officers or
employees, except to maintain qualification under the Code and
except as contemplated by the merger agreement;
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increase the base salary, bonus, incentive compensation or
fringe benefits of any director, officer or employee or pay any
benefit not required by any employee benefit plan or other
agreement in effect as of the
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date of the merger agreement, except for normal increases in the
ordinary course of business consistent with past practice and
subject to the limitations of the merger agreement;
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declare or pay any dividend on, or make any other distribution
in respect of, its outstanding common stock, except for
(i) regular, quarterly cash dividends on its common stock
with usual record and payment dates at a rate not in excess of
$0.21 per share for a dividend payable in 2007 or $0.22 per
share for a dividend payable in 2008, and (ii) payment of
dividends by a subsidiary of First Indiana solely to First
Indiana or another First Indiana subsidiary;
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merge into any other entity, permit any other entity to merge
into it or consolidate with any other entity, or effect any
reorganization or recapitalization;
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purchase or otherwise acquire any substantial portion of the
assets, or more than 5% of any class of stock or other equity
interests, of any entity other than in the ordinary course of
business;
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liquidate, sell, encumber or dispose of assets, or acquire any
assets with a value in excess of $100,000 other than in the
ordinary course of business;
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repurchase, redeem or otherwise acquire shares of its capital
stock, bonds or other securities;
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grant or issue any options, warrants or other rights to acquire
shares of its capital stock, bonds or other securities;
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issue, sell or deliver, split, reclassify, combine or otherwise
adjust any of its capital stock, bonds or other securities
(except pursuant to the exercise of outstanding stock options);
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propose or adopt any amendment to its articles of incorporation,
bylaws, articles of organization or operating agreement;
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change any of its methods of accounting in effect at
December 31, 2006 or reporting of income and deductions for
federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable
year ending December 31, 2006, except as may be required by
GAAP; and
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change any lending, investment, liability management or other
material policies concerning its business or operations, except
as may be required by law or regulatory authorities, including,
without limitation:
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acquire or sell any contracts for the purchase or sale of
financial or other futures or any put or call options, or enter
into any hedges or interest rate swaps relating to cash,
securities or any commodities or enter into any other derivative
transaction, which would have gains or losses in excess of
$100,000, or enter into, terminate or exchange a derivative
instrument with a notional amount in excess of $100,000 or
having a term of more than five years;
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sell, assign, transfer, pledge, mortgage or otherwise encumber,
or permit any liens to exist with respect to, any of its assets
with a value in excess of $100,000 individually, except in the
ordinary course of business consistent with past practice;
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make any investment with a maturity of five years or more;
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incur any material liabilities or material obligations, whether
directly or by way of guaranty, including any obligation for
borrowed money in excess of an aggregate of $100,000 except in
the ordinary course of business consistent with past practice;
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enter into any contract with respect to any acquisition of a
material amount of assets or securities or any discharge,
waiver, satisfaction, release or relinquishment of any material
contract rights, liens, debts or claims, not in the ordinary
course of business and consistent with past practice, or impose,
or suffer the imposition of, any lien, or permit any such lien
to exist, on any of its material assets (other than in
connection with certain instruments established in the ordinary
course of business) and in no event with a value in excess of
$100,000 individually;
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settle any proceeding or controversy for any amount in excess of
$100,000 or in any manner that would restrict in any material
respect the operations or business of First Indiana or any of
its subsidiaries;
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purchase any new financial product or instrument which involves
entering into a contract with a term of six months or longer;
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make any capital expenditure, except in the ordinary course of
business and consistent with past practice and in no event in
excess of $100,000 individually;
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take any action or fail to take any action which would be
reasonably expected to have a material adverse effect on First
Indiana and its subsidiaries, taken as a whole;
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take any action that would adversely affect or delay the ability
of First Indiana to perform any of its obligations on a timely
basis under the merger agreement or cause any of the conditions
set forth in the merger agreement to not be satisfied; or
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agree in writing or otherwise to do any of the foregoing.
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Except as (1) permitted by the merger agreement,
(2) disclosed prior to or concurrently with the signing of
the merger agreement, (3) required by law or a governmental
authority or (4) consented to in writing by First Indiana,
Marshall & Ilsley and Merger Sub have agreed that they
will, and Marshall & Ilsley will cause each of its
other subsidiaries to:
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maintain its corporate existence in good standing and maintain
all books and records in accordance with accounting principles
and practices as used in Marshall & Ilsleys
financial statements applied on a consistent basis; and
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conduct its business in a manner that does not violate any law,
except for possible violations that do not have, and would not
reasonably be expected to have, a material adverse effect on
Marshall & Ilsley.
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Marshall & Ilsley has also agreed:
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to give prompt written notice to First Indiana if
Marshall & Ilsley becomes aware of the impending or
threatened occurrence of any event or condition which would
cause or constitute a material breach of any of its
representations or agreements and to use its reasonable efforts
to prevent or promptly remedy the same; and
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that the confidentiality agreement signed in connection with the
merger will remain in full force and effect, be binding upon
Marshall & Ilsley and survive termination of the
merger agreement.
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Except as contemplated by the merger agreement or as disclosed
prior to or concurrently with the signing of the merger
agreement, Marshall & Ilsley and Merger Sub have
further agreed that, without the prior written consent of First
Indiana, neither of them shall or, in the case of
Marshall & Ilsley, permit any of its other
subsidiaries to, take any action that would adversely affect or
delay its ability to perform any of its obligations on a timely
basis under the merger agreement or cause any of the conditions
specified in the merger agreement to not be satisfied.
First Indiana has also agreed to provide Marshall &
Ilsley, subject to certain limitations, with reasonable access
to First Indianas properties, books and records and any
other information relating to it and its subsidiaries in
connection with consummation of the transactions contemplated by
the merger agreement.
No
Solicitation of Transactions
First Indiana has agreed that it and its subsidiaries will not,
nor will they authorize or permit any of their officers,
directors, employees, affiliates, investment bankers, attorneys
or other advisors or representatives to solicit, initiate,
encourage or induce the making of a submission or announcement
of any acquisition proposal, as defined below,
participate in any discussions or negotiations with, or provide
any non-public information to, any person relating to, or take
any action to facilitate any inquiry or the making of any
proposal that constitutes or may reasonably be expected to lead
to, any acquisition proposal, or enter into any contract
relating to an acquisition transaction, as defined
below.
30
However, under the merger agreement, First Indiana or its board
of directors is permitted to furnish material non-public
information regarding itself and its subsidiaries to, and enter
into a customary confidentiality agreement or discussions with,
a third party making an acquisition proposal if:
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First Indianas board of directors reasonably determines in
good faith, after taking into consideration the advice of and
consultation with a nationally reputable investment banking
firm, that such acquisition proposal constitutes or is
reasonably likely to result in an offer for a merger or other
similar transaction that the board of directors determines will
be more favorable to First Indianas shareholders than the
terms of the merger agreement with Marshall & Ilsley;
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First Indianas board of directors concludes in good faith,
after consultation with its outside legal counsel, that failure
to take such action is reasonably likely to result in a breach
by the board of directors of its fiduciary obligations to First
Indianas shareholders;
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First Indiana gives Marshall & Ilsley written notice
of the identity of the person making the acquisition proposal
and of First Indianas intention to furnish material
non-public information to, or enter into discussions or
negotiations with, such person ten days before forwarding any
information or entering into discussions or negotiations with
such person; and
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prior to doing so, First Indiana enters into a customary
confidentiality agreement with such third party and
contemporaneously with furnishing any such information, First
Indiana furnishes the same information to Marshall &
Ilsley.
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If First Indiana receives an acquisition proposal that its board
of directors determines in accordance with the above guidelines
constitutes a more favorable offer, prior to accepting such
offer, First Indiana must provide a written notice to that
effect to Marshall & Ilsley and allow ten days for
Marshall & Ilsley and First Indiana to negotiate and
make necessary adjustments in the terms and conditions of the
merger agreement that would permit First Indiana to proceed with
the transactions contemplated by the merger agreement on such
adjusted terms if so elected by Marshall & Ilsley.
For purposes of the above discussion, acquisition
proposal means any offer or proposal (other than an offer
or proposal by Marshall & Ilsley) relating to any
acquisition transaction. Acquisition
transaction means any transaction or series of related
transactions, other than the transactions contemplated by the
merger agreement, involving:
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any acquisition or purchase from First Indiana by any person of
more than a 15% interest in the total outstanding voting
securities of First Indiana or any of its subsidiaries or any
tender offer or exchange offer that if consummated would result
in any person beneficially owning 15% or more of the total
outstanding voting securities of First Indiana or any of its
subsidiaries, or any merger, consolidation, business combination
or similar transaction involving First Indiana or any of its
subsidiaries;
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any sale, lease, exchange, transfer, license, acquisition or
other disposition of more than 15% of the assets of First
Indiana or any of its subsidiaries; or
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any liquidation or dissolution of First Indiana or any of its
subsidiaries.
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Prior to the effective time of the merger, First Indiana has
agreed that, unless otherwise agreed by First Indiana and
Marshall & Ilsley:
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First Indiana and its subsidiaries will not increase the base
salaries of their respective employees except, in the case of
employees without employment agreements, in the ordinary course
of business in accordance with past practices, and then only on
the annual review dates of such employees or as necessary to
account for market adjustments for limited specific individuals
and limited in the aggregate to 4% on an annualized basis;
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no bonuses or incentive payments will be paid to employees of
First Indiana or its subsidiaries except consistent with
existing bonus or incentive programs and in the ordinary course
of business consistent with past practices;
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no new programs, plans or agreements providing compensation or
benefits to employees or directors of First Indiana or its
subsidiaries will be adopted or implemented;
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existing programs, plans or agreements providing compensation or
benefits to employees or directors of First Indiana or its
subsidiaries will not be amended or modified except as required
by, or necessary to comply with, applicable law or as provided
in the merger agreement or in agreements signed by employees in
connection with the merger agreement;
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no further grants or awards will be made under existing
programs, plans or agreements providing compensation or benefits
to employees or directors of First Indiana or its subsidiaries,
except as provided in the merger agreement;
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there will be no officer title promotions, except that if an
officer position becomes vacant, another officer may be promoted
to that position if he or she assumes the former employees
job responsibilities;
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no new consulting agreements or employment continuation
agreements will be granted to employees of First Indiana or its
subsidiaries, and existing consulting agreements and employment
continuation agreements will not be amended, except as provided
in the merger agreement;
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First Indiana will not make employer contributions to its
retirement programs except to the extent consistent with past
practice, and First Indiana will not amend or modify its
retirement programs other than as provided in the merger
agreement or as required to maintain the tax-qualified status of
any such retirement programs; and
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First Indiana or its subsidiaries will only pay severance to
those employees who are terminated by their employer and then
only in amounts and for a period consistent with past practice
of the employer or as provided in the employees employment
agreement, if any.
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Marshall & Ilsley has agreed that it will not
knowingly amend, unreasonably omit to take any action or
unreasonably fail to consent to action to be taken by First
Indiana with respect to any existing arrangement in a manner
that would result in additional employee tax under
Section 409A of the Internal Revenue Code.
After the effective time of the merger, First Indiana employees
who become Marshall & Ilsley employees, whom we refer
to as transferred employees, will be integrated into
Marshall & Ilsleys qualified retirement plans,
health and dental plans and other employee welfare benefit plans
subject to the terms and conditions of such plans, except as
otherwise provided in the merger agreement. If integration of
transferred employees into Marshall & Ilsleys
employee welfare benefit plans occurs during a plan year, such
employees will receive credit for co-pays, deductibles and
similar limits incurred under First Indianas plans during
such plan year.
Marshall & Ilsley has agreed that it will give
transferred employees full credit for their prior service with
First Indiana and its subsidiaries for purposes of eligibility
and vesting under any qualified or nonqualified retirement or
profit sharing plans in which the transferred employees may be
eligible to participate and for all purposes under any welfare
benefit plans, cafeteria plans, vacation plans and
similar arrangements maintained by Marshall & Ilsley.
However, Marshall & Ilsley will not give prior service
credit in connection with the Marshall & Ilsley
retiree health plan.
Marshall & Ilsley has also agreed to waive all
limitations relating to preexisting conditions and waiting
periods with respect to participation and coverage requirements
applicable to transferred employees under any welfare benefit
plans maintained by Marshall & Ilsley in which
transferred employees may be eligible to participate, subject to
meeting the service requirements and other eligibility criteria
under Marshall & Ilsleys plans.
Marshall & Ilsley is not required to waive limitations
or waiting periods that are currently in effect under the First
Indiana welfare plans that have not been satisfied as of the
effective time of the merger.
If a transferred employees employment with
Marshall & Ilsley is terminated within the first
twelve months after the effective time of the merger, the amount
of severance he or she is entitled to will be as set forth in
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Marshall & Ilsleys
Reduction-In-Force
Severance Policy as in effect when the merger agreement was
signed. Thereafter, a terminated transferred employees
severance will be determined in accordance with
Marshall & Ilsleys severance plans as then in
effect, and transferred employees will be given full credit for
their service with First Indiana and its subsidiaries for
purposes of Marshall & Ilsleys severance plans
then in effect.
First Indianas 401(k) profit sharing plan will be frozen
and merged into Marshall & Ilsleys qualified
retirement program on or after the effective time of the merger.
On and after the effective time of the merger, transferred
employees will be allowed to participate in Marshall &
Ilsleys qualified retirement program.
Prior to the effective time of the merger, First Indiana will
not make any discretionary employer contributions to its 401(k)
profit sharing plan, its supplemental benefit plan with key
executives or the defined benefit plan in which it participates
except as consistent with past practice. At or prior to the
effective time of the merger, First Indiana will also cause all
benefit accruals under its supplemental benefit plan and the
defined benefit plan to cease.
Marshall & Ilsley has agreed to either
(i) maintain any Code Section 125 plans of First
Indiana and its subsidiaries (the 125 Plans) for the
remainder of the calendar year in which the effective time of
the merger occurs, or (ii) terminate the 125 Plans after
the effective time of the merger and either allow the
transferred employees to participate in Marshall &
Ilsleys Code Section 125 Plan or adopt a new Code
Section 125 plan (in either case, a New 125
Plan) for the transferred employees who were participating
in the 125 Plans and transfer the account balances of such
employees under the 125 Plans to the New 125 Plan. Until the
transferred employees are integrated into the New 125 Plan, the
125 Plans will remain in effect.
Treatment
of First Indiana Stock Options, Deferred Shares and Restricted
Shares
Pursuant to the merger agreement, each outstanding option to
purchase the common stock of First Indiana will be converted
into the right to receive from Marshall & Ilsley as of
the effective time of the merger an amount equal to the excess,
if any, of $32.00 per share (the merger consideration) over the
per share exercise price for each share of First Indiana common
stock subject to such option, less applicable income and
employment tax withholding. As of October 17, 2007, options
for 615,455 shares of First Indiana common stock, were
outstanding. Assuming none of the options are exercised, expire
or are forfeited before the effective date of the merger, the
holders of these options will receive, prior to tax
withholdings, an aggregate of $10,765,401. The excess of the
cash consideration over the per share exercise price for each
share of common stock subject to such stock options will
constitute taxable ordinary income to the holder of the option.
Pursuant to the merger agreement, each outstanding deferred
share right for First Indiana common stock that is unvested at
the effective time of the merger will become vested and will be
converted into the right to receive $32.00 in cash at the
effective time of the merger less applicable income and
employment tax withholding. As of October 17, 2007,
deferred share rights for 36,936 shares of First Indiana
common stock were outstanding. Assuming all of these deferred
share rights are outstanding at the effective date of the
merger, the holders of these deferred share rights will receive,
prior to tax withholdings, an aggregate of $1,181,953.
Each share of restricted stock issued pursuant to First
Indianas
2006-2008
Long-Term Incentive Program that is unvested at the effective
time of the merger will be cancelled and converted into the
right to receive $32.00 in cash at the effective time of the
merger. As of October 17, 2007, there were 41,041 such
restricted shares outstanding. Assuming all of these restricted
shares are outstanding at the effective date of the merger, the
holders of these shares will receive, prior to tax withholdings,
an aggregate of $1,313,312.
Any share of restricted stock issued otherwise than under First
Indianas
2006-2008
Long-Term Incentive Program that is unvested at the effective
time of the merger will be cancelled and will be converted into
the right to receive $32.00 in cash. If the holders
continuous service terminates in connection with the merger,
this amount will be payable to that holder on the effective date
of the merger. If the holders continuous service does not
so terminate, this amount, plus interest from the effective date
of the merger, will be payable to the holder at the earliest of
(1) the normal vesting date for such restricted share or an
agreed retention date, provided the employee remains
continuously employed by Marshall & Ilsley or its
subsidiaries through that vesting date, or (2) the date of
termination of the employees employment if the
employees position is involuntarily impacted or the
employee terminates employment for certain specified reasons or
(3) an accelerated date determined by Marshall &
Ilsley in
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its sole discretion. As of October 17, 2007, there were
185,272 such other restricted shares outstanding. Assuming all
of these outstanding restricted shares vest at or before the
effective date of the merger (either automatically or at
Marshall &Ilsleys election), the holders of
these shares will receive, prior to tax withholdings, an
aggregate of $5,928,704.
Marshall & Ilsley and First Indiana have further
agreed, among other things, to:
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give prompt notice to each other of the occurrence or
non-occurrence of any event the occurrence or non-occurrence of
which would be likely to cause any of their respective
representations or warranties to be untrue or inaccurate; and to
give prompt notice of any failure to comply with or satisfy any
of their respective covenants, conditions or agreements under
the merger agreement; and
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consult with each other before issuing any press release or
making any public statements except as may be required by law,
including disclosures required under federal securities laws.
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First Indiana has further agreed to use all reasonable best
efforts to assist Marshall & Ilsley in retaining First
Indianas and its subsidiaries customers for the
surviving corporation.
Marshall & Ilsley has further agreed to:
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succeed to First Indianas obligations with respect to
indemnification or exculpation existing in favor of the
directors and officers of First Indiana and its subsidiaries as
provided in First Indianas articles of incorporation,
bylaws, or indemnification agreements with respect to matters
occurring prior to the effective time of the merger;
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use commercially reasonable best efforts to maintain an
insurance policy for directors and officers
liabilities for all present and former directors and officers of
First Indiana covered by the policies existing on July 8,
2007, with respect to acts, omissions and other matters
occurring prior to the effective time of the merger for a period
of six years after the effective time of the merger or until
Marshall & Ilsleys cost of maintaining such
insurance equals or exceeds 250% of the annual premium in effect
on July 8, 2007; and
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require that its successors or assigns, in the case of a merger,
consolidation or transfer of all assets, maintain the indemnity
and insurance obligations with respect to the indemnified
parties as described above.
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Conditions
to the Completion of the Merger
Marshall & Ilsleys, the Merger Subs and
First Indianas obligations to complete the merger and the
other transactions contemplated by the merger agreement are
subject to the satisfaction or written waiver, where
permissible, of a number of conditions, including, among others,
the following:
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the merger agreement must be approved by the holders of at least
a majority of the shares of common stock of First Indiana
entitled to vote thereon;
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the approval of the Federal Reserve Board must have been
obtained without any condition that would have a material
adverse effect on Marshall & Ilsley or First Indiana,
and all conditions to such approval must have been satisfied and
all waiting periods relating to the approval must have expired;
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all statutory waiting periods under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976 must have expired and
Marshall & Ilsley must not have received any
objections to the merger from the Federal Trade Commission or
the United States Department of Justice;
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no governmental authority may have enacted, issued, promulgated,
enforced or entered any law or order which is in effect
preventing or prohibiting consummation of the transactions
contemplated by the merger agreement or restricting the
consummation of the transactions contemplated by the merger
agreement in a manner that would have a material adverse effect
on Marshall & Ilsley or First Indiana;
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the representations and warranties of each party contained in
the merger agreement must be true and correct in all material
respects or as otherwise required in the merger agreement;
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each party must have performed or complied in all material
respects with all of its agreements and covenants in the merger
agreement;
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each party must continue to possess all necessary approvals and
all required consents, approvals and authorizations must be
obtained and all required filings and notifications must be made
by the parties, except as would not have a material adverse
effect on Marshall & Ilsley or First Indiana;
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no challenge to the merger or the right of Marshall &
Ilsley to own or operate the business of First Indiana may be
pending which is reasonably likely to have a material adverse
effect on First Indiana or Marshall & Ilsley;
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the parties must have received legal opinions relating to the
merger;
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there must not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed
applicable to the merger, by any governmental authority which
imposes any condition or restriction upon Marshall &
Ilsley, the Merger Sub or First Indiana or their respective
subsidiaries (or the surviving corporation), which would
materially adversely impact the economic or business benefits of
the transactions contemplated by the merger agreement in such a
manner as to render inadvisable the consummation of the
merger; and
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since July 8, 2007, the date of the merger agreement, there
must not have been any material adverse effect on
Marshall & Ilsley and its subsidiaries, taken as a
whole, or on First Indiana and its subsidiaries, taken as a
whole, or any effect, change, event, fact, condition, occurrence
or development that is reasonably likely to have such a material
adverse effect.
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We cannot assure you whether all of the conditions to the merger
will be satisfied or waived by the party permitted to do so. As
discussed below, if the merger is not completed on or before
February 29, 2008 (or March 31, 2008, if the reason
the merger is not completed by such date is due to the failure
to obtain required regulatory approvals or the required waiting
periods have not yet expired or been terminated), either
Marshall & Ilsley or First Indiana may terminate the
merger agreement, unless the failure to effect the merger by
such date is due to the failure of the party seeking to
terminate the merger agreement to comply with its obligations
under the merger agreement.
Termination
of the Merger Agreement
The merger agreement may be terminated at any time prior to
completion of the merger, whether before or after the approval
of the merger by the shareholders of First Indiana, as
applicable, in any of the following ways:
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by mutual written consent of First Indiana and
Marshall & Ilsley;
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by either First Indiana or Marshall & Ilsley, if the
merger is not completed on or before February 29, 2008 (or
March 31, 2008, if the reason the merger is not completed
by such date is due to the failure to obtain required regulatory
approvals or the required waiting periods have not yet expired
or been terminated), unless the failure of the closing to occur
by this date is principally due to a breach of the merger
agreement by the party seeking to terminate the merger agreement;
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by either First Indiana or Marshall & Ilsley, if a
governmental authority has issued a non-appealable final order
or taken some other action restraining, enjoining or otherwise
prohibiting the merger;
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by either First Indiana or Marshall & Ilsley, if First
Indiana shareholders hold a meeting and the approval of the
shareholders of First Indiana required for completion of the
merger has not been obtained, provided that First Indiana may
not terminate the merger agreement under this provision if the
failure to obtain shareholder approval is caused by a breach of
the merger agreement by First Indiana;
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by either First Indiana or Marshall & Ilsley, if there
has been a material breach of any of the representations,
warranties, covenants or agreements of the other party to the
merger agreement, which breach if unintentional and curable is
not cured through exercise of the partys commercially
reasonable best efforts within ten days following written notice
to the party committing the breach and which breach would, if
occurring or
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35
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continuing on the closing date, result in the failure of the
condition relating to breaches of representations, warranties
and covenants described under Conditions to
the Completion of the Merger.
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by Marshall & Ilsley, if the First Indiana board of
directors or any committee of the board of directors withholds,
withdraws, amends or modifies in any manner adverse to
Marshall & Ilsley, its recommendation that First
Indianas shareholders approve the merger agreement and the
merger, or First Indiana fails to include the boards
recommendation in favor of the merger agreement and the merger
in this proxy statement;
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by First Indiana if, prior to the vote of its shareholders,
First Indiana has entered into a definitive agreement with
respect to a more favorable offer with a third party; or
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by either First Indiana or Marshall & Ilsley, if any
of the conditions to the obligations of the party to complete
the merger have not been satisfied or waived by such party at
closing or the party reasonably determines that the timely
satisfaction of any condition has become impossible or if there
has been a material adverse effect on the other party.
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Any termination of the merger agreement will be effective
immediately upon the delivery of written notice by the
terminating party to the other party, except that if either
First Indiana or Marshall & Ilsley terminates the
agreement due to the breach of any covenant or agreement by the
other party, the termination will be effective ten days after
the delivery of written notice by the terminating party to the
other party if such breach was unintentional and curable and is
not cured within such
ten-day
period.
First Indiana will pay to Marshall & Ilsley a
termination fee in the amount of $18.3 million plus
Marshall & Ilsleys reimbursable expenses if:
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First Indiana has terminated the merger agreement prior to a
shareholder vote and has entered into a definitive agreement
with respect to a superior offer with a third party;
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Marshall & Ilsley has terminated the merger agreement
because First Indianas board of directors or a committee
of its board of directors has withheld, withdrawn, amended or
modified, in a manner adverse to Marshall & Ilsley,
its approval or recommendation of the merger agreement or the
merger, or failed to include its recommendation that First
Indiana shareholders vote for approval of the merger agreement
and the merger in this proxy statement, and within
12 months following the termination of the merger agreement
an acquisition proposal is consummated or First Indiana enters
into a contract providing for an acquisition proposal;
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Marshall & Ilsley or First Indiana has terminated the
merger agreement because the merger has not been consummated
prior to February 29, 2008 (or March 31, 2008, if the
reason the merger is not completed by such date is due to the
failure to obtain the required regulatory approvals or the
required waiting periods have not yet expired or been
terminated) and prior to such termination:
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First Indiana has not held a meeting of its shareholders,
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an acquisition proposal has been received by First Indiana and
not withdrawn, and
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within 12 months following the termination of the merger
agreement, such acquisition proposal is consummated or First
Indiana enters into a contract providing for such acquisition
proposal; or
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Marshall & Ilsley or First Indiana has terminated the
merger agreement because the required approval of First Indiana
shareholders was not obtained at a meeting of First Indiana
shareholders where a final vote on a proposal to adopt the
merger agreement was taken, prior to such termination an
acquisition proposal has been received by First Indiana and not
withdrawn, and within 12 months following the termination
of the merger agreement, such acquisition proposal is
consummated or First Indiana enters into a contract providing
for such acquisition proposal.
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36
Except as otherwise provided in the merger agreement, First
Indiana and Marshall & Ilsley will be responsible for
their own expenses incidental to the merger.
Stockholder
Voting Agreement
In order to induce Marshall & Ilsley to enter into the
merger agreement, certain directors and executive officers who
are shareholders of First Indiana and who own and have the
ability to vote, in the aggregate, approximately
16.6 percent of the outstanding shares of First Indiana
common stock as of the record date, have agreed that at any
meeting of the shareholders of First Indiana or in connection
with any written consent of the shareholders of First Indiana,
each such shareholder will vote all shares of First Indiana
common stock held of record or beneficially owned by such
shareholder (to the extent the shareholder has the right to vote
or direct the voting of such shares):
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in favor of the merger agreement and the merger; and
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against any proposal relating to an acquisition proposal and
against any action or agreement that would impede, frustrate,
prevent or nullify the stockholder voting agreement or result in
a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of First Indiana
under the merger agreement or which would result in any of the
conditions to the parties obligations to effect the merger
described in the merger agreement not being fulfilled; such
shareholder, may, however, vote his or her shares in favor of a
superior offer that is submitted to First Indiana shareholders
for approval, subject to certain conditions specified in the
stockholder voting agreement.
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Each shareholder who is a party to the stockholder voting
agreement has agreed that, except as provided by the merger
agreement and the stockholder voting agreement, such shareholder
will not:
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offer to transfer, transfer or consent to the transfer of any or
all shares of First Indiana common stock beneficially owned by
such shareholder (and as to which such shareholder has the right
to vote or direct the voting) or any interest in such shares
without the prior written consent of Marshall & Ilsley;
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enter into any contract, option or other agreement or
understanding with respect to any transfer of any such shares or
any interest in such shares;
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grant any proxy, power-of-attorney or other authorization or
consent with respect to any such shares, except to vote such
shares in accordance with the stockholder voting agreement;
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deposit into a voting trust or enter into a voting agreement or
arrangement with respect to any such shares; or
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take any other action that would cause any representation or
warranty made under the stockholder voting agreement to become
untrue or incorrect in any material respect or in any way
restrict, limit or interfere with the performance of such
shareholders obligations or transactions contemplated by
the stockholder voting agreement and the merger agreement.
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Except to the extent a shareholder, or any officer or affiliate
of a shareholder, is a director of First Indiana and is acting
solely in such capacity or is exercising his or her fiduciary
duties as a First Indiana director (to the extent permitted in
the merger agreement), each shareholder who is a party to the
stockholder voting agreement has agreed that such shareholder
shall not encourage, solicit, initiate or participate in any way
in any discussions or negotiations with, or provide information
to, afford access to First Indianas properties, books or
records to or otherwise take any action to assist or facilitate,
any person concerning any acquisition proposal. Each shareholder
who is a party to the stockholder voting agreement has agreed to
cease any such existing activities and to immediately
communicate to Marshall & Ilsley the terms of any
acquisition proposal and the identity of the person making such
an acquisition proposal or inquiry.
Each shareholder who is a party to the stockholder voting
agreement has waived any rights of appraisal or rights to
dissent from the merger.
Each shareholder who is a party to the stockholder voting
agreement has agreed to take all actions necessary to consummate
and make effective the transactions contemplated by the
stockholder voting agreement and the merger agreement.
37
The stockholder voting agreement with respect to each
shareholder will terminate upon the earliest of:
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the effective time of the merger; or
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the termination of the merger agreement.
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DESCRIPTION
OF MARSHALL & ILSLEY CORPORATION
Marshall & Ilsley Corporation is a registered bank
holding company under the Bank Holding Company Act of 1956 and
is certified as a financial holding company under the
Gramm-Leach-Bliley Act of 1999. On November 1, 2007,
Marshall & Ilsley completed a corporate reorganization
in connection with the separation of its data services
subsidiary, Metavante Corporation, into a publicly-traded
corporation known as Metavante Technologies, Inc. Following the
reorganization and separation transactions, the shareholders of
the old Marshall & Ilsley Corporation remained the
owners of 100% of the new Marshall & Ilsley
Corporation, which continues to own and operate all of the
banking businesses of the prior organization, and 75% of
Metavante Technologies, Inc.
As a result of the reorganization transactions that accompanied
the separation of Metavante, the entity that entered into the
merger agreement with First Indiana was converted into a limited
liability company and is now a wholly-owned subsidiary through
which the publicly-traded Marshall & Ilsley
Corporation owns its banking and non-banking subsidiaries. As of
June 30, 2007, the old Marshall & Ilsley had
consolidated total assets of approximately $58.3 billion
and consolidated total deposits of approximately
$35.0 billion, making it the largest bank holding company
headquartered in Wisconsin. On a pro forma basis giving effect
to the reorganization and separation transactions, total assets
as of June 30, 2007 were $55.8 billion and
consolidated total deposits as of June 30, 2007 were
$35.2 billion. As of June 30, 2007, Marshall &
Ilsleys total shareholders equity was approximately
$6.4 billion.
M&I Marshall & Ilsley Bank, one of
Marshall & Ilsleys primary bank subsidiaries, is
the largest Wisconsin-based bank with 192 offices throughout the
state. In addition, M&I Marshall & Ilsley Bank
has 49 locations throughout Arizona; 30 offices on
Floridas west coast and in central Florida; 14 offices in
Kansas City and nearby communities; 22 offices in metropolitan
Minneapolis/St. Paul; one office in Duluth, Minnesota; three
offices in Tulsa, Oklahoma; and one office in Las Vegas, Nevada.
Marshall & Ilsleys Southwest Bank subsidiary has
17 offices in the greater St. Louis area. M&I
Marshall & Ilsley Bank also provides trust and
investment management, equipment leasing, mortgage banking,
asset-based lending, financial planning, investments and
insurance services from offices throughout the country and on
the Internet.
Marshall & Ilsleys common stock is traded on the
New York Stock Exchange under the symbol MI.
DESCRIPTION
OF FIRST INDIANA CORPORATION
First Indiana, incorporated under the laws of the State of
Indiana in 1986, is a registered bank holding company under the
Bank Holding Company Act and a financial holding company under
the Gramm-Leach-Bliley Act. First Indianas principal
assets are the stock of its bank and non-bank subsidiaries. As
of June 30, 2007, First Indiana had consolidated total
assets of approximately $2.2 billion and consolidated total
deposits of approximately $1.7 billion, making it the
largest bank holding company headquartered in Indianapolis. As
of June 30, 2007, First Indianas total
shareholders equity was approximately $178.1 million.
First Indiana Bank, First Indianas principal subsidiary,
was founded in 1915 and is the largest Indianapolis,
Indiana-based national bank. First Indiana Bank is engaged
primarily in the business of attracting deposits from the
general public and originating commercial loans and consumer
loans. It offers a full range of banking services through 32
offices in central Indiana.
First Indianas common stock is traded on the NASDAQ Global
Select Market under the symbol FINB.
38
SECURITY
OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table shows, as of October 17, 2007, the
number and percentage of shares of common stock held by First
Indianas directors, executive officers, holders of more
than five percent of First Indianas stock, and directors
and executive officers as a group.
The information provided in the table is based on our records,
information filed with the U.S. Securities and Exchange
Commission, and information provided to us, except where
otherwise noted.
The number of shares beneficially owned by each individual is
determined under SEC rules and the information is not
necessarily indicative of beneficial ownership for any other
purpose, including the ability to vote such shares at the
special meeting. Under these rules, beneficial ownership
includes any shares as to which the individual has the right to
acquire within 60 days after October 17, 2007 through
the exercise of any stock option or other right. Unless
otherwise indicated, each person has sole voting and investment
power (or shares these powers with his or her spouse) with
respect to the shares set forth in the following table.
Security
Ownership
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Name and Address
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Amount and Nature of
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Percent
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of Beneficial Owner(1)
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Beneficial Ownership
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of Class
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Gerald L. Bepko
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52,764
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(2)
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(3
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Anat Bird
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14,204
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(4)
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(3
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)
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Pedro P. Granadillo
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14,746
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(5)
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(3
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William G. Mays
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13,252
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(6)
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(3
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)
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Marni McKinney
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3,480,718
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(7)
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20.7
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%
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Robert H. McKinney
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3,480,718
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(7)
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20.7
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%
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Phyllis W. Minott
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64,317
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(8)
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(3
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Michael W. Wells
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1,667
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(9)
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(3
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Robert H. Warrington
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251,743
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(10)
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1.5
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%
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William J. Brunner
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66,324
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(11)
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(3
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David L. Maraman
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101,890
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(12)
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(3
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Tim S. Massey
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17,918
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(13)
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(3
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Reagan K. Rick
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36,335
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(14)
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(3
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)
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Executive Officers and Directors as a Group (13 Persons)
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4,115,879
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(15)
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24.2
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%
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Other Beneficial Owners of More than 5%:
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Marvin C. Schwartz
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989,446
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(16)
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6.0
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%
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(1)
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The business address for all First Indiana executive officers
and directors is 135 North Pennsylvania Street, Suite 1000,
Indianapolis, Indiana 46204.
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(2)
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Includes 22,926 shares held jointly with
Mr. Bepkos spouse; 27,158 shares as to which
there is a right to acquire beneficial ownership; and 2,680
deferred shares.
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(3)
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The number of shares represents less than one percent of First
Indianas common stock outstanding.
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(4)
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Includes 6,415 shares owned directly; 1,359 shares
held in trust under the Directors Deferred Fee plan;
3,750 shares as to which there is a right to acquire
beneficial ownership; and 2,680 deferred shares.
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(5)
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Includes 4,335 shares owned directly; 3,981 shares
held in trust under the Directors Deferred Fee Plan;
3,750 shares as to which there is a right to acquire
beneficial ownership; and 2,680 deferred shares.
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(6)
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Includes 2,326 shares owned directly; 5,746 shares
held in trust under the Directors Deferred Fee Plan;
2,500 shares as to which there is a right to acquire
beneficial ownership; and 2,680 deferred shares.
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39
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(7)
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These shares are beneficially owned by a group consisting
primarily of Robert H. McKinney and Marni McKinney.
Mr. McKinneys holdings include 1,010,310 shares
owned directly by Mr. McKinney; 53,621 shares owned of
record by Mr. McKinneys wife; 129,985 shares as
to which there is a right to acquire beneficial ownership;
1,051,626 shares held by a limited partnership established
by Mr. McKinney for the benefit of his children, including
Marni McKinney, which Mr. McKinney is deemed to
beneficially own; and 2,349 deferred shares. Marni
McKinneys holdings include 327,216 shares owned
directly by Ms. McKinney or her spouse (including
6,250 shares of restricted stock granted to
Ms. McKinney under the 2002 Stock Incentive Plan);
16,018 shares held on her behalf under First Indiana
Banks 401(k) Plan; 207 shares held in an Individual
Retirement Account; and 168,988 shares as to which there is
a right to acquire beneficial ownership. The total held by the
group also includes 720,398 shares held in two irrevocable
trusts of which Ms. McKinney is the trustee and which were
established by Mr. McKinney for the benefit of his children.
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(8)
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Includes 27,108 shares owned directly; 11,817 shares
held under the Dividend Reinvestment Plan; 21,306 shares as
to which there is a right to acquire beneficial ownership; and
2,680 deferred shares.
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(9)
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Includes 1,000 shares jointly owned with Mr. Wells
spouse and 667 deferred shares.
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(10)
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Includes 4,318 shares held on his behalf under First
Indiana Banks 401(k) Plan; 184,926 shares owned
directly (25,000 restricted shares and 12,500 deferred shares
granted under the 2006-2008 Long-Term Incentive Program; and
12,500 shares of restricted stock granted under the 2004
Executive Compensation Plan); and 62,499 shares as to which
there is a right to acquire beneficial ownership.
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(11)
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Includes 33,259 shares owned directly (12,500 shares
of restricted stock granted to Mr. Brunner under the 2002
Stock Incentive Plan; 4,375 shares of restricted stock and
2,187 deferred shares granted under the
2006-2008
Long-Term Incentive Program); and 33,065 shares as to which
there is a right to acquire beneficial ownership.
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(12)
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Includes 97,724 shares owned directly (59,767 shares
of restricted stock granted to Mr. Maraman pursuant to the
2002 Stock Incentive Plan; 4,375 shares of restricted
stock; and 2,187 deferred shares pursuant to the
2006-2008
Long-Term Incentive Program); and 4,166 shares as to which
there is a right to acquire beneficial ownership.
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(13)
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Includes 17,918 shares owned directly (12,500 shares of
restricted stock; and 2,916 shares of restricted stock and
1,458 deferred shares pursuant to the 2006-2008 Long-Term
Incentive Program).
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(14)
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Includes 25,310 shares owned directly (1,250 shares of
restricted stock granted to Mr. Rick pursuant to the 2002
Stock Incentive Plan; 12,500 shares of restricted stock
granted to Mr. Rick pursuant to the 2004 Executive
Compensation Plan; and 4,375 shares of restricted stock,
and 2,187 deferred shares pursuant to the 2006-2008 Long-Term
Incentive Program); 5,817 shares held in an Individual
Retirement Account; and 5,208 shares as to which there is a
right to acquire beneficial ownership.
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(15)
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Includes 1,406 shares held under the Dividend Reinvestment
Plan; 20,336 shares held under First Indiana Banks
401(k) Plan; and 476,959 shares as to which there is a
right to acquire beneficial ownership.
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(16)
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This information is taken from a Schedule 13D Report dated
October 11, 2000, and filed by the shareholder with the
SEC. It does not reflect any changes in those shareholdings that
may have occurred since the date of such filing, except as
adjusted to reflect the five-for-four stock split on
February 27, 2002, to shareholders of record
February 13, 2002. According to the referenced
Schedule 13D Report, Mr. Schwartzs business
address is
c/o Neuberger
Berman, LLC, 605 Third Avenue, New York, New York
10158-3698.
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The special meeting is called for the purposes set forth in the
notice at the beginning of this proxy statement. The First
Indiana board of directors knows of no other matters for action
by shareholders at the special meeting other than the matters
described in the notice. However, the enclosed proxy will confer
discretionary authority to the persons named therein with
respect to any such matters which may properly come before the
special meeting. It is the intention of each of the persons
named in the proxy to vote pursuant to the proxy with respect to
such matters in accordance with his or her best judgment.
40
In the event that the effective time of the merger does not
occur prior to that date, First Indianas 2008 annual
meeting is anticipated to be held April 16, 2008. To be
considered for inclusion in the proxy statement for that annual
meeting, if it is held, shareholder proposals must be submitted
in writing by November 11, 2007, to First Indianas
corporate secretary at First Indiana Corporation, Attn:
Corporate Secretary, 135 N. Pennsylvania Street,
Suite 1000, Indianapolis, Indiana 46204. In addition, First
Indianas bylaws provide that any shareholder wishing to
nominate a candidate for director or propose other business at
the annual meeting must give First Indiana written notice
60 days before the meeting, and the notice must provide
certain other information as described in the bylaws. Copies of
the bylaws are available to shareholders free of charge upon
request to First Indianas corporate secretary. The persons
named in the proxies retain the discretion to vote proxies on
matters of which First Indiana is not properly notified at its
principal executive offices on or before 60 days before the
meeting and also retain this authority under certain other
circumstances.
FORWARD-LOOKING
STATEMENTS
This document contains certain forward-looking statements with
respect to the merger and the other transactions contemplated by
the merger agreement, as well as the business of each of
Marshall & Ilsley and First Indiana, including,
without limitation statements preceded by, followed by or that
include the words believes, expects,
anticipates, estimates or similar
expressions. These forward-looking statements involve certain
risks and uncertainties, and you should consider them with
caution. Actual results may differ materially from those
contemplated by such forward-looking statements due to, among
others, the following factors: (1) consummation of the
proposed merger and the other transactions contemplated by the
merger agreement is subject to approval of regulatory
authorities, which might not be obtained within the deadline
specified in the merger agreement, or at all; (2) the
proposed merger is subject to several other conditions,
including the absence of a material adverse effect on either
First Indiana or Marshall & Ilsley, which could arise
from changes in the interest rate environment, increased
competitive pressures, unexpected developments or the effects of
normal business risks, and changes in general economic or
business conditions, either nationally or in the states in which
Marshall & Ilsley and First Indiana are doing
business, resulting in, among other things, a deterioration in
credit quality or a reduced demand for credit; and
(3) burdensome legislative or regulatory changes which may
adversely affect the business in which Marshall &
Ilsley and First Indiana are engaged and cause the merger to be
abandoned.
WHERE
YOU CAN FIND MORE INFORMATION
Marshall & Ilsley and First Indiana are subject to the
reporting requirements of the Securities Exchange Act of 1934
and in accordance therewith file reports, proxy statements and
other information with the SEC. Such reports, proxy statements
and other information may be inspected and copied at prescribed
rates at the following locations of the SEC:
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Public Reference Room
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|
Midwest Regional Office
|
450 Fifth Street, N.W.
|
|
500 West Madison Street
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Room 1024
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|
Suite 1400
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Washington, D.C. 20549
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Chicago, IL 60661-2511
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Copies of such material may also be obtained at prescribed rates
from the Public Reference Section of the SEC, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. You
may obtain information on the operation of the Public Reference
Room by calling the SEC at
1-800-SEC-0330.
The SEC maintains an Internet site that contains reports, proxy
and information statements, and other information regarding
Marshall & Ilsley and First Indiana, and the address
of that site is
http://www.sec.gov.
You may obtain information about Marshall & Ilsley
on its Internet site
(
http://www.micorp.com
)
or about First Indiana on its Internet site
(
http://www.firstindiana.com
),
but the contents of those sites are not incorporated by
reference in, or otherwise a part of, this proxy statement and
are not soliciting material. First Indianas common stock
is quoted on the NASDAQ Global Select Market and reports, proxy
statements and other information concerning First Indiana are
available for inspection and copying at prescribed rates at the
office of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
Marshall & Ilsleys common stock is quoted on the
New York Stock Exchange, and reports, proxy statements and other
information concerning Marshall & Ilsley are available
for inspection and
41
copying at prescribed rates at the office of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
First Indiana has not authorized anyone to give any information
or make any representation about the merger or First Indiana
that is different from, or in addition to, that contained in
this document. Therefore, if anyone does give you information of
this sort, you should not rely on it. The information contained
in this document speaks only as of the date of this document
unless the information specifically indicates that another date
applies.
IT IS IMPORTANT THAT PROXIES BE RETURNED OR VOTED
PROMPTLY.
Whether or not you attend the meeting,
you are urged to execute and return the proxy or to vote your
proxy via telephone or the Internet in accordance with the
instructions on your proxy card.
For the Board of Directors,
Marni McKinney,
Chairman
November 5, 2007
42
APPENDIX A
The merger agreement has been included to provide you with
information regarding its terms. It is not intended to provide
any other factual information about First Indiana or
Marshall & Ilsley. Such information can be found
elsewhere in this proxy statement and in the public filings that
First Indiana and Marshall & Ilsley make with the
Securities and Exchange Commission, which are available without
charge at www.sec.gov.
The merger agreement contains representations and
warranties First Indiana and Marshall & Ilsley made to
each other. The assertions embodied in those representations and
warranties are qualified by information in confidential
disclosure schedules that First Indiana and Marshall &
Ilsley have exchanged in connection with signing the merger
agreement. In addition, certain annexes to the merger agreement
are not reproduced in this appendix. Although First Indiana does
not believe that the disclosure schedules or the omitted annexes
contain information that the securities laws require to be
publicly disclosed, the disclosure schedules do contain
information that modifies, qualifies and creates exceptions to
the representations and warranties set forth in the attached
merger agreement. Accordingly, you should not rely on the
representations and warranties as characterizations of the
actual state of facts, since they are modified by the underlying
disclosure schedules. These disclosure schedules contain
information that has been included in First Indianas and
Marshall & Ilsleys prior public disclosures, as
well as potential additional non-public information. Moreover,
information concerning the subject matter of the representations
and warranties may have changed since the date of the merger
agreement, which subsequent information may or may not be fully
reflected in First Indianas and Marshall &
Ilsleys public disclosures.
AGREEMENT
AND PLAN OF MERGER
AMONG
MARSHALL & ILSLEY CORPORATION,
FIC ACQUISITION CORPORATION
AND
FIRST INDIANA CORPORATION
Dated as of July 8, 2007
Table of
Contents
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Page
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ARTICLE I THE
MERGER
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A-1
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1.1
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The Merger
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A-1
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1.2
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The Closing; Effective Time
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A-1
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1.3
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Effect of the Merger
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A-2
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1.4
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Articles of Incorporation; By-Laws
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A-2
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1.5
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Directors and Officers
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A-2
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1.6
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Conversion of Securities
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A-2
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1.7
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Exchange of Certificates
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A-2
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1.8
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Stock Transfer Books
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A-3
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1.9
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Stock Options
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A-4
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
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A-4
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2.1
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Organization and Qualification;
Subsidiaries
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A-4
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2.2
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Articles of Incorporation and
By-Laws
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A-5
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2.3
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Capitalization
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A-5
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2.4
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Authority
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A-6
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2.5
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No Conflict; Required Filings and
Consents
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A-6
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2.6
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Compliance; Permits
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A-7
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2.7
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Securities and Banking Reports;
Financial Statements
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A-7
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2.8
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Absence of Certain Changes or
Events
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A-9
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2.9
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Absence of Proceedings and Orders
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A-10
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2.10
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Employee Benefit Plans
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A-11
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2.11
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Proxy Statement
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A-12
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2.12
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Title to Property
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A-12
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2.13
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Environmental Matters
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A-13
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2.14
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Absence of Agreements
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A-13
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2.15
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Taxes
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A-13
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2.16
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Insurance
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A-14
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2.17
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Brokers
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A-14
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2.18
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Seller Material Adverse Effect
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A-14
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2.19
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Material Contracts
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A-14
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2.20
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Opinion of Financial Advisor
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A-14
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2.21
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Vote Required
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A-15
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2.22
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Rights Agreement
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A-15
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2.23
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No Dissenters Rights
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A-15
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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A-15
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3.1
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Organization and Qualification;
Subsidiaries
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A-15
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3.2
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Organizational Documents
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A-16
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3.3
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Authority
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A-16
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3.4
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No Conflict; Required Filings and
Consents
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A-16
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3.5
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Absence of Proceedings and Orders
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A-16
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3.6
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Proxy Statement
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A-17
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3.7
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Brokers
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A-17
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A-i
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Page
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ARTICLE IV
COVENANTS OF SELLER
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A-17
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4.1
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Affirmative Covenants
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A-17
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4.2
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Negative Covenants
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A-17
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4.3
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No Solicitation of Transactions
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A-19
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4.4
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Update Disclosure; Breaches
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A-21
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4.5
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Delivery of Stockholder and Option
Information
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A-21
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4.6
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Loan and Investment Policies
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A-21
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4.7
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Access and Information
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A-22
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4.8
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Confidentiality Agreement
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A-22
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4.9
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Resignations
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A-22
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ARTICLE V
COVENANTS OF THE COMPANY AND THE MERGER SUB
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A-22
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5.1
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Affirmative Covenants
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A-22
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5.2
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Negative Covenants
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A-22
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5.3
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Breaches
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A-23
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5.4
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Confidentiality Agreement
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A-23
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ARTICLE VI
ADDITIONAL AGREEMENTS
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A-23
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6.1
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Proxy Statement
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A-23
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6.2
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Meeting of Sellers
Stockholders
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A-23
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6.3
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Appropriate Action; Consents;
Filings
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A-23
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6.4
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Employee Benefit Matters
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A-24
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6.5
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Directors and Officers
Indemnification and Insurance
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A-24
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6.6
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Notification of Certain Matters
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A-25
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6.7
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Public Announcements
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A-25
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6.8
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Customer Retention
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A-25
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6.9
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NASDAQ Delisting
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A-25
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6.10
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Additional Documents
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A-25
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ARTICLE VII
CONDITIONS OF MERGER
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A-25
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7.1
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Conditions to Obligation of Each
Party to Effect the Merger
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A-25
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7.2
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Additional Conditions to
Obligations of the Company and the Merger Sub
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A-26
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7.3
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Additional Conditions to
Obligations of the Seller
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A-27
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
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A-28
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8.1
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Termination
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A-28
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8.2
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Notice of Termination; Effect of
Termination
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A-29
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8.3
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Fees and Expenses
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A-29
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8.4
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Waiver
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A-30
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A-ii
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Page
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ARTICLE IX
GENERAL PROVISIONS
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A-30
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9.1
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Non-Survival of Representations,
Warranties and Agreements
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A-30
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9.2
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Notices
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A-30
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9.3
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Certain Definitions
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A-31
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9.4
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Headings
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A-34
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9.5
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Severability
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A-34
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9.6
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Entire Agreement
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A-34
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9.7
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Assignment
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A-34
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9.8
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Binding Effect
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A-34
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9.9
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Parties in Interest
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A-34
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9.10
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Governing Law
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A-34
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9.11
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Counterparts
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A-34
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9.12
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Time is of the Essence
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A-34
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9.13
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Specific Performance
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A-34
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9.14
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Interpretation
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A-35
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ANNEX A EMPLOYEE
BENEFIT MATTERS
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A-37
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ANNEX B FORM OF
OPINION OF COUNSEL TO SELLER
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ANNEX C FORM OF
OPINION OF COUNSEL TO COMPANY
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A-iii
Index
of Defined Terms
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Section
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Affiliate
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9.3
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Acquisition Proposal
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9.3
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Acquisition Transaction
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9.3
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Bank Secrecy Act
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2.9(d)
|
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BHCA
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2.1(a)
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Blue Sky Laws
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2.5(b)
|
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Business Day
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9.3
|
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Certificate
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1.7(b)
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Change of Recommendation
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4.3(c)
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Closing
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1.2(a)
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Closing Date
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1.2(a)
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Code
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2.10(b)
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Company
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Preamble
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Company Approvals
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3.1(a)
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Company Disclosure Schedule
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Article III
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Company Material Adverse Effect
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3.1(c)
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Company Organizational Documents
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3.2
|
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Company SEC Reports
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9.3
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Company Subsidiary
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3.1(a)
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Companys Board of Directors
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Preamble
|
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Confidentiality Agreement
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4.8
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Consent
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9.3
|
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Contract
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9.3
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Conversion
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9.8
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D&O Policy
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6.5(b)
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Effect
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2.1(d)
|
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Effective Time
|
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1.2(b)
|
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Environmental Claims
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2.13
|
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Environmental Laws
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2.13
|
|
ERISA
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2.10(a)
|
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Exchange Act
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2.5(b)
|
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Exchange Agent
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1.7(a)
|
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Exchange Fund
|
|
|
1.7(a)
|
|
Existing D&O Policy
|
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4.1(e)
|
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FDIC
|
|
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2.1(b)
|
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Federal Reserve Board
|
|
|
2.1(a)
|
|
FinCEN
|
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|
2.9(d)
|
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GAAP
|
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|
2.7(b)
|
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GLB Act
|
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|
2.1(a)
|
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Governmental Authority
|
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1.7(d)
|
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Hazardous Materials
|
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2.13
|
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HSR Act
|
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|
2.5(b)
|
|
IBCL
|
|
|
Preamble
|
|
A-iv
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Section
|
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Indemnified Parties
|
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6.5(d)
|
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IRS
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2.10(a)
|
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Knowledge
|
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9.3
|
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Law
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9.3
|
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Lien
|
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9.3
|
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Loan Property
|
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2.13
|
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Merger
|
|
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Preamble
|
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Merger Sub
|
|
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Preamble
|
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Merger Sub Common Stock
|
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1.6(c)
|
|
Merger Subs Board of
Directors
|
|
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Preamble
|
|
M&I LLC
|
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9.8
|
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OCC
|
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2.1(b)
|
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OFAC
|
|
|
2.9(d)
|
|
Option Consideration
|
|
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1.9
|
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Option Plans
|
|
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2.3
|
|
Options
|
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2.3
|
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Order
|
|
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9.3
|
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OTS
|
|
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3.1(a)
|
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Participation Facility
|
|
|
2.13
|
|
Patriot Act
|
|
|
2.9(d)
|
|
Per Share Consideration
|
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1.6(a)
|
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Person
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9.3
|
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Plans
|
|
|
2.10(a)
|
|
Preferred Share Purchase Right
|
|
|
9.3
|
|
Proceeding
|
|
|
9.3
|
|
Proxy Statement
|
|
|
2.11
|
|
Regulatory Authorities
|
|
|
9.3
|
|
Reimbursable Company Expenses
|
|
|
9.3
|
|
Rights
|
|
|
9.3
|
|
Rights Agreement
|
|
|
2.22
|
|
Sarbanes-Oxley
|
|
|
2.7(d)
|
|
SEC
|
|
|
2.7(a)
|
|
Section 409A
|
|
|
2.10(e)
|
|
Securities Act
|
|
|
2.5(b)
|
|
Seller
|
|
|
Preamble
|
|
Seller Approvals
|
|
|
2.1(b)
|
|
Seller Articles
|
|
|
1.4
|
|
Seller By-Laws
|
|
|
1.4
|
|
Seller Common Stock
|
|
|
1.6(a)
|
|
Seller Disclosure Schedule
|
|
|
Article II
|
|
Seller Material Adverse Effect
|
|
|
2.1(d)
|
|
Seller Reports
|
|
|
2.7(a)
|
|
Seller SEC Documents
|
|
|
2.7(c)
|
|
Seller SEC Reports
|
|
|
2.7(a)
|
|
A-v
|
|
|
|
|
|
|
Section
|
|
Seller Stockholders Meeting
|
|
|
2.11
|
|
Seller Subsidiary
|
|
|
2.1(a)
|
|
Sellers Board of Directors
|
|
|
Preamble
|
|
Sellers Board of Directors
Recommendation
|
|
|
2.4
|
|
Shares
|
|
|
1.6(a)
|
|
Subsidiary
|
|
|
9.3
|
|
Subsidiary Organizational Documents
|
|
|
2.2
|
|
Subsidiary Securities
|
|
|
2.1(c)
|
|
Superior Offer
|
|
|
9.3
|
|
Surviving Corporation
|
|
|
1.1
|
|
Tax
|
|
|
2.15
|
|
Tax Returns
|
|
|
2.15
|
|
Termination Fee
|
|
|
8.3(b)
|
|
Title IV Plan
|
|
|
2.10(b)
|
|
Trust Securities
|
|
|
2.3
|
|
Voting Agreement
|
|
|
Preamble
|
|
WBCL
|
|
|
Preamble
|
|
WI DFI
|
|
|
1.2(b)
|
|
A-vi
AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
, dated as of July 8,
2007 (this Agreement), among MARSHALL &
ILSLEY CORPORATION, a Wisconsin corporation (the
Company), FIC ACQUISITION CORPORATION, a Wisconsin
corporation (the Merger Sub), and FIRST INDIANA
CORPORATION, an Indiana corporation (the Seller).
Capitalized terms used herein without definition are defined in
the Sections of this Agreement specified in the index of defined
terms attached hereto.
WHEREAS
, the Boards of Directors of the Company (the
Companys Board of Directors), the Merger Sub
(the Merger Subs Board of Directors) and the
Seller (the Sellers Board of Directors) have
each determined that it is advisable to and in the best
interests of their respective stockholders for the Merger Sub to
merge with and into the Seller (the Merger),
pursuant to which the Seller would become a wholly-owned
subsidiary of the Company, upon the terms and subject to the
conditions set forth herein and in accordance with the Indiana
Business Corporation Law (the IBCL) and the
Wisconsin Business Corporation Law (the WBCL);
WHEREAS
, the Companys Board of Directors, the
Merger Subs Board of Directors and the Sellers Board
of Directors have each approved the Merger, upon the terms and
subject to the conditions set forth herein, and approved and
adopted this Agreement; and
WHEREAS
, subsequent to the Sellers approval of this
Agreement and concurrently with the execution of this Agreement
and as a condition and an inducement to the willingness of the
Company and the Merger Sub to enter into this Agreement, the
Company has entered into a Stockholder Voting Agreement pursuant
to which each stockholder listed on Schedule I to such
Stockholder Voting Agreement has agreed to vote the shares of
the Seller Common Stock beneficially owned by such stockholder
in favor of the Merger (the Voting Agreement).
NOW
,
THEREFORE
, in consideration of the foregoing
premises and the representations, warranties and agreements
contained herein, and subject to the terms and conditions set
forth herein, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1
The Merger
.
Upon the terms and
subject to the conditions set forth in this Agreement, and in
accordance with the IBCL, the WBCL and a Plan of Merger
consistent with the terms and conditions hereof to be agreed to
by the parties, at the Effective Time, the Merger Sub shall be
merged with and into the Seller. As a result of the Merger, the
separate corporate existence of the Merger Sub shall cease and
the Seller shall continue as the surviving corporation of the
Merger (the Surviving Corporation).
1.2
The Closing; Effective Time
.
(a) The closing of the Merger and the transactions
contemplated hereby (the Closing) shall be held at
such time, date (the Closing Date) and location as
may be mutually agreed by the parties. In the absence of such
agreement, the Closing shall be held at the offices of
Godfrey & Kahn, S.C., 780 North Water Street,
Milwaukee, Wisconsin, commencing at 9:00 a.m., Milwaukee
time, on a date specified by either party upon five
(5) Business Days written notice after the last to
occur of the following events: (i) receipt of all Consents
of Governmental Authorities legally required to consummate the
Merger and the expiration of all statutory waiting periods
applicable to the Merger and the other transactions contemplated
hereby; and (ii) approval of this Agreement and the Merger
by the Sellers stockholders in the manner contemplated by
Section 6.2;
provided
,
however
, that, at the
Companys election, the Closing may be deferred until the
first Business Day of the calendar month after the month in
which the conditions set forth in clauses (i) and (ii),
above, have been satisfied. Scheduling or commencing the Closing
shall not constitute a waiver of the conditions set forth in
Article VII by either the Company or the Seller.
(b) Contemporaneously with the Closing, the parties hereto
shall cause the Merger to be consummated by filing articles of
merger, as necessary, and any other required documents, with the
Secretary of State of the State of Indiana and the Department of
Financial Institutions of the State of Wisconsin (the WI
DFI), in such form as required by, and executed in
accordance with the relevant provisions of, the IBCL and the
WBCL (the effective date and time of such filing or such date
and time as the Company and the Seller shall agree and specify
in the articles of merger are referred to herein as the
Effective Time).
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1.3
Effect of the Merger
.
At the
Effective Time, the effect of the Merger shall be as provided in
this Agreement and the applicable provisions of the IBCL and the
WBCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, except as otherwise
provided herein, all of the property, rights, privileges, powers
and franchises of the Seller and the Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties
of the Seller and the Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4
Articles of Incorporation;
By-Laws
.
At the Effective Time, the
Sellers Articles of Incorporation and the Sellers
By-Laws, each as amended or restated (the Seller
Articles and the Seller By-Laws,
respectively), as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation and the By-Laws of
the Surviving Corporation.
1.5
Directors and Officers
.
At the
Effective Time, the directors of the Merger Sub immediately
prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance
with the Articles of Incorporation and By-Laws of the Surviving
Corporation. At the Effective Time, the officers of the Merger
Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed.
1.6
Conversion of Securities
.
(a) At the Effective Time, by virtue of the Merger and
without action on the part of the Company, the Merger Sub or the
Seller, each share of the common stock, $0.01 par value, of
the Seller together with the associated Preferred Share Purchase
Right (Seller Common Stock), issued and outstanding
immediately prior to the Effective Time, other than
(i) shares of Seller Common Stock held in the treasury of
the Seller, and (ii) shares of Seller Common Stock owned by
the Company or any Company Subsidiary for its own account, shall
cease to be outstanding and shall be converted into the right to
receive an amount in cash equal to Thirty-Two and No/100 Dollars
($32.00), without interest (the Per Share
Consideration). For purposes hereof, Shares
shall mean all shares of Seller Common Stock issued and
outstanding other than those shares of Seller Common Stock
described in clauses (i) and (ii), above.
(b) Each share of Seller Common Stock held in the treasury
of the Seller and each share held by the Company or any Company
Subsidiary for its own account immediately prior to the
Effective Time shall be canceled and extinguished without any
conversion thereof as provided in this Section 1.6.
(c) Each share of common stock, par value $0.01 per share,
of the Merger Sub (Merger Sub Common Stock) issued
and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and
non-assessable share of common stock, par value $0.01 per share,
of the Surviving Corporation. Following the Effective Time, each
certificate evidencing ownership of shares of Merger Sub Common
Stock shall evidence ownership of such shares of the Surviving
Corporation.
1.7
Exchange of Certificates
.
(a)
Exchange Agent
.
The Company
shall deposit, or shall cause to be deposited, from time to
time, with the bank or trust company designated by the Company
as the exchange agent (the Exchange Agent), for the
benefit of the holders of Shares, for exchange in accordance
with this Article I, through the Exchange Agent, the Per
Share Consideration (the Exchange Fund). Such
deposits shall be made after the Effective Time as requested by
the Exchange Agent in order for the Exchange Agent to promptly
deliver the Per Share Consideration.
(b)
Exchange Procedures
.
As soon
as reasonably practicable after the Effective Time but in any
event no more than ten (10) Business Days thereafter, the
Exchange Agent shall mail to each holder of record of a
certificate representing ownership of Shares (a
Certificate or Certificates) whose
Shares were converted into the right to receive the Per Share
Consideration pursuant to Section 1.6, (i) a letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions
as the Company may reasonably specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Per Share Consideration. Upon
surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in
exchange therefor the
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Per Share Consideration as provided in this Article I,
which such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this
Article I, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership
of Shares which is not registered in the transfer records of the
Seller, a transferee may exchange the Certificate representing
such Shares for the Per Share Consideration as provided in this
Article I if the Certificate representing such Shares is
presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer, and by evidence
that any applicable stock transfer taxes have been paid. In the
event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and
the posting by such Person of a bond in such amount as the
Company may direct as indemnity against any claim that may be
made against it or the Exchange Agent with respect to such
Certificate, the Exchange Agent will pay in exchange for such
lost, stolen or destroyed Certificate the Per Share
Consideration as provided in this Article I, which such
holder would have had the right to receive in respect of such
lost, stolen or destroyed Certificate. Until surrendered as
contemplated by this Section 1.7, each Certificate (other
than Certificates representing shares of Seller Common Stock
described in clauses (i) and (ii) of
Section 1.6(a), above) shall be deemed at any time after
the Effective Time to represent only the right to receive upon
such surrender the Per Share Consideration, without interest, as
provided in this Article I.
(c)
No Further Rights in the
Shares
.
The Per Share Consideration paid upon
conversion of the Shares in accordance with the terms hereof
shall be deemed to have been paid in full satisfaction of all
rights pertaining to such Shares.
(d)
Termination of Exchange
Fund
.
Any portion of the Exchange Fund which
remains undistributed to the former stockholders of the Seller
for six (6) months after the Effective Time shall be
delivered to the Company, upon demand, and any former
stockholders of the Seller who have not theretofore complied
with this Article I shall thereafter look only to the
Company to claim the Per Share Consideration, without interest
thereon, and subject to Section 1.7(f). Any portion of the
Exchange Fund remaining unclaimed by holders of Shares as of a
date which is immediately prior to such time as such amounts
would otherwise escheat to or become property of any United
States federal, state or local or any foreign government, or
political subdivision thereof, or any multinational organization
or authority or any authority, agency or commission entitled to
exercise any administrative, executive, judicial, legislative,
police, regulatory (including, without limitation, any
Regulatory Authority) or taxing authority or power, any court or
tribunal (or any department, bureau or division thereof), or any
arbitrator or arbitral body (each a Governmental
Authority), shall, to the extent permitted by applicable
Law, become the property of the Surviving Corporation free and
clear of any claims or interest of any Person previously
entitled thereto.
(e)
No Liability
.
None of the
Company, the Merger Sub, the Surviving Corporation or the Seller
shall be liable to any former holder of Shares for any such
Shares (or dividends or distributions with respect thereto) or
cash or other payment delivered to a Governmental Authority
pursuant to any abandoned property, escheat or similar Laws.
(f)
Withholding Rights
.
Each of
the Company, the Surviving Corporation and the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any former
holder of Shares such amounts as it is required to deduct and
withhold with respect to the making of such payment under any
Laws relating to Taxes and pay such withholding amount over to
the appropriate Governmental Authority. To the extent that
amounts are so withheld by the Company, the Surviving
Corporation or the Exchange Agent, such withheld amounts shall
be treated for all purposes of this Agreement as having been
paid to the former holder of the Shares in respect of which such
deduction and withholding was made by the Company, the Surviving
Corporation or the Exchange Agent, as the case may be.
1.8
Stock Transfer Books
.
On the
business day immediately preceding the Effective Time, the stock
transfer books of the Seller shall be closed and there shall be
no further registration of transfers of shares of the Seller
Common Stock thereafter on the records of the Seller. From and
after the Effective Time, the holders of Certificates
outstanding immediately prior to the Effective Time shall cease
to have any rights with respect to such Shares except as
otherwise provided herein or by Law. On or after the Effective
Time, any Certificates presented to the Exchange Agent or the
Company for any reason shall be converted into the Per Share
Consideration in accordance with this Article I.
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1.9
Stock Options
.
Each Option
which is outstanding immediately prior to the Effective Time,
whether or not exercisable, shall be canceled, effective as of
the Effective Time, in exchange for a single lump-sum cash
payment from the Surviving Corporation (less any applicable
income or employment Tax withholding) equal to the product of
(i) the number of shares of Seller Common Stock subject to
such Option immediately prior to the Effective Time and
(ii) the excess, if any, of the Per Share Consideration
over the exercise price per share of such Option (the
Option Consideration);
provided
, that if the
exercise price per share of any such Option is equal to or
greater than the Per Share Consideration, such Option shall be
canceled without any cash payment being made in respect thereof.
Prior to the Closing, the Seller, in consultation with the
Company, shall take or cause to be taken any and all actions
reasonably necessary, including amendment of the Option Plans,
and shall use its reasonable best efforts to obtain any
necessary consent of each holder of an Option, (i) to give
effect to the treatment of Options pursuant to this
Section 1.9, to the extent such treatment is not expressly
provided for by the terms of the applicable Option Plans and
related award agreements, and (ii) to cause the actions
contemplated by this Section 1.9 to be in compliance with
applicable Law, including Section 409A, if applicable. The
Company shall pay the Option Consideration promptly after the
Effective Time and shall use its reasonable best efforts to mail
or deliver checks in an amount equal to the Option Consideration
to the Option holders entitled thereto on the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed in the Seller SEC Reports or in the
disclosure schedule delivered by the Seller to the Company prior
to the execution of this Agreement (the Seller Disclosure
Schedule), which shall set forth items of disclosure with
specific reference to the particular Section or subsection of
this Agreement to which the information in the Seller Disclosure
Schedule relates, the Seller hereby represents and warrants to
the Company as follows:
2.1
Organization and Qualification;
Subsidiaries
.
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the Laws of the State of
Indiana and a registered bank holding company under the Bank
Holding Company Act of 1956 and the regulations promulgated
thereunder, as amended (the BHCA). The Seller is
subject to regulation by the Board of Governors of the Federal
Reserve System (the Federal Reserve Board). The
Seller is a financial holding company under the
Gramm-Leach-Bliley Act of 1999 and the regulations promulgated
thereunder, as amended (the GLB Act). Each direct or
indirect Subsidiary of the Seller (a Seller
Subsidiary, or collectively the Seller
Subsidiaries) is a national banking association,
corporation, limited liability company, limited partnership or
trust duly organized, validly existing and in good standing
under the Laws of the United States of America or the state of
its incorporation or organization, as the case may be. Each of
the Seller and the Seller Subsidiaries has the requisite power
and authority to own, lease and operate the properties it now
owns or holds under lease and to carry on its business as it is
now being conducted, is duly qualified or licensed as a foreign
business entity to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased
or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such
jurisdictions in which the failure to be so qualified or
licensed would not have a Seller Material Adverse Effect.
(b) Each of the Seller and the Seller Subsidiaries has all
Consents and Orders (Seller Approvals) necessary to
own, lease and operate its properties and to carry on its
business as it is now being conducted, including all required
authorizations from the Federal Reserve Board, the Federal
Deposit Insurance Corporation (the FDIC), and the
Office of Comptroller of the Currency (the OCC), and
neither the Seller nor any Seller Subsidiary has received any
notice of any Proceedings relating to the revocation or
modification of any Seller Approvals.
(c) A true and complete list of the Seller Subsidiaries,
together with (i) the Sellers percentage ownership of
each Seller Subsidiary and (ii) Laws under which the Seller
Subsidiary is incorporated or organized, is set forth in the
Seller Disclosure Schedule. The Seller or one or more of the
Seller Subsidiaries owns beneficially and of record all of the
outstanding shares of capital stock
and/or
other
equity interests, as the case may be (Subsidiary
Securities), of each of the Seller Subsidiaries. Except
for the Seller Subsidiaries, the Seller does not directly or
indirectly own any capital stock or equity interest in, or any
interests convertible into or exchangeable or exercisable for
any capital stock or equity interest in, any corporation,
partnership, joint venture or other business association or
other Person, other than in the ordinary course of business and
in no event in excess of five percent (5%) of the outstanding
equity securities of such Person.
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(d) As used in this Agreement, the term Seller
Material Adverse Effect means any effect, change, event,
fact, condition, occurrence or development (each an
Effect) that, individually or in the aggregate with
other Effects, (i) is material and adverse to the business,
assets, liabilities, results of operations or financial
condition of the Seller and the Seller Subsidiaries taken as a
whole,
and/or
(ii) materially impairs the ability of the Seller to
consummate the transactions contemplated hereby;
provided
,
however
, that the term Seller
Material Adverse Effect shall not be deemed to include the
impact of: (a) any Effect to the extent resulting from the
announcement of this Agreement or the transactions contemplated
hereby; (b) any action taken or not taken by the Seller or
the Seller Subsidiaries in accordance with the terms and
covenants contained in this Agreement; (c) any changes in
Laws or interpretations thereof that are generally applicable to
the banking industry; (d) changes in GAAP that are
generally applicable to the banking industry; (e) expenses
reasonably incurred in connection with the transactions
contemplated hereby; (f) changes attributable to or
resulting from changes in general economic conditions affecting
the banking industry generally, including, without limitation,
changes in interest rates and loan delinquency rates (unless
such Effect would reasonably be expected to have a materially
disproportionate impact on the business, assets, liabilities,
results of operations or financial condition of the Seller and
the Seller Subsidiaries taken as a whole relative to other
banking industry participants); or (g) the payment of any
amounts due to, or the provision of any other benefits to, any
officers or employees under employment Contracts,
non-competition agreements, employee benefit plans, severance
agreements or other arrangements in existence as of the date of
or contemplated by this Agreement, in each case only if
disclosed in Section 2.1(d) of the Seller Disclosure
Schedule, provided that the payment of any such amounts or the
provision of any such benefits shall be made in the ordinary
course consistent with past practices or paid in accordance with
such Contracts, agreements, plans or arrangements.
(e) The minute books of the Seller and each of the Seller
Subsidiaries contain complete and correct records of all
material matters approved at all meetings of, and all corporate
actions taken by, their respective stockholders and Boards of
Directors (including committees of their respective Boards of
Directors).
2.2
Articles of Incorporation and
By-Laws
.
The Seller has heretofore furnished
or made available to the Company a complete and correct copy of
the Seller Articles and the Seller By-Laws and the Articles of
Incorporation and the By-Laws, or other organizational
documents, as the case may be, of each Seller Subsidiary, each
as amended or restated (the Subsidiary Organizational
Documents). The Seller Articles, the Seller By-Laws and
the Subsidiary Organizational Documents are in full force and
effect. Neither the Seller nor any Seller Subsidiary is in
breach of any of the provisions of the Seller Articles, the
Seller By-Laws or the Subsidiary Organizational Documents.
2.3
Capitalization
.
The authorized
capital stock of the Seller consists of 33,000,000 shares
of Seller Common Stock and 2,000,000 shares of preferred
stock, par value $.01 per share, none of which shares of
preferred stock are outstanding as of the date of this
Agreement. As of July 6, 2007,
(i) 16,525,072 shares of Seller Common Stock are
issued and outstanding, all of which are duly authorized,
validly issued, fully paid and non-assessable, and not issued in
violation of any preemptive right of any Seller stockholder,
(ii) 4,075,646 shares of Seller Common Stock are held
in the treasury of the Seller, (iii) 643,776 shares of
Seller Common Stock are subject to outstanding options to
acquire shares of Seller Common Stock (the Options),
issued pursuant to the Sellers stock option plans
disclosed in Section 2.3 of the Seller Disclosure Schedule
(the Option Plans), (iv) Preferred Share
Purchase Rights have been issued to holders of the Seller Common
Stock, and (v) no undesignated shares are outstanding. The
authorized capital stock of First Indiana Capital Trust I
consists of 12,000 preferred securities, stated liquidation
amount of $1,000 per security, and 372 common securities, stated
liquidation amount of $1,000 per security, and the authorized
capital stock of First Indiana Capital Statutory Trust II
consists of 12,000 capital securities, stated liquidation amount
of $1,000 per security, and 372 common securities, stated
liquidation amount of $1,000 per security (collectively,
Trust Securities). Except as set forth above in
this Section 2.3, there are no outstanding Rights relating
to the issued or unissued capital stock
and/or
other
equity interests of the Seller, any Seller Subsidiary or
obligating the Seller or any Seller Subsidiary to issue or sell
any shares of capital stock or other securities of or in the
Seller or any Seller Subsidiary. Each Option (a) was
granted in compliance with all applicable Laws and all of the
terms and conditions of the Option Plan pursuant to which it was
issued, (b) has an exercise price per share of Seller
Common Stock equal to or greater than the fair market value of
such share at the close of business on the date of such grant,
(c) has a grant date identical to the date on which the
Sellers Board of Directors or any committee thereof
actually awarded such Option, and (d) qualifies for the tax and
accounting treatment afforded to
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such Option as reflected in the Sellers Tax Returns and
the Sellers financial statements. Section 2.3 of the
Seller Disclosure Schedule contains a complete and correct
description of all Options which do not fully vest upon
consummation of the transactions contemplated by this Agreement,
including the Merger. Section 2.3 of the Seller Disclosure
Schedule sets forth all dividends and other distributions, if
any, allocated to the shares of Seller Common Stock covered by
the Options but unpaid as of the date hereof. There are no
obligations, contingent or otherwise, of the Seller or any
Seller Subsidiary to repurchase, redeem or otherwise acquire any
shares of Seller Common Stock or Subsidiary Securities, as the
case may be, or to provide funds to or make any investment (in
the form of a loan, capital contribution or otherwise) in any
Seller Subsidiary or any other Person, except for loan
commitments and other funding obligations entered into in the
ordinary course of business. Except as set forth in
Section 2.3 of the Seller Disclosure Schedule, neither the
Seller nor any Seller Subsidiary has repurchased, redeemed or
otherwise acquired any of its shares of capital stock
and/or
other
equity interests since December 31, 2006. Each of the
Subsidiary Securities is duly authorized, validly issued, fully
paid and non-assessable, and not issued in violation of any
preemptive rights of any Seller Subsidiary stockholder or other
equity holder, and such shares owned by the Seller or a Seller
Subsidiary, as the case may be, are owned free and clear of all
voting rights and Liens whatsoever. All outstanding shares of
Seller Common Stock and Subsidiary Securities were issued in
compliance with all applicable Laws.
2.4
Authority
.
The Seller has the
requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby (other than,
with respect to the Merger, the approval and adoption of this
Agreement by the Sellers stockholders in accordance with
the IBCL, the Seller Articles and the Seller By-Laws). The
execution and delivery of this Agreement by the Seller and the
consummation by the Seller of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action on the part of the Seller, including, without
limitation, the Sellers Board of Directors (other than,
with respect to the Merger, the approval and adoption of this
Agreement by the Sellers stockholders in accordance with
the IBCL, the Seller Articles and the Seller By-Laws). As of the
date of this Agreement, the Sellers Board of Directors, at
a meeting duly called, constituted and held in accordance with
the IBCL and the provisions of the Seller Articles and the
Seller By-Laws, has by the unanimous vote of all of the members
of the Sellers Board of Directors determined (a) that
this Agreement and the transactions contemplated hereby,
including the Merger, are advisable to, fair to and in the best
interests of the Seller and its stockholders, (b) to submit
this Agreement for approval and adoption by the stockholders of
the Seller and to declare the advisability of this Agreement,
and (c) to recommend that the stockholders of the Seller
adopt and approve this Agreement and the transactions
contemplated hereby, including the Merger, and direct that this
Agreement and the Merger be submitted for consideration by the
stockholders of the Seller at the Seller Stockholders
Meeting (collectively, the Sellers Board of
Directors Recommendation). No other corporate proceedings
on the part of the Seller are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the Merger, the approval and
adoption of this Agreement by the Sellers stockholders in
accordance with the IBCL, the Seller Articles and the Seller
By-Laws). This Agreement has been duly and validly executed and
delivered by, and constitutes a valid and binding obligation of,
the Seller and, assuming due authorization, execution and
delivery by the Company, is enforceable against the Seller in
accordance with its terms, except as enforcement may be limited
by Laws affecting insured depository institutions, general
principles of equity, whether applied in a court of law or a
court of equity, and by bankruptcy, insolvency and similar Laws
affecting creditors rights and remedies generally.
2.5
No Conflict; Required Filings and
Consents
.
(a) The execution and delivery of this Agreement by the
Seller do not, and the performance of this Agreement and the
consummation of the transactions contemplated hereby by the
Seller will not, (i) conflict with or violate the Seller
Articles, the Seller By-Laws or the Subsidiary Organizational
Documents, (ii) conflict with or violate any Laws or Orders
applicable to the Seller or any Seller Subsidiary or by which
its or any of their respective properties is bound or affected,
or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of a Lien on any of the properties or
assets of the Seller or any Seller Subsidiary pursuant to, any
note, bond, mortgage, indenture, lease, license, permit,
franchise or other Contract to which the Seller or any Seller
Subsidiary is a party or by which the Seller or any Seller
Subsidiary or its or any of
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their respective properties is bound or affected.
Sections 23-1-42
and
23-1-43
of the IBCL are inapplicable to the execution, delivery or
performance of this Agreement and the Voting Agreement and the
transactions contemplated hereby and thereby, including the
Merger. Except for
Sections 23-1-42
and
23-1-43
of the IBCL, no other business combination,
control share acquisition, fair price or
other anti-takeover laws or regulations enacted under Indiana
state law apply or purport to apply to the execution, delivery
or performance of this Agreement or the Voting Agreement or any
of the transactions contemplated hereby or thereby, including
the Merger.
(b) The execution and delivery of this Agreement by the
Seller do not, and the performance of this Agreement and the
consummation of the transactions contemplated hereby by the
Seller will not, require any Consent from, or filing with or
notification to, any Governmental Authority, except for
applicable requirements, if any, of the Securities Act of 1933
and the regulations promulgated thereunder, as amended (the
Securities Act), the Securities Exchange Act of 1934
and the regulations promulgated thereunder, as amended (the
Exchange Act), state securities or blue sky laws and
the regulations promulgated thereunder, each as amended
(Blue Sky Laws), the BHCA, the banking laws of the
State of Indiana and the regulations promulgated thereunder, as
amended, the filing and recordation of appropriate merger or
other documents as required by the IBCL and the WBCL, and prior
notification filings with the Department of Justice under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the regulations
promulgated thereunder, as amended (the HSR Act).
Neither the Seller nor any Seller Subsidiary is subject to any
foreign Governmental Authority or foreign Law.
2.6
Compliance; Permits
.
Neither
the Seller nor any Seller Subsidiary is in conflict with, or in
default under or violation of, as applicable, (a) any Law
applicable to the Seller or any Seller Subsidiary or by which
its or any of their respective properties is bound or affected,
or (b) any note, bond, mortgage, indenture, lease, license,
permit, franchise or other Contract to which the Seller or any
Seller Subsidiary is a party or by which the Seller or any
Seller Subsidiary or its or any of their respective properties
is bound or affected, except for any such conflicts, defaults or
violations which would not have a Seller Material Adverse Effect.
2.7
Securities and Banking Reports; Financial
Statements
.
(a) The Seller and each Seller Subsidiary have filed all
forms, reports and documents required to be filed with
(x) the Securities and Exchange Commission
(SEC) since December 31, 2004, and, as of the
date of this Agreement, has delivered or made available to the
Company (i) its Annual Reports on
Form 10-K
for the fiscal years ended December 31, 2004, 2005 and
2006, respectively, (ii) all proxy statements relating to
the Sellers meetings of stockholders (whether annual or
special) held since December 31, 2004, (iii) all
Quarterly Reports on
Form 10-Q
filed by the Seller with the SEC since December 31, 2004,
(iv) all Reports on
Form 8-K
filed by the Seller with the SEC since December 31, 2004,
(v) all other reports or registration statements filed by
the Seller with the SEC since December 31, 2004, and
(vi) all amendments and supplements to all such reports and
registration statements filed by the Seller with the SEC since
December 31, 2004 (collectively, the Seller SEC
Reports) and (y) the Federal Reserve Board, the FDIC,
the OCC and any other applicable federal or state securities or
banking authorities (all such reports and statements are
collectively referred to as the Seller Reports). The
Seller Reports, including all Seller Reports filed after the
date of this Agreement, (i) were or will be prepared in
accordance with the requirements of applicable Law and
(ii) did not at the time they were filed, or will not at
the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The parties agree that failure of the
Sellers Chief Executive Officer or Chief Financial Officer
to provide any certification required to be filed with any
document filed with the SEC shall constitute an event that has a
Seller Material Adverse Effect.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained
in the Seller SEC Reports, including any Seller SEC Reports
filed after the date of this Agreement and prior to or on the
Effective Time, have been or will be prepared in accordance with
generally accepted accounting principles (GAAP)
applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto or required by
reason of a concurrent change to GAAP) and each fairly presents
in all material respects the consolidated financial position of
the Seller and the Seller Subsidiaries as of the respective
dates thereof and the consolidated results of its operations and
cash flows and changes in financial position for the periods
indicated, except that any unaudited interim financial
statements do not contain the footnotes required by GAAP and
were or
A-7
are subject to normal and recurring year-end adjustments, which
were not or are not expected to be material in amount, either
individually or in the aggregate. The Seller has not had any
dispute with any of its auditors regarding accounting matters or
policies during any of its past three (3) full fiscal years
or during the current fiscal year-to-date requiring disclosure
pursuant to Item 304 of
Regulation S-K
promulgated by the SEC.
(c) The Seller has made available to the Company a complete
and correct copy of any amendments or modifications which are
required to be filed with the SEC, but have not yet been filed
with the SEC, to (i) the Seller SEC Reports filed prior to
the date hereof, and (ii) Contracts which previously have
been filed by the Seller with the SEC pursuant to the Securities
Act and Exchange Act (together with the Seller SEC Reports, the
Seller SEC Documents). The Seller has timely
responded to all comment letters and other correspondence of the
staff of the SEC relating to the Seller SEC Documents, and the
SEC has not advised the Seller that any final responses are
inadequate, insufficient or otherwise non-responsive. The Seller
has made available to the Company complete and correct copies of
all correspondence between the SEC, on the one hand, and the
Seller and any of the Seller Subsidiaries, on the other hand,
occurring since December 31, 2004 and prior to the date
hereof and will, reasonably promptly following the receipt
thereof, make available to the Company any such correspondence
sent or received after the date hereof. To the Sellers
Knowledge, none of the Seller SEC Documents is the subject of
ongoing SEC review or outstanding SEC comment.
(d) The Seller and, to the Sellers Knowledge, each of
its officers and directors, are in compliance with and have
complied in all material respects with (A) the applicable
provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder, as amended
(Sarbanes-Oxley), including, without limitation,
Section 404 thereof and (B) the applicable listing and
corporate governance rules and regulations of the NASDAQ Stock
Market LLC. With respect to each Report on
Form 10-K
and
Form 10-Q
and each amendment of any such report filed by the Seller with
the SEC since December 31, 2004, the Chief Executive
Officer and Chief Financial Officer of the Seller have made all
certifications required by Sections 302 and 906 of
Sarbanes-Oxley at the time of such filing, and the statements
contained in each such certification were true and correct.
Further, the Seller has established and maintains
disclosure controls and procedures (as defined in
Rule 13a-15(e)
promulgated under the Exchange Act) that are reasonably designed
to ensure that material information (both financial and
non-financial) relating to the Seller and the Seller
Subsidiaries required to be disclosed by the Seller in the
reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that
such information is accumulated and communicated to the
Sellers principal executive officer and principal
financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the principal
executive officer and the principal financial officer of the
Seller required by Section 302 of Sarbanes-Oxley with
respect to such reports. For purposes of this Agreement,
principal executive officer and principal
financial officer shall have the meanings given to such
terms in Sarbanes-Oxley.
(e) The Seller has established and maintains a system of
internal control over financial reporting (as defined in
Rule 13a-15(f)
promulgated under the Exchange Act) (internal
controls). To the Sellers Knowledge, based on its
evaluation of internal controls prior to the date hereof, such
internal controls are sufficient to provide reasonable assurance
regarding the reliability of the Sellers financial
reporting and the preparation of the Sellers financial
statements for external purposes in accordance with GAAP. The
Seller has disclosed, based on its most recent evaluation of
internal controls prior to the date hereof, to the Sellers
auditors and audit committee (i) any significant
deficiencies and material weaknesses known to the Seller in the
design or operation of internal controls which are reasonably
likely to adversely affect in a material respect the
Sellers ability to record, process, summarize and report
financial information and (ii) any material fraud known to
the Seller that involves management or other employees who have
a significant role in internal controls. The Seller has made
available to the Company a summary of any such disclosure
regarding material weaknesses and fraud made by management to
the Sellers auditors and audit committee since
December 31, 2004. For purposes of this Agreement, a
significant deficiency in controls means an internal
control deficiency that adversely affects an entitys
ability to initiate, authorize, record, process, or report
external financial data reliably in accordance with GAAP. A
significant deficiency may be a single deficiency or
a combination of deficiencies that results in more than a remote
likelihood that a misstatement of the annual or interim
financial statements that is more than inconsequential will not
be prevented or detected. For purposes of this Agreement, a
material weakness in internal controls means a
significant deficiency,
A-8
or a combination of significant deficiencies, that results in
more than a remote likelihood that a material misstatement of
the annual or interim financial statements will not be prevented
or detected.
(f) There are no outstanding loans made by the Seller or
any Seller Subsidiary to any executive officer (as defined in
Rule 3b-7
promulgated under the Exchange Act) or director of the Seller,
other than loans that are subject to and that were made and
continue to be in compliance with Regulation O under the
Federal Reserve Act.
(g) Except (i) for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet
of the Seller included in the Sellers Quarterly Report on
Form 10-Q
for the period ended March 31, 2007, and (ii) for
liabilities incurred in the ordinary course of business
consistent with past practice since March 31, 2007, neither
the Seller nor any Seller Subsidiary has incurred any liability
of any nature whatsoever (whether absolute, accrued, contingent
or otherwise and whether due or to become due) that is required
to be disclosed on a balance sheet prepared in accordance with
GAAP that has had, or would reasonably be expected to have, a
Seller Material Adverse Effect.
(h) The Seller has not been notified by its independent
registered public accounting firm or by the staff of the SEC
that such accounting firm or the staff of the SEC, as the case
may be, are of the view that any financial statement included in
any registration statement filed by the Seller under the
Securities Act or any periodic or current report filed by the
Seller under the Exchange Act should be restated, or that the
Seller should modify its accounting in future periods in a
manner that would have, or would be reasonably expected to have,
a Seller Material Adverse Effect.
(i) Since December 31, 2006, none of the Seller, the
Seller Subsidiaries, any executive officer of the Seller or, to
the Sellers Knowledge, any auditor, accountant or
representative of the Seller or the Seller Subsidiaries, has
received or otherwise had or obtained knowledge of any
complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of the Seller or the Seller
Subsidiaries or their respective internal accounting controls,
including any complaint, allegation, assertion or claim that the
Seller or any Seller Subsidiary has engaged in questionable
accounting or auditing practices. To the Sellers
Knowledge, no attorney representing the Seller or the Seller
Subsidiaries, whether or not employed by the Seller or the
Seller Subsidiaries, has reported evidence of a material
violation of securities laws, breach of fiduciary duty or
similar violation by the Seller, any Seller Subsidiary or any of
their officers, directors, employees or agents to the
Sellers or any Seller Subsidiarys Board of Directors
or any committee thereof or to any director or officer of the
Seller or any Seller Subsidiary. Since December 31, 2006,
there have been no internal investigations regarding accounting
or revenue recognition discussed with, reviewed by or initiated
at the direction of the Chief Executive Officer, Chief Financial
Officer, individuals performing similar functions, general
counsel, the Sellers or any Seller Subsidiarys Board
of Directors or any committee thereof.
2.8
Absence of Certain Changes or
Events
.
(a) Since December 31, 2006 to the date hereof, the
Seller and the Seller Subsidiaries have conducted their
businesses only in the ordinary course and in a manner
consistent with past practice and, since December 31, 2006,
there has not been (i) any change in the financial
condition, results of operations or business of the Seller or
any of the Seller Subsidiaries which has had, or would be
reasonably expected to have, a Seller Material Adverse Effect,
(ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to any assets of the Seller
or any of the Seller Subsidiaries which has had, or would be
reasonably expected to have, a Seller Material Adverse Effect,
(iii) any change by the Seller in its accounting methods,
principles or practices, (iv) any revaluation by the Seller
of any of its assets in any material respect, (v) except
for regular, quarterly cash dividends on the Seller Common Stock
with usual record and payment dates to the date of this
Agreement and the purchase of Seller Common Stock pursuant to
the Sellers publicly announced stock repurchase program,
any declaration, setting aside or payment of any dividends or
distributions in respect of shares of Seller Common Stock or any
redemption, repurchase or other acquisition of any of its
securities or any Subsidiary Securities, (vi) any increase
in the wages, salaries, bonuses, compensation, pension or other
fringe benefits or perquisites payable to any executive officer,
employee or director of the Seller or any Seller Subsidiary or
any grant of any severance or termination pay, except in the
ordinary course of business consistent with past practices,
(vii) any strike, work stoppage, slow-down or other labor
disturbance, (viii) the execution of any collective
bargaining agreement or other Contract with a labor union or
organization, or (ix) any union organizing activities.
A-9
(b) To the Sellers Knowledge, no third Person has
used, with or without permission, the corporate name,
trademarks, trade names, service marks, logos, symbols or
similar intellectual property of the Seller or any Seller
Subsidiary in connection with the marketing, advertising,
promotion or sale of such third Persons products or
services, except for any such use which would not have a Seller
Material Adverse Effect. Neither the Seller nor any Seller
Subsidiary is a party to any joint marketing or other affinity
marketing program with any third Person.
2.9
Absence of Proceedings and
Orders
.
(a) There is no Proceeding pending or, to the Sellers
Knowledge, threatened in writing against the Seller or any
Seller Subsidiary or any of their properties or assets or
challenging the validity or propriety of the transactions
contemplated by this Agreement which, if determined adversely to
the Seller or such Seller Subsidiary, would reasonably be
expected to result in the Seller or such Seller Subsidiary
incurring a liability in an amount equal to or greater than
$100,000.
(b) There is no Order imposed upon the Seller, any of the
Seller Subsidiaries or the assets of the Seller or any of the
Seller Subsidiaries, including, without limitation, any Order
relating to any of the transactions contemplated by this
Agreement, which has had, or would reasonably be expected to
have, a Seller Material Adverse Effect.
(c) Except as set forth in the Sellers Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2006 or its
Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007 (without giving effect
to any amendment filed after the date of this Agreement),
neither the Seller nor any of the Seller Subsidiaries is subject
to and, to the Sellers Knowledge, there are no facts
and/or
circumstances in existence that will result in the Seller or any
of the Seller Subsidiaries becoming subject to, any written
Order, agreement (including an agreement under Section 4(m)
of the BHCA), memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or
extraordinary supervisory letter from, or has adopted any
extraordinary board resolutions at the request of, any
Governmental Authority charged with the supervision or
regulation of financial institutions or issuers of securities or
engaged in the insurance of deposits or the supervision or
regulation of it or any of the Seller Subsidiaries, nor has any
Governmental Authority advised it in writing or, to the
Sellers Knowledge, otherwise advised that it is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such Order,
agreement, memorandum of understanding or extraordinary
supervisory letter or any such board resolutions, nor, to the
Sellers Knowledge, has any Governmental Authority
commenced an investigation in connection therewith.
(d) The Seller is not aware of, has not been advised of,
and has no reason to believe in the existence of, any facts or
circumstances which would cause it or any of the Seller
Subsidiaries to be deemed to be (i) operating in violation
of The Currency and Foreign Transactions Reporting Act and the
regulations promulgated thereunder, as amended (the Bank
Secrecy Act), the USA Patriot Act of 2001 and the
regulations promulgated thereunder, as amended (the
Patriot Act), the laws and regulations promulgated
and administered by the Office of Foreign Asset Control
(OFAC), any Order issued with respect to anti-money
laundering by the United States Department of Justice or the
United States Department of Treasurys Financial Crimes
Enforcement Network (FinCEN), any Order issued by
OFAC, or any other applicable anti-money laundering Laws; or
(ii) not in satisfactory compliance with the applicable
privacy and customer information requirements contained in any
privacy, data protection or security breach notification Laws,
including, without limitation, Title V of the GLB Act and
the provisions of the information security program adopted
pursuant to 12 C.F.R Part 40. The Seller is not aware of
any facts or circumstances which would cause it to believe that
any non-public customer information has been disclosed to or
accessed by an unauthorized third Person in a manner which would
cause it or any of the Seller Subsidiaries to undertake any
remedial action. The Seller (or where appropriate the Seller
Subsidiary) has adopted and implemented an anti-money laundering
program that contains adequate and appropriate customer
identification verification procedures that comply with
Section 326 of the Patriot Act and such anti-money
laundering program meets the requirements in all material
respects of Section 352 of the Patriot Act and it (or such
other of the Seller Subsidiaries) has complied in all respects
with any requirements to file reports and other necessary
documents as required by the Patriot Act, the Bank Secrecy Act
or any other anti-money laundering Laws.
A-10
2.10
Employee Benefit Plans
.
(a)
Current Plans
.
The Seller
Disclosure Schedule lists all employee benefit plans (as defined
in Section 3(3) of the Employee Retirement Income Security
Act of 1974 and the regulations promulgated thereunder, as
amended (ERISA)), and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation,
retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and
all employment, termination, severance and other employment
Contracts or employment arrangements involving an obligation in
excess of $25,000, with respect to which the Seller or any
Seller Subsidiary has any obligation, whether absolute, accrued,
contingent or otherwise and whether due or to become due
(collectively, the Plans). The Seller has furnished
or made available to the Company a complete and correct copy of
each Plan (or a description of the Plans, if the Plans are not
in writing) and a complete and accurate copy of each material
document prepared in connection with each such Plan, including,
without limitation, and where applicable, a copy of
(i) each trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications,
(iii) the three (3) most recently filed United States
Internal Revenue Service (IRS) Forms 5500 and
related schedules, (iv) the most recently issued
determination letter from the IRS for each such Plan and the
materials submitted to obtain such letter, and (v) the
three (3) most recently prepared actuarial and financial
statements with respect to each such Plan.
(b)
Absence of Certain Types of
Plans
.
No member of the Sellers
controlled group, within the meaning of
Section 4001(a)(14) of ERISA, maintains or contributes to,
or within the five (5) years preceding the Effective Time
has maintained or contributed to, an employee pension benefit
plan subject to Title IV of ERISA (Title IV
Plan), including, without limitation, any
multiemployer pension plan as defined in
Section 3(37) of ERISA. Except as set forth in the Seller
Disclosure Schedule or the Seller SEC Reports, none of the Plans
obligates the Seller or any of the Seller Subsidiaries to pay
separation, severance, termination or similar benefits solely as
a result of any transaction contemplated by this Agreement or as
a result of a change in control, within the meaning
of such term under Section 280G of the Internal Revenue
Code of 1986, as amended (the Code). Except as
required by the Consolidated Omnibus Budget Reconciliation Act
of 1986, as amended, and except as set forth in the Seller
Disclosure Schedule or the Seller SEC Reports, none of the Plans
provides for or promises retiree medical, disability or life
insurance benefits to any current or former employee, officer or
director of the Seller or any of the Seller Subsidiaries. Each
of the Plans is subject only to the Laws of the United States or
a political subdivision thereof.
(c)
Compliance with Applicable
Law
.
To the Sellers Knowledge, each
Plan has been operated in all respects in accordance with the
requirements of all applicable Law and all Persons who
participate in the operation of such Plans and all Plan
fiduciaries (within the meaning of
Section 3(21) of ERISA) have acted in accordance with the
provisions of all applicable Law, except where such operations
or violations of applicable Law would not have a Seller Material
Adverse Effect. To the Sellers Knowledge, the Seller and
the Seller Subsidiaries have performed all obligations required
to be performed by any of them under, are not in any respect in
default under or in violation of, and the Seller and the Seller
Subsidiaries have no Knowledge of any default or violation by
any party to, any Plan, except where such failures, defaults or
violations would not have a Seller Material Adverse Effect. No
Proceeding is pending or, to the Knowledge of the Seller or the
Seller Subsidiaries, threatened with respect to any Plan (other
than claims for benefits in the ordinary course) and, to the
Knowledge of the Seller or the Seller Subsidiaries, no fact or
event exists that could give rise to any such Proceeding.
Neither the Seller nor any Seller Subsidiary has incurred any
liability under Section 302 of ERISA or Section 412 of
the Code that has not been satisfied in full and, to the
Sellers Knowledge, no condition exists that presents a
material risk of incurring any such liability.
(d)
Qualification of Certain
Plans
.
Each Plan that is intended to be
qualified under Section 401(a) of the Code or
Section 401(k) of the Code (including each trust
established in connection with such a Plan that is intended to
be exempt from federal income taxation under Section 501(a)
of the Code) has received a favorable determination letter from
the IRS that it is so qualified or is entitled to rely on a
favorable opinion or advisory letter issued to the sponsor of a
master and prototype plan pursuant to Section 19 of Revenue
Procedure
2005-16,
and, to the Sellers Knowledge, there is no fact or event
that could adversely affect the qualified status of any such
Plan. No trust maintained or contributed to by the Seller or any
of the Seller Subsidiaries is intended to be qualified as a
voluntary employees beneficiary association or is intended
to be exempt from federal income taxation under
Section 501(c)(9) of the Code.
A-11
(e)
Non-Qualified Deferred Compensation
Plans
.
Any Plan that is a non-qualified
deferred compensation plan subject to Section 409A of the
Code and the related guidance issued thereunder, as amended
(Section 409A) has been operated and
administered by the Seller and the Seller Subsidiaries in good
faith compliance with Section 409A from the period
beginning January 1, 2005 through the date hereof.
(f)
Absence of Certain Liabilities and
Events
.
To the Sellers Knowledge, there
has been no non-exempt prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any Plan. Neither the Seller nor any
Seller Subsidiary has incurred any liability for any excise tax
arising under Sections 4971 through 4980G of the Code that
would have a Seller Material Adverse Effect and, to the
Sellers Knowledge, no fact or event exists that could give
rise to any such liability.
(g)
Plan Contributions
.
All
contributions, premiums or payments required to be made with
respect to any Plan by the Seller and the Seller Subsidiaries
have been made on or before their due dates or within the
applicable grace period for payment without default.
(h)
Employment Contracts
.
Neither
the Seller nor any Seller Subsidiary is a party to any Contracts
for employment, severance, consulting or other similar
agreements with any employees, consultants, officers or
directors of the Seller or any of the Seller Subsidiaries,
except as set forth on Section 2.10(h) of the Seller
Disclosure Schedule. Neither the Seller nor any Seller
Subsidiary is a party to any collective bargaining agreements.
(i)
Effect of Agreement
.
The
consummation of the transactions contemplated by this Agreement
will not, either alone or in conjunction with another event,
entitle any current or former employee of the Seller or any
Seller Subsidiary to severance pay, unemployment compensation or
any other payment, including payments constituting excess
parachute payments within the meaning of Section 280G
of the Code or accelerate the time of payment or vesting or
increase the compensation due any such employee or former
employee.
2.11
Proxy Statement
.
The
information contained in the proxy statement to be sent to the
stockholders of the Seller in connection with the meeting of the
Sellers stockholders to consider the Merger (the
Seller Stockholders Meeting) (such proxy
statement as amended or supplemented is referred to herein as
the Proxy Statement) will not, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is
first mailed to stockholders, at the time of the Seller
Stockholders Meeting and at the Effective Time, be false
or misleading with respect to any material fact required to be
stated therein, or omit to state any material fact required to
be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they
are made, not misleading. If at any time prior to the Effective
Time any event relating to the Seller, the Seller Subsidiaries
or any of its or their Affiliates, officers or directors is
discovered by the Seller which should be set forth in an
amendment or supplement to the Proxy Statement, the Seller shall
promptly inform the Company thereof. The Proxy Statement will
comply in all material respects as to form with the requirements
of the Exchange Act. Notwithstanding the foregoing, the Seller
makes no representation or warranty with respect to any
information about, or supplied or omitted by, the Company which
is contained in any of the foregoing documents.
2.12
Title to Property
.
The Seller
Disclosure Schedule identifies all real property owned by the
Seller or any of the Seller Subsidiaries and identifies, to the
Sellers Knowledge, all real property leases pursuant to
which the Seller or any of the Seller Subsidiaries is a party,
either as a lessor or lessee. The Seller and each of the Seller
Subsidiaries has good and marketable title to all of their
respective properties and assets, real and personal, free and
clear of all Liens, except liens for Taxes not yet due and
payable, pledges to secure deposits and such minor imperfections
of title, if any, as do not materially detract from the value of
or interfere with the present use of the property affected
thereby and which would not have a Seller Material Adverse
Effect; and all leases and licenses pursuant to which the Seller
or any of the Seller Subsidiaries lease or license from other
Persons any real or material amounts of personal property are in
good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases and
licenses, any existing default or event of default (or event
which with notice or lapse of time, or both, would constitute a
default and in respect of which the Seller or such Seller
Subsidiary has not taken adequate steps to prevent such a
default from occurring), except for any such default or event
which has not had, and would not reasonably be expected to have,
a Seller Material Adverse Effect. All of the Sellers and
each of the Sellers Subsidiaries buildings and
equipment in regular use have been reasonably maintained and are
in good and serviceable condition, reasonable wear and tear
excepted, except for any defect as would not have a Seller
Material Adverse Effect.
A-12
2.13
Environmental Matters
.
To the
Sellers Knowledge and except for any Effect which has not
had, or would reasonably be expected to have, a Seller Material
Adverse Effect: (i) each of the Seller, the Seller
Subsidiaries, properties owned or operated by the Seller or the
Seller Subsidiaries, the Participation Facilities and the Loan
Properties are and at all times since they became properties
owned or operated by the Seller or the Seller Subsidiaries or,
in the case of Participation Facilities or Loan Properties,
since they became Participation Facilities or Loan Properties,
as the case may be, have been in compliance with all applicable
Laws, Orders and Contractual obligations relating to the
environment, health, safety, natural resources, wildlife or
Hazardous Materials which are hereinafter defined as
chemicals, pollutants, contaminants, wastes, toxic substances,
compounds, products, solid, liquid, gas, petroleum or other
regulated substances or materials which are hazardous, toxic or
otherwise harmful to health, safety, natural resources or the
environment (Environmental Laws); (ii) during
and prior to the period of (a) the Sellers or any of
the Seller Subsidiaries ownership or operation of any of
their respective current properties, (b) the Sellers
or any of the Seller Subsidiaries participation in the
management of any Participation Facility or (c) the
Sellers or any of the Seller Subsidiaries holding of
a security interest in a Loan Property, Hazardous Materials have
not been generated, treated, stored, transported, released or
disposed of in, on, under, above, from or affecting any such
property; (iii) there is no asbestos or any material amount
of urea formaldehyde materials in or on any property owned or
operated by the Seller or any Seller Subsidiary or any Loan
Property or Participation Facility and no electrical
transformers or capacitors, other than those owned by public
utility companies, on any such properties contain any
polychlorinated biphenyls; (iv) there are no underground or
aboveground storage tanks and there have never been any
underground or aboveground storage tanks located on, in or under
any properties currently or formerly owned or operated by the
Seller or any Seller Subsidiary or any Loan Property or
Participation Facility; (v) neither the Seller nor any
Seller Subsidiary has received any notice from any Governmental
Authority or third Person notifying the Seller or any Seller
Subsidiary of any Environmental Claim; and (vi) there are
no circumstances with respect to any properties currently owned
or operated by the Seller or any Seller Subsidiary or any Loan
Property or Participation Facility that could reasonably be
anticipated (a) to form the basis for an Environmental
Claim against the Seller or any Seller Subsidiary or any
properties currently or formerly owned or operated by the Seller
or any Seller Subsidiary or any Loan Property or Participation
Facility or (b) to cause any properties currently owned or
operated by the Seller or any Seller Subsidiary or any Loan
Property or Participation Facility to be subject to any
restrictions on ownership, occupancy, use or transferability
under any applicable Environmental Law or require notification
to or Consent of any Governmental Authority or third Person
pursuant to any Environmental Law.
The following definitions apply for purposes of this
Section 2.13: (a) Loan Property means any
real property in which the Seller or any Seller Subsidiary holds
a security interest and, where required by the context, said
term means the owner or operator of such property;
(b) Participation Facility means any facility
in which the Seller or any Seller Subsidiary participates in the
management and, where required by the context, said term means
the owner or operator of such property; and
(c) Environmental Claims shall mean any and all
administrative, regulatory, judicial or private Proceedings
relating in any way to (i) any Environmental Law;
(ii) any Hazardous Material including, without limitation,
any abatements, removal, remedial, corrective or other response
action in connection with any Hazardous Material, Environmental
Law or Order of a Governmental Authority; or (iii) any
actual or alleged damage, injury, threat or harm to health,
safety, natural resources, wildlife or the environment.
2.14
Absence of
Agreements
.
Neither the Seller nor any Seller
Subsidiary is a party to any Contract or any action by a
Governmental Authority which restricts the conduct of its
business (including any Contract containing covenants which
limit the ability of the Seller or of any Seller Subsidiary to
compete in any line of business or with any Person or which
involve any restriction of the geographical area in which, or
method by which, the Seller or any Seller Subsidiary may carry
on its business (other than as may be required by applicable Law
or Governmental Authorities)), or in any manner relates to its
capital adequacy, credit policies or management, nor has the
Seller been advised that any Governmental Authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such Contract or
Order.
2.15
Taxes
.
The Seller and the
Seller Subsidiaries have timely filed all Tax Returns required
to be filed by them on or prior to the date of this Agreement
(all such Tax Returns being accurate and complete in all
material respects), and the Seller and the Seller Subsidiaries
have timely paid and discharged all Taxes due in connection with
or with respect to the filing of such Tax Returns, except such
as are not yet due or are being contested in good
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faith by appropriate Proceedings and with respect to which the
Seller is maintaining reserves adequate for their payment. For
purposes of this Agreement, Tax or Taxes
shall mean taxes, charges, fees, levies and other governmental
assessments and impositions of any kind payable to any
Governmental Authority, including, without limitation,
(i) income, franchise, profits, gross receipts, estimated,
ad valorem, value-added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding,
disability, employment, social security, workers
compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, (ii) customs duties,
imposts, charges, levies or other similar assessments of any
kind, and (iii) interest, penalties and additions to tax
imposed with respect thereto; and Tax Returns shall
mean returns, reports and information statements with respect to
Taxes required to be filed with the IRS or any other
Governmental Authority, including, without limitation,
consolidated, combined and unitary tax returns. For purposes of
this Section 2.15, references to the Seller and the Seller
Subsidiaries include former subsidiaries of the Seller for the
periods during which any such Persons were owned, directly or
indirectly, by the Seller. Neither the IRS nor any other
Governmental Authority is now asserting, either through audits,
administrative Proceedings or court Proceedings, any deficiency
or claim for additional Taxes from the Seller or the Seller
Subsidiaries. Neither the Seller nor any of the Seller
Subsidiaries has granted any waiver of any statute of
limitations with respect to, or any extension of a period for
the assessment of, any Tax. Except for statutory liens for
current Taxes not yet due, there are no material Tax Liens on
any assets of the Seller or any of the Seller Subsidiaries.
Neither the Seller nor any of the Seller Subsidiaries has
received a ruling or entered into an agreement with the IRS or
any other Governmental Authority with respect to Taxes that
would have a Seller Material Adverse Effect. No agreements
relating to allocating or sharing of Taxes exist among the
Seller and the Seller Subsidiaries and no Tax indemnities given
by the Seller or the Seller Subsidiaries in connection with a
sale of stock or assets remain in effect. Neither the Seller nor
any of the Seller Subsidiaries is required to include in income
either (i) any amount in respect of any adjustment under
Section 481 of the Code or (ii) any installment sale
gain. Neither the Seller nor any of the Seller Subsidiaries
(i) is a member of an affiliated, consolidated, combined or
unitary group, other than one of which the Seller was the common
parent, or (ii) has any liability for the Taxes of any
Person (other than the Seller and the Seller Subsidiaries) under
Treasury
Regulation Section 1.1502-6
(or any similar provision of state or local Law), as a
transferee or successor, by Contract or otherwise.
2.16
Insurance
.
The Seller
Disclosure Schedule lists all policies of insurance of the
Seller and the Seller Subsidiaries currently in effect.
2.17
Brokers
.
No broker, finder or
investment banker (other than Sandler ONeill &
Partners, L.P.) is entitled to any brokerage, finders or
other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by
or on behalf of the Seller. Prior to the date of this Agreement,
the Seller has furnished to the Company a complete and correct
copy of all agreements between the Seller and Sandler
ONeill & Partners, L.P. pursuant to which such
firm would be entitled to any payment relating to the
transactions contemplated hereunder.
2.18
Seller Material Adverse
Effect
.
Since December 31, 2006, there
has not been any Effect that has had, or would be reasonably
expected to have, a Seller Material Adverse Effect.
2.19
Material Contracts
.
Except
for loan or credit agreements entered into by the Seller or any
Seller Subsidiary as lender in the ordinary course of business
consistent with past practice or as disclosed in
Section 2.19 of the Seller Disclosure Schedule (which may
reference other Sections of such Schedule), neither the Seller
nor any Seller Subsidiary is a party to or obligated under any
Contract which (i) is not terminable by the Seller or the
Seller Subsidiary without additional payment or penalty within
sixty (60) days of delivery of notice of such termination
and obligates the Seller or any Seller Subsidiary for payments
or other consideration with a value in excess of $100,000, in
the aggregate over the term of such Contract; or (ii) would
require disclosure by the Seller pursuant to
Item 601(b)(10) of
Regulation S-K
under the Exchange Act.
2.20
Opinion of Financial
Advisor
.
The Seller has received the opinion
of Sandler ONeill & Partners, L.P. on the date
of this Agreement to the effect that, as of the date of this
Agreement, the Per Share Consideration to be received in the
Merger by the Sellers stockholders is fair to the
Sellers stockholders from a financial point of view, and
the Seller will promptly, upon receipt of a written copy of such
opinion, deliver a copy of such opinion to the Company.
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2.21
Vote Required
.
The
affirmative vote of a majority of the votes that holders of the
outstanding shares of Seller Common Stock are entitled to cast
is the only vote of the holders of any class or series of the
Sellers capital stock necessary to approve this Agreement
and the transactions contemplated hereby, including the Merger.
2.22
Rights Agreement
.
The Seller
and the Sellers Board of Directors have taken all
necessary action to render the Rights Agreement dated
November 14, 1997, between the Seller and Harris Trust and
Savings Bank, as amended by the Amendment to Rights Agreement
dated May 8, 2002 (the Rights Agreement),
inapplicable to this Agreement and the Voting Agreement and the
transactions contemplated hereby and thereby, including the
Merger, without any further action on the part of the holders of
Seller Common Stock or the Sellers Board of Directors, and
neither the execution and delivery of this Agreement or the
Voting Agreement nor the consummation of any of the transactions
contemplated hereby or thereby will result in the occurrence of
a Distribution Date (as defined in the Rights Agreement) or
otherwise cause the Preferred Share Purchase Rights to become
exercisable by the holders thereof.
2.23
No Dissenters
Rights
.
No dissenters, appraisal or
similar rights or demands shall be exercisable by any
stockholder of the Seller in connection with the transactions
contemplated by this Agreement, including the Merger, including,
without limitation, under
Section 23-1-44
of the IBCL.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company SEC Reports or in the
disclosure schedule delivered by the Company to the Seller prior
to the execution of this Agreement (the Company Disclosure
Schedule), which shall set forth items of disclosure with
specific reference to the particular Section or subsection to
which the information in the Company Disclosure Schedule
relates, the Company hereby represents and warrants to the
Seller as follows:
3.1
Organization and Qualification;
Subsidiaries
.
(a) The Company is a business entity duly organized,
validly existing and in active status under the Laws of the
State of Wisconsin, a registered bank holding company under the
BHCA and a financial holding company under the GLB Act. Each
direct or indirect Subsidiary of the Company (a Company
Subsidiary, or collectively the Company
Subsidiaries) is a bank, corporation, limited liability
company or other form of business entity duly organized, validly
existing and in good standing under the Laws of the state of its
incorporation or organization or the United States of America.
Each of the Company and the Company Subsidiaries have the
requisite power and authority and is in possession of all
Consents and Orders (Company Approvals) necessary to
own, lease and operate its properties and to carry on its
business as it is now being conducted, including appropriate
authorizations from the Federal Reserve Board, the FDIC, the WI
DFI, the Office of Thrift Supervision (the OTS) and
the OCC, and neither the Company nor any Company Subsidiary has
received any notice of Proceedings relating to the revocation or
modification of any Company Approvals, except in each case where
the revocations or modifications, the failure to be so
organized, existing and in good standing or to have such power,
authority or Company Approvals would not have a Company Material
Adverse Effect.
(b) The Company and each Company Subsidiary is duly
qualified or licensed as a foreign business entity to do
business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it
or the nature of its business makes such qualification or
licensing necessary, except for such jurisdictions in which the
failure to be so qualified or licensed would not have a Company
Material Adverse Effect.
(c) As used in this Agreement, the term Company
Material Adverse Effect means any Effect that,
individually or in the aggregate with other Effects, (i) is
material and adverse to the business, assets, liabilities,
results of operations or financial condition of the Company and
the Company Subsidiaries taken as a whole,
and/or
(ii) materially impairs the ability of the Company to
consummate the transactions contemplated hereby; provided,
however, that the term Company Material Adverse
Effect shall not be deemed to include: (a) any Effect
to the extent resulting from the announcement of this Agreement
or the transactions contemplated hereby; (b) any Effect
resulting from compliance with the terms and conditions of this
Agreement; (c) any decrease in the price or trading volume
of the Companys common stock (but not excluding any Effect
underlying such decrease to the extent such Effect would
constitute a Company Material Adverse Effect); (d) any
Effect to the extent resulting from changes in Laws generally
applicable to the banking industry; (e) any Effect to the
extent resulting from changes in GAAP
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which the Company or any of the Company Subsidiaries is required
to adopt; (f) changes attributable to or resulting from
changes in general economic conditions affecting the banking
industry generally (unless such Effect would reasonably be
expected to have a materially disproportionate impact on the
business, assets, liabilities, results of operations or
financial condition of the Company and the Company Subsidiaries
taken as a whole relative to other banking industry
participants); or (g) actions contemplated and permitted by
this Agreement.
3.2
Organizational Documents
.
The
Company has heretofore furnished or made available to the Seller
a complete and correct copy of the Companys organizational
documents (the Company Organizational Documents).
The Company Organizational Documents are in full force and
effect. The Company is not in breach of any of the provisions of
the Company Organizational Documents.
3.3
Authority
.
The Company has the
requisite power and authority to execute and deliver this
Agreement, and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary
action on the part of the Company, including, without
limitation, the Companys Board of Directors, and no other
proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by, and constitutes a valid and binding
obligation of, the Company and, assuming the due authorization,
execution and delivery of this Agreement by the Seller, is
enforceable against the Company in accordance with its terms,
except as enforcement may be limited by Laws affecting insured
depository institutions, general principles of equity, whether
applied in a court of law or a court of equity, and by
bankruptcy, insolvency and similar Laws affecting
creditors rights and remedies generally.
3.4
No Conflict; Required Filings and
Consents
.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement and the
transactions contemplated hereby by the Company will not,
(i) conflict with or violate the Company Organizational
Documents or the Articles of Incorporation, By-Laws or other
organizational documents, as the case may be, of any Company
Subsidiary, (ii) conflict with or violate any Laws or
Orders applicable to the Company or any Company Subsidiary or by
which any of their respective properties is bound or affected,
except in the case of clauses (i) and (ii), above, for any
such conflicts, violations, breaches, defaults or other
occurrences that would not have a Company Material Adverse
Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement and the
consummation of the transactions contemplated hereby by the
Company will not, require any Consent from, or filing with or
notification to, any Governmental Authority, except (i) for
applicable requirements, if any, of the Securities Act, the
Exchange Act, Blue Sky Laws, the BHCA, applicable state banking
laws and regulations, the filing and recordation of appropriate
merger or other documents as required by the IBCL and WBCL, and
prior notification filings with the Department of Justice under
the HSR Act and (ii) where the failure to obtain such
Consents or to make such filings or notifications would not
prevent or delay consummation of the Merger, or otherwise would
not prevent or delay consummation of the Merger, or otherwise
prevent the Company from performing its obligations under this
Agreement, and would not have, or be reasonably expected to
have, a Company Material Adverse Effect.
3.5
Absence of Proceedings and
Orders
.
(a) There is no Proceeding pending or, to the
Companys Knowledge, threatened against the Company or any
Company Subsidiary or any of their properties or assets or
challenging the validity or propriety of the transactions
contemplated by this Agreement, as to which there is a
reasonable probability of an adverse determination and which, if
adversely determined, would have a Company Material Adverse
Effect.
(b) There is no Order imposed upon the Company, any of the
Company Subsidiaries or the assets of the Company or any of the
Company Subsidiaries, including, without limitation, any Order
relating to any of the transactions contemplated by this
Agreement, which has had, or which would reasonably be expected
to have, a Company Material Adverse Effect.
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3.6
Proxy Statement
.
The
information, if any, supplied by the Company for inclusion or
incorporation by reference in the Proxy Statement will not, at
the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to stockholders, at the time
of the Seller Stockholders Meeting and at the Effective
Time, be false or misleading with respect to any material fact
required to be stated therein, or omit to state any material
fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under
which they are made, not misleading. If at any time prior to the
Effective Time any event relating to the Company, any Company
Subsidiary or any of its or their Affiliates, officers or
directors is discovered by the Company which should be set forth
in an amendment or supplement to the Proxy Statement, the
Company shall promptly inform the Seller thereof.
Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information
about, or supplied or omitted by, the Seller which is contained
in any of the foregoing documents.
3.7
Brokers
.
No broker, finder or
investment banker is entitled to any brokerage, finders or
other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by
or on behalf of the Company.
ARTICLE IV
COVENANTS OF SELLER
4.1
Affirmative Covenants
.
The
Seller hereby covenants and agrees with the Company and the
Merger Sub that, except (i) as permitted by this Agreement,
(ii) as disclosed in the Seller Disclosure Schedule,
(iii) as required by Law or a Governmental Authority of
competent jurisdiction,
provided
, that prior to failing
to take any such action, the Seller notifies the Company thereof
and to the extent required by the Company, uses its reasonable
best efforts to take any such action otherwise subject to such
Law or Governmental Authority, or (iv) as otherwise
consented to in writing by the Company, during the period from
the date hereof to the earlier of the Effective Time or the
termination of this Agreement pursuant to Article VIII, the
Seller will, and the Seller will cause each Seller Subsidiary,
to:
(a) operate its business only in the usual, regular and
ordinary course consistent with past practices;
(b) use its reasonable best efforts to preserve intact its
business organization and assets, maintain its rights and
franchises, retain the services of its officers and key
employees and maintain its relationships with customers;
(c) use its reasonable best efforts to maintain and keep
its properties which are necessary to the operation of its
business in good repair and condition as at present, ordinary
wear and tear excepted;
(d) cooperate with the Company in its efforts to obtain
information and title insurance with respect to real property
owned or leased by the Seller or any of the Seller Subsidiaries,
including, without limitation, efforts to communicate with and
obtain Consents
and/or
estoppels from landlords and tenants, and the execution and
delivery as of the Effective Time of standard title affidavits,
deeds and other documents as may be reasonably necessary to
reflect the transaction in the real estate records of the states
in which real property is located
and/or
to
obtain title insurance;
(e) use its reasonable best efforts to keep in full force
and effect director and officer liability insurance comparable
in amount and scope of coverage to that now maintained by it
(the Existing D&O Policy);
(f) perform in all material respects all obligations
required to be performed by it under all material Contracts
relating to or affecting its assets, properties and business;
(g) comply with and perform in all material respects all
obligations and duties imposed upon it by all applicable
Laws; and
(h) not to take any action or fail to take any action which
can be expected to have a Seller Material Adverse Effect.
4.2
Negative Covenants
.
Except
(i) as permitted by or provided in this Agreement,
(ii) as disclosed in the Seller Disclosure Schedule,
(iii) as required by Law or a Governmental Authority of
competent jurisdiction,
provided
that prior to taking any
such action, the Seller notifies the Company thereof and to the
extent required by
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the Company, uses its reasonable best efforts to avoid having to
take such action required by such Law or Governmental Authority,
or (iv) as otherwise consented to in writing by the
Company, during the period from the date hereof to the earlier
of the Effective Time or the termination of this Agreement
pursuant to Article VIII, the Seller shall not do, or
permit any Seller Subsidiary to do, any of the following:
(a) (i) except to maintain qualification pursuant to
the Code or as contemplated in
Annex A
,
adopt, amend, renew or terminate any Plan or any other
agreement, arrangement, plan or policy between the Seller or any
Seller Subsidiary and one or more of its current or former
directors, officers or employees, or (ii) except for normal
increases in the ordinary cause of business consistent with past
practices, increase in any manner the base salary, bonus,
incentive compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any Plan
or other agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options,
stock appreciation rights, restricted stock, restricted stock
units or performance units or shares);
(b) declare or pay any dividend on, or make any other
distribution in respect of, its outstanding shares of capital
stock or other equity interests, except for (A) regular,
quarterly cash dividends on the Seller Common Stock with usual
record and payment dates for such dividends with each such
dividend at a rate per share of Seller Common Stock not in
excess of $0.21 per share for a dividend payable in 2007 or
$0.22 per share for a dividend payable in 2008, and
(B) dividends by a Seller Subsidiary either to the Seller
or another Seller Subsidiary;
(c) except as contemplated by this Agreement, merge into
any other Person, permit any other Person to merge into it or
consolidate with any other Person, or effect any reorganization
or recapitalization;
(d) purchase or otherwise acquire any substantial portion
of the assets, or more than five percent (5%) of any class of
stock or other equity interests, of any Person other than in the
ordinary course of business;
(e) liquidate, sell, dispose of, or encumber any assets or
acquire any assets with a value in excess of $100,000 outside of
the ordinary course of business;
(f) repurchase, redeem or otherwise acquire, or issue, sell
or deliver, split, reclassify, combine or otherwise adjust, or
agree to issue, sell or deliver, split, reclassify, combine or
otherwise adjust, any stock (except pursuant to exercise of the
Options), bonds or other corporate securities of which the
Seller or any of the Seller Subsidiaries is the issuer (whether
authorized and unissued or held in treasury), or grant or issue,
or agree to grant or issue, any options, warrants or other
Rights (including convertible securities) calling for issue
thereof;
(g) propose or adopt any amendments to its articles of
incorporation, by-laws, articles of organization or operating
agreement, as the case may be;
(h) change any of its methods of accounting in effect at
December 31, 2006 or change any of its methods of reporting
income or deductions for federal income tax purposes from those
employed in the preparation of the federal income tax returns
for the taxable year ended December 31, 2006, except as may
be required by GAAP; or
(i) change any lending, investment, liability management or
other material policies concerning the business or operations of
the Seller or any of the Seller Subsidiaries, except as required
by Law or by a Regulatory Authority, including, without
limitation:
(i) acquire or sell any Contracts for the purchase or sale
of financial or other futures or any put or call options, or
enter into any hedges or interest rate swaps relating to cash,
securities or any commodities whatsoever or enter into any other
derivative transaction, which would have gains or losses in
excess of $100,000, or enter into, terminate or exchange a
derivative instrument with a notional amount in excess of
$100,000 or having a term of more than five (5) years;
(ii) sell, assign, transfer, pledge, mortgage or otherwise
encumber, or permit any Liens to exist with respect to, any of
its assets with a value in excess of $100,000 individually,
except in the ordinary course of business consistent with past
practice;
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(iii) make any investment with a maturity of five
(5) years or more;
(iv) incur any material liabilities or material
obligations, whether directly or by way of guaranty, including
any obligation for borrowed money (other than indebtedness of
the Seller or the Seller Subsidiaries to each other) in excess
of an aggregate of $100,000 (for the Seller and the Seller
Subsidiaries on a consolidated basis) except in the ordinary
course of business consistent with past practice;
(v) enter into any Contract with respect to any acquisition
of a material amount of assets or securities or any discharge,
waiver, satisfaction, release or relinquishment of any material
Contract rights, Liens, debts or claims, not in the ordinary
course of business and consistent with past practices (which
shall include creation of deposit liabilities, purchases of
federal funds, advances from the Federal Reserve Bank or Federal
Home Loan Bank, and entry into repurchase agreements fully
secured by United States government or agency securities), or
impose, or suffer the imposition of, on any material asset of
the Seller or any Seller Subsidiaries, any Lien or permit any
such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, treasury tax
and loan accounts established in the ordinary course of
business, the satisfaction of legal requirements in the exercise
of trust powers, and Liens in effect as of the date hereof that
are disclosed in the Seller SEC Reports) and in no event with a
value in excess of $100,000 individually;
(vi) settle any Proceeding or controversy of any kind for
any amount in excess of $100,000 or in any manner which would
restrict in any material respect the operations or business of
the Seller or any of the Seller Subsidiaries;
(vii) purchase any new financial product or instrument
outside of the ordinary course of business which involves
entering into a Contract with a term of six (6) months or
longer;
(viii) make any capital expenditure, except in the ordinary
course and consistent with past practice and in no event in
excess of $100,000 individually;
(ix) take any action or fail to take any action which would
be reasonably expected to have a Seller Material Adverse Effect;
(x) take any action that would adversely affect or delay
the ability of the Seller to perform any of its obligations on a
timely basis under this Agreement or cause any of the conditions
set forth in Article VII to not be satisfied; or
(xi) agree in writing or otherwise to do any of the
foregoing.
4.3
No Solicitation of
Transactions
.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to
Article VIII, the Seller and the Seller Subsidiaries will
not, nor will they authorize or permit any of their respective
officers, directors, Affiliates or employees or any investment
banker, attorney or other advisor or representative retained by
any of them to, directly or indirectly:
(i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal;
(ii) participate in any discussions or negotiations
regarding, or furnish to any Person any material non-public
information with respect to, or take any other action to
facilitate any inquiry or the making of any proposal that
constitutes or may reasonably be expected to lead to, any
Acquisition Proposal; or
(iii) enter into any Contract relating to any Acquisition
Transaction;
provided
,
however
, this
Section 4.3(a) shall not prohibit the Seller or the
Sellers Board of Directors from:
(A) furnishing material nonpublic information (other than
information regarding the Company or the Merger Sub supplied to
the Seller by the Company or the Merger Sub) regarding the
Seller or the Seller Subsidiaries to, or entering into a
customary confidentiality agreement with or entering or
re-entering into discussions with, any Person in response to an
Acquisition Proposal submitted by such
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Person (and not withdrawn) if (x) the Sellers Board
of Directors reasonably determines in good faith, after taking
into consideration the advice of and consultation with an
investment banking firm of national reputation (which includes
the Sellers current financial advisor), that such
Acquisition Proposal constitutes or is reasonably likely to
result in a Superior Offer, and (y) the Sellers Board
of Directors concludes in good faith, after consultation with
its outside legal counsel, that failure to take such action is
reasonably likely to result in a breach by the Sellers
Board of Directors of its fiduciary obligations to the
Sellers stockholders under applicable Laws, provided that
in any such case neither the Seller nor any representative of
the Seller and the Seller Subsidiaries shall have violated any
of the restrictions set forth in this
Section 4.3(a), or
(B) taking the actions described in the proviso of
subsection (c), below, as permitted thereby, provided that none
of the Seller, the Seller Subsidiaries or any representatives of
the Seller and the Seller Subsidiaries shall have violated any
of the restrictions set forth in this Section 4.3(a).
At least ten (10) days prior to furnishing any material
nonpublic information to, or entering into discussions or
negotiations with, any Person, the Seller shall:
(i) give the Company written notice of the identity of such
Person and of the Sellers intention to furnish material
nonpublic information to, or enter into discussions or
negotiations with, such Person; and
(ii) receive from such Person an executed confidentiality
agreement containing customary limitations on the use and
disclosure of all written and oral nonpublic information
furnished to such Person by or on behalf of the Seller, and
contemporaneously with furnishing any such information to such
Person, the Seller shall furnish such information to the Company
(to the extent such information has not been previously
furnished by the Seller to the Company).
Nothing in this Section 4.3(a) shall prevent the Seller or
the Sellers Board of Directors from complying with
Rules 14e-2
and
14d-9
promulgated under the Exchange Act with regard to an Acquisition
Proposal. The Seller and the Seller Subsidiaries will
immediately cease, and will cause each of their officers,
directors, employees, Affiliates, investment bankers, attorneys
and other advisors or representatives to immediately cease, as
of the date hereof, any and all existing activities, discussions
or negotiations with any other Persons conducted heretofore with
respect to any Acquisition Proposal, subject to the right to
renew such activities, discussions or negotiations in accordance
with this Section 4.3. Without limiting the generality of
the foregoing, it is understood that any violation of the
restrictions set forth in this Section 4.3 by any officer,
director, employee or Affiliate of the Seller or any of the
Seller Subsidiaries or any investment banker, attorney or other
advisor or representative retained by any of them shall be
deemed to be a breach of this Section 4.3 by the Seller.
(b) In addition to the obligations of the Seller set forth
in Section 4.3(a), the Seller as promptly as practicable
shall advise the Company orally and in writing of any request
received by the Seller, any Seller Subsidiary or any of their
officers, directors, employees, Affiliates, investment bankers,
attorneys and other advisors or representatives after the date
hereof for information which the Seller reasonably believes
would lead to an Acquisition Proposal or of any Acquisition
Proposal, or any inquiry received by the Seller, any Seller
Subsidiary or any of their officers, directors, employees,
Affiliates, investment bankers, attorneys and other advisors or
representatives after the date hereof with respect to, or which
the Seller reasonably believes would lead to, any Acquisition
Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the Person
making any such request, Acquisition Proposal or inquiry. The
Seller will keep the Company informed in all material respects
of the status and details (including material amendments or
proposed amendments) of any such request, Acquisition Proposal
or inquiry.
(c) Except as provided herein below: (i) the
Sellers Board of Directors shall recommend that the
Sellers stockholders vote in favor of and to adopt and
approve this Agreement and the Merger at the Seller
Stockholders Meeting; (ii) the Proxy Statement shall
include a statement of the Sellers Board of Directors
Recommendation; and (iii) neither the Sellers Board
of Directors nor any committee thereof shall withhold, withdraw,
amend or modify, or propose or resolve to withhold, withdraw,
amend or modify, in a manner adverse to the Company (in either
event, a Change of Recommendation), the
Sellers Board of Directors Recommendation;
provided
,
however
, that nothing in this Agreement
shall prevent the Sellers Board of Directors from
(i) withholding, withdrawing, amending or
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modifying the Sellers Board of Directors Recommendation or
(ii) not including in the Proxy Statement the Sellers
Board of Directors Recommendation if, in either case, the
Sellers Board of Directors reasonably determines in good
faith, after consultation with its outside legal counsel, that,
due primarily to facts or circumstances coming to the attention
of the Sellers Board of Directors after the date of this
Agreement, the failure to take such action is reasonably likely
to result in a breach by the Sellers Board of Directors of
its fiduciary obligations to Sellers stockholders under
applicable Law; and
provided
further
,
however
, that neither the Seller nor the Sellers
Board of Directors may take any of the actions described in
clauses (i) and (ii) of the immediately preceding
proviso unless the Seller shall have received an Acquisition
Proposal that has not been withdrawn as of the time of such
action of the Sellers Board of Directors and the
Sellers Board of Directors shall have reasonably
determined in good faith, after taking into consideration the
advice of and consultation with an investment banking firm of
national reputation (which includes the Sellers current
financial advisor), that such Acquisition Proposal constitutes
or is reasonably likely to result in a Superior Offer.
(d) Notwithstanding anything to the contrary contained in
this Section 4.3, in the event that the Sellers Board
of Directors determines in good faith, after consultation with
outside counsel, that in light of a Superior Offer it is
necessary to do so in order to comply with its fiduciary duties
to the Seller or the Sellers stockholders under applicable
Law, the Sellers Board of Directors may terminate this
Agreement in the manner contemplated by Section 8.1(h)
solely in order to concurrently enter into a definitive
agreement with respect to a Superior Offer, but only after the
tenth
(10
th
)
day following the Companys receipt of written notice
advising the Company that the Sellers Board of Directors
is prepared to accept a Superior Offer, and only if, during such
ten (10) day period, if the Company so elects, the Seller
and its advisors shall have negotiated in good faith with the
Company to make such adjustments in the terms and conditions of
this Agreement as would enable the Seller to proceed with the
transactions contemplated herein on such adjusted terms.
4.4
Update Disclosure; Breaches
.
(a) From and after the date of this Agreement until the
Effective Time, the Seller shall update the Seller Disclosure
Schedule on a regular basis by written notice to the Company to
reflect any matters which have occurred from and after the date
of this Agreement which, if existing on the date of this
Agreement, would have been required to be described therein;
provided
that (i) to the extent that any information
that would be required to be included in an update under this
Section 4.4(a) would have in the past been contained in
internal reports prepared by the Seller or any Seller Subsidiary
in the ordinary course, such update may occur by delivery of
such internal reports prepared in accordance with past practice,
with appropriate steps taken by the Seller to identify relevant
information contained therein, and (ii) to the extent that
updating required under this Section 4.4 is unduly
burdensome to the Seller, the Seller and the Company will use
their reasonable best efforts to develop alternate updating
procedures using, wherever possible, existing reporting systems.
(b) The Seller shall, in the event it becomes aware of the
impending or threatened occurrence of any event or condition
which would cause or constitute a material breach (or would have
caused or constituted a material breach had such event occurred
or been known prior to the date of this Agreement) of any of its
representations or agreements contained or referred to herein,
give prompt written notice thereof to the Company and use its
reasonable best efforts to prevent or promptly remedy the same.
4.5
Delivery of Stockholder and Option
Information
.
The Seller shall deliver or
arrange to have its transfer agent deliver, as the case may be,
to the Company or its designee, from time to time prior to the
Effective Time, a complete and correct list setting forth the
names and addresses of the Seller stockholders and holders of
Options, their holdings of stock or Options as of the latest
practicable date, and such other information as the Company may
reasonably request.
4.6
Loan and Investment
Policies
.
The Seller agrees to maintain and
to cause the Seller Subsidiaries to maintain their existing loan
and investment policies and procedures designed to insure safe
and sound banking practices, which shall remain in effect,
except as otherwise agreed in writing by the Company, for the
period from the date hereof until the earlier of the Effective
Time or termination of this Agreement pursuant to
Article VIII. To the extent permitted by applicable Law,
such policies and procedures shall apply to, among other
matters, the following: (i) making or renewing any
commitments or loans, or purchase or renewals of any
participations in loans, in excess of an amount to be agreed for
any commercial loan, single-family residential loan or consumer
loan;
A-21
(ii) making, committing to make or renewing any loan to any
Affiliate of the Seller or the Seller Subsidiaries or any family
member of such Affiliate or any entity in which such Affiliate
has a material interest; (iii) making any investment or
commitment to invest, or making any loan, in excess of an amount
to be agreed with respect to any commercial real estate
development project; (iv) making multiple commercial real
estate loans which are in the aggregate in excess of an amount
to be agreed; or (v) entering into any Contract under which
the Seller or any Seller Subsidiary will be bound to pay in
excess of an amount to be agreed over the life of such Contract
or voluntarily committing any act or omission which constitutes
a breach or default by the Seller or any Seller Subsidiary under
any Contract to which the Seller or any Seller Subsidiary is a
party or by which it or any of its properties are bound. To the
extent permitted by applicable Law, the Company shall have the
right to designate one (1) observer to attend all meetings
of the Sellers (i) senior credit committee, or
similar committee at any Seller Subsidiary designated by the
Company, and (ii) investment committee or similar committee
at any Seller Subsidiary, and the Seller shall ensure that such
representatives receive all information given by the Seller or
its agents to the Sellers members of said committees.
4.7
Access and Information
.
From
the date hereof until the earlier of the Effective Time or the
termination of this Agreement pursuant to Article VIII, the
Seller will give the Company and its representatives, employees,
counsel and accountants reasonable access to the properties,
books and records of the Seller and the Seller Subsidiaries and
any other information relating to the Seller and the Seller
Subsidiaries that is reasonably requested by the Company for
purpose of permitting the Company, among other things, to:
(a) conduct its due diligence review; (b) review the
financial statements of the Seller; (c) verify the accuracy
of the representations and warranties of the Seller contained in
this Agreement; (d) confirm compliance by the Seller with
the terms of this Agreement; and (e) prepare for the
consummation of the transactions contemplated by this Agreement.
The parties hereto acknowledge and agree that any investigation
by the Company pursuant to this Section 4.7 shall not
unreasonably interfere with the business and operations of the
Seller. The Company shall not, without the consent of the Seller
(which consent shall not be unreasonably withheld), directly
contact any customers or key employees of the Seller. General
advertisements by the Company will not be deemed a violation of
the preceding sentence.
4.8
Confidentiality Agreement
.
The
Seller agrees that the Confidentiality Agreement dated
July 5, 2007, between the Company and the Seller (the
Confidentiality Agreement) shall remain in full
force and effect and binding upon the Seller and shall survive
termination of this Agreement for the period set forth therein.
4.9
Resignations
.
The Seller shall
obtain and deliver to the Company at the Closing evidence
reasonably satisfactory to the Company of the resignation,
effective as of the Effective Time, of those directors and
officers of the Seller and Seller Subsidiaries designated by the
Company to the Seller prior to the Closing.
ARTICLE V
COVENANTS OF THE COMPANY AND THE MERGER SUB
5.1
Affirmative Covenants
.
The
Company and the Merger Sub hereby covenant and agree with the
Seller that, except (i) as permitted by this Agreement,
(ii) as disclosed in the Company Disclosure Schedule or in
the Company SEC Reports, (iii) as required by Law or a
Governmental Authority of competent jurisdiction, or
(iv) as otherwise consented to in writing by the Seller,
during the period from the date hereof to the earlier of the
Effective Time or the termination of this Agreement pursuant to
Article VIII, each of the Company and the Merger Sub will,
and the Company will cause each other Company Subsidiary, to:
(a) maintain its corporate existence in good standing and
maintain all books and records in accordance with accounting
principles and practices as used in the Companys financial
statements applied on a consistent basis; and
(b) conduct its business in a manner that does not violate
any Law, except for possible violations which do not have, and
would not reasonably be expected to have, a Company Material
Adverse Effect.
5.2
Negative Covenants
.
Except as
disclosed in the Company Disclosure Schedule or in the Company
SEC Reports or as otherwise contemplated by this Agreement,
from the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement pursuant to
Article VIII, neither the Company nor the Merger Sub shall,
or agree to commit to, or, in the case of the Company, permit
any Company Subsidiaries to, without the prior written consent
of the Seller, take any action that would adversely affect or
delay the ability of the
A-22
Company or the Merger Sub to perform any of their obligations on
a timely basis under this Agreement or cause any of the
conditions set forth in Article VII to not be satisfied.
5.3
Breaches
.
The Company and the
Merger Sub shall, in the event either of them becomes aware of
the impending or threatened occurrence of any event or condition
which would cause or constitute a material breach (or would have
caused or constituted a material breach had such event occurred
or been known prior to the date of this Agreement) of any of
their respective representations or agreements contained or
referred to herein, give prompt written notice thereof to the
Seller and use their reasonable best efforts to prevent or
promptly remedy the same.
5.4
Confidentiality Agreement
.
The
Company agrees that the Confidentiality Agreement shall remain
in full force and effect and binding upon the Company and shall
survive termination of this Agreement for the period set forth
therein.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1
Proxy Statement
.
As promptly
as practicable after the execution of this Agreement, the Seller
shall prepare the Proxy Statement relating to the approval of
this Agreement and the transactions contemplated hereby,
including the Merger, by the stockholders of the Seller. Each of
the Seller, the Company and the Merger Sub shall furnish all
information concerning itself and its Affiliates, officers and
directors that is required to be included in the Proxy
Statement. The Seller shall use its reasonable best efforts to
respond as promptly as practicable to any comments of the SEC
with respect to the Proxy Statement or the other filings, and
the Seller shall use its reasonable best efforts to cause the
definitive Proxy Statement to be mailed to the Sellers
stockholders as promptly as reasonably practicable after the
execution of this Agreement. The Seller shall promptly notify
the Company upon receipt of any comments from the SEC or its
staff or any request from the SEC or its staff for amendments or
supplements to the Proxy Statement or the other filings and
shall provide the Company with copies of all correspondence
between it and its representatives, on the one hand, and the SEC
and its staff, on the other hand, relating to the Proxy
Statement or the other filings. If at any time prior to the
Seller Stockholders Meeting, any information relating to
the Seller, the Company, the Merger Sub or any of their
respective Affiliates, officers or directors, should be
discovered by the Seller, the Company or the Merger Sub which
should be set forth in an amendment or supplement to the Proxy
Statement, so that the Proxy Statement shall not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading, the
party which discovers such information shall promptly notify the
other party, and an appropriate amendment or supplement
describing such information shall be, to the extent required by
applicable Law, disseminated to the stockholders of the Seller.
Notwithstanding anything to the contrary stated above, prior to
mailing the Proxy Statement (or any amendment or supplement
thereto) to the stockholders of the Seller or responding to any
comments of the SEC with respect thereto, the Seller shall
provide the Company an opportunity to review and comment on such
document or response and shall include in such document or
response all comments reasonably proposed by the Company.
6.2
Meeting of Sellers
Stockholders
.
The Seller shall promptly,
after the Proxy Statement becomes effective, take all action
necessary in accordance with the IBCL, the Seller Articles and
the Seller By-Laws to convene the Seller Stockholders
Meeting. The Seller shall use its reasonable best efforts to
solicit from stockholders of the Seller proxies in favor of the
Merger and shall take all other action necessary or advisable to
secure the vote or consent of stockholders required by the IBCL
to approve the Merger, except as otherwise provided in
Section 4.3(c), above.
6.3
Appropriate Action; Consents;
Filings
.
The Seller, the Company and the
Merger Sub shall use their reasonable best efforts to
(i) take, or cause to be taken, all appropriate action, and
do, or cause to be done, all things necessary, proper or
advisable under applicable Law to consummate and make effective
the transactions contemplated by this Agreement,
(ii) obtain all Consents and Orders required under Law
(including, without limitation, all rulings and approvals of
Governmental Authorities) and from parties to Contracts required
in connection with the authorization, execution and delivery of
this Agreement and the consummation by them of the transactions
contemplated hereby, including, without limitation, the Merger,
and (iii) make all necessary filings, and thereafter make
any other required submissions, with respect to this Agreement
and the Merger required under (A) the
A-23
Securities Act and the Exchange Act (to the extent applicable)
and any other applicable federal or state securities laws,
(B) the BHCA and any other applicable federal or state
banking laws and (C) any other applicable Law;
provided
that
, the Company, the Seller and the
Merger Sub shall cooperate with each other in connection with
the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors
prior to filing and, if requested, to accept all reasonable
additions, deletions or changes suggested in connection
therewith, and shall use their respective reasonable best
efforts to file all applications required to be filed with the
Federal Reserve Board, the OCC or any other federal or state
banking regulator no later than thirty (30) days after the
execution of this Agreement by the parties. The Seller, the
Company and the Merger Sub shall furnish all information
required for any application or other filing to be made pursuant
to the rules and regulations of any applicable Law (including
all information required to be included in the Proxy Statement)
in connection with the transactions contemplated by this
Agreement, and shall furnish the other party with copies of all
such applications and filings and correspondence to and from
such party with respect thereto. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers
and directors of each party to this Agreement shall use all
reasonable best efforts to take all such necessary action.
6.4
Employee Benefit
Matters
.
Annex A
attached
hereto sets forth certain agreements of the parties with respect
to the manner in which various benefit and compensation matters
will be handled prior to and after the Effective Time for
employees and directors of the Seller and the Seller
Subsidiaries.
6.5
Directors and Officers
Indemnification and Insurance
.
(a) By virtue of the occurrence of the Merger, and subject
to the limitations imposed by Section 18(k) of the Federal
Deposit Insurance Act, as amended by the Crime Control Act of
1990 and the regulations issued thereunder, including, without
limitation, 12 C.F.R. Part 359, the Surviving
Corporation shall from and after the Effective Time succeed to
the Sellers obligations with respect to indemnification or
exculpation now existing in favor of the directors and officers
of the Seller and the Seller Subsidiaries as provided in the
Seller Articles, the Seller By-Laws and indemnification
agreements of the Seller or the Seller Subsidiaries with respect
to matters occurring prior to the Effective Time.
Section 6.5 of the Seller Disclosure Schedule contains a
complete and correct list of all indemnification arrangements to
which the Seller is a party on the date of this Agreement. The
Seller agrees not to amend or enter into new indemnification
arrangements or agreements from and after the date hereof.
(b) From and after the Effective Time, the Company agrees
to use its commercially reasonable best efforts to maintain an
insurance policy for directors and officers
liabilities (the D&O Policy) for all present
and former directors and officers of the Seller covered by the
Existing D&O Policy on the date of this Agreement with
terms (including coverage limits) substantially similar in all
respects to those currently in effect on the date of this
Agreement with respect to acts, omissions and other matters
occurring prior to the Effective Time for which coverage is
provided under the Existing D&O Policy;
provided
,
however
, that the Companys obligation under this
subsection (b) shall be completely satisfied at such time
as the Company shall have satisfied either of the following
conditions: (i) the Company shall have maintained the
D&O Policy in accordance with this subsection (b) for
a period of six (6) years from and after the Effective Time
or (ii) the Company shall have incurred costs to maintain
insurance in accordance with this subsection equal to or
exceeding two hundred fifty percent (250%) of the annualized
premium in effect on the date of this Agreement and disclosed on
Section 6.5 of the Seller Disclosure Schedule;
provided
,
further
however
, if the Company
fails to maintain the D&O Policy in accordance with this
subsection (b) for six (6) years from the Effective
Time, the Company will indemnify and hold all present and former
directors and officers of the Seller covered by the Existing
D&O Policy harmless against any and all losses, claims,
damages, liabilities, costs and expenses (including, but not
limited to, attorneys fees, disbursements and court costs)
and actions with respect to acts, omissions, and other matters
occurring prior to the Effective Time for which coverage is
provided under the Existing D&O Policy to the same extent
as coverage would have been provided to such persons had the
D&O Policy in accordance with this subsection (b) been
maintained by the Company for a period of six (6) years
from and after the Effective Time.
(c) In the event the Company or any of its successors or
assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, or
(ii) transfers or conveys all or substantially all of its
properties or assets to any Person, then, and in each such case,
to
A-24
the extent necessary, proper provision shall be made so that the
successors and assigns of the Company assume the obligations set
forth in this Section 6.5.
(d) The provisions of this Section 6.5 are intended to
be for the benefit of, and shall be enforceable by, each Person
who is now, or has been at any time prior to the date of this
Agreement or who becomes prior to the Effective Time, an officer
or director of Seller or any Seller Subsidiary (the
Indemnified Parties) and his or her heirs and
representatives.
6.6
Notification of Certain
Matters
.
The Seller shall give prompt notice
to the Company, and the Company shall give prompt notice to the
Seller, of (i) the occurrence, or non-occurrence, of any
event the occurrence or non-occurrence of which would be likely
to cause any representation or warranty of the Seller, the
Company or the Merger Sub, as the case may be, contained in this
Agreement to be untrue or inaccurate, and (ii) any failure
of the Seller, the Company or the Merger Sub, as the case may
be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder;
provided
,
however
, that the delivery of any notice
pursuant to this Section 6.6 shall not limit or otherwise
affect the remedies available hereunder to the party receiving
such notice.
6.7
Public Announcements
.
The
Company and the Seller shall consult with each other before
issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any
such press release or make any such public statement prior to
such consultation, except as may be required by Law, including
disclosures required under the federal securities laws.
6.8
Customer Retention
.
To the
extent permitted by applicable Law, the Seller shall, and shall
cause each Seller Subsidiary to, use all reasonable best efforts
to assist the Company in its efforts to retain the Sellers
and the Seller Subsidiaries customers for the Surviving
Corporation. Such efforts shall include making introductions of
the Companys employees to such customers, assisting in the
mailing of information prepared by the Company and reasonably
acceptable to the Seller to such customers and actively
participating in any transitional marketing programs
as the Company shall reasonably request.
6.9
NASDAQ Delisting
.
The
Surviving Corporation shall use its reasonable best efforts, and
the Company shall cause the Surviving Corporation to use its
reasonable best efforts, to cause the Shares to no longer be
listed on the NASDAQ Stock Market LLC and de-registered under
the Exchange Act as soon as reasonably practicable following the
Effective Time.
6.10
Additional Documents
.
From
time to time, as and when requested by a party hereto, each
party shall execute and deliver any additional agreements,
instruments, documents and certificates which are consistent
with the terms and conditions of this Agreement and are
reasonably necessary to consummate the transactions contemplated
by this Agreement.
ARTICLE VII
CONDITIONS OF MERGER
7.1
Conditions to Obligation of Each Party to Effect
the Merger
.
The respective obligations of
each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following
conditions:
(a)
Stockholder Approval
.
This
Agreement and the Merger shall have been approved and adopted by
the requisite vote of the stockholders of the Seller.
(b)
Federal Reserve Board
.
The
Merger shall have been approved by the Federal Reserve Board,
which approval shall not contain any condition that would
materially adversely affect the Company or the Surviving
Corporation. All conditions required to be satisfied prior to
the Effective Time imposed by the terms of such approval shall
have been satisfied and all waiting periods relating to such
approval shall have expired.
(c)
HSR
.
All statutory waiting
periods under the HSR Act shall have expired and the Company
shall not have received any objections thereunder from either
the Federal Trade Commission or the United States Department of
Justice.
(d)
Regulatory Approval
.
The
Merger shall have been approved by the OCC and the WI DFI and
neither of such approvals shall contain any condition that would
materially adversely affect the Company or
A-25
the Surviving Corporation. All conditions required to be
satisfied prior to the Effective Time imposed by the terms of
such approval shall have been satisfied and all waiting periods
relating to such approval shall have expired. All documents
required to be filed with any state agency or recorded at the
county level in connection with such approval shall be filed or
recorded at the Effective Time.
(e)
No Order
.
No Governmental
Authority shall have enacted, issued, promulgated, enforced or
entered any Law or Order which is in effect preventing or
prohibiting consummation of the transactions contemplated by
this Agreement or restricting the consummation of the
transactions contemplated by this Agreement in a manner that
would have a Seller Material Adverse Effect or a Company
Material Adverse Effect.
7.2
Additional Conditions to Obligations of the
Company and the Merger Sub
.
The obligation of
the Company and the Merger Sub to effect the Merger is also
subject to the satisfaction at or prior to the Effective Time
(or, if an earlier time is set forth in this Section 7.2,
at such earlier time) of the following conditions:
(a)
Representations and
Warranties
.
Without giving effect to any
update to the Seller Disclosure Schedule or notice to the
Company under Sections 4.4 or 6.6, above, and except for
Section 2.18, above, which is provided for in subsection
(g), below, (i) each of the representations and warranties
of the Seller contained in this Agreement that is qualified by
reference to materiality or Seller Material Adverse
Effect shall be true and correct as of the date of this
Agreement and as of the Effective Time, except to the extent
such representations and warranties are made as of another date,
in which case such representations and warranties shall be true
and correct as of such other date; and (ii) each of the
representations and warranties of the Seller contained in this
Agreement that is not qualified by reference to
materiality or Seller Material Adverse Effect shall
be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time, except to the
extent such representations and warranties are made as of
another date, in which case such representations and warranties
shall be true and correct as of such other date, and except in
the case of either clauses (i) or (ii), above, where any
failure of such representations and warranties to be true and
correct would not have a Seller Material Adverse Effect. The
Company shall have received a certificate signed on behalf of
the Seller by the Chief Executive Officer and the Chief
Financial Officer of the Seller, or individuals performing
similar functions, to the foregoing effect.
(b)
Agreements and Covenants
.
The
Seller shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to
be performed or complied with by it on or prior to the Effective
Time.
(c)
Consents
Obtained
.
(i) The Seller shall continue
to possess all Seller Approvals and (ii) all Consents and
Orders required to be obtained, and all filings and
notifications required to be made, by the Seller for the
authorization, execution and delivery of this Agreement and the
consummation by the Seller of the transactions contemplated
hereby shall have been obtained and made by the Seller, except
where the failure to obtain any such Consents or Orders, or make
any such filings or notifications, would not have a Seller
Material Adverse Effect.
(d)
No Challenge
.
There shall not
be pending any Proceeding before any Governmental Authority or
any other Person (i) challenging or seeking material
damages in connection with the Merger or (ii) seeking to
restrain, prohibit or limit the exercise of full rights of
ownership or operation by the Company or the Company
Subsidiaries of all or any portion of the business or assets of
the Seller and the Seller Subsidiaries, which in either case is
reasonably likely to have a Seller Material Adverse Effect or a
Company Material Adverse Effect.
(e)
Opinion of Counsel
.
The
Company shall have received from Bose McKinney & Evans
LLP, or other independent counsel to the Seller reasonably
satisfactory to the Company, an opinion dated as of the Closing
Date, in form and substance reasonably satisfactory to the
Company, covering the matters set forth in
Annex B
attached hereto, which opinion shall
be based on such assumptions and contain such qualifications and
limitations as are appropriate and reasonably satisfactory to
the Company. In rendering such opinion, Bose
McKinney & Evans LLP or such other legal counsel may
require and rely upon representations and covenants contained in
certificates of officers of the Seller.
A-26
(f)
Burdensome Condition
.
There
shall not be any action taken, or any statute, rule, regulation
or Order enacted, entered, enforced or deemed applicable to the
Merger, by any Governmental Authority which imposes any
condition or restriction upon the Company, the Merger Sub or the
Seller or their respective subsidiaries (or the Surviving
Corporation after the Effective Time), which would materially
adversely impact the economic or business benefits of the
transactions contemplated by this Agreement in such a manner as
to render inadvisable the consummation of the Merger.
(g)
No Material Adverse
Changes
.
Since the date of this Agreement,
there shall have been no Seller Material Adverse Effect and no
Effect shall have occurred that is reasonably likely to have a
Seller Material Adverse Effect. The Company shall have received
a certificate of the Chief Executive Officer and the Chief
Financial Officer of the Seller, or individuals performing
similar functions, to that effect.
7.3
Additional Conditions to Obligations of the
Seller
.
The obligation of the Seller to
effect the Merger is also subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a)
Representations and
Warranties
.
Without giving effect to any
notice to the Seller under Sections 5.3 or 6.6, above,
(i) each of the representations and warranties of the
Company and the Merger Sub contained in this Agreement that is
qualified by reference to materiality or Company
Material Adverse Effect shall be true and correct as of the date
of this Agreement and as of the Effective Time, except to the
extent that such representations and warranties are made as of
another date, in which case such representations and warranties
shall be true and correct as of such other date; and
(ii) each of the representations and warranties of the
Company and the Merger Sub contained in this Agreement that is
not qualified by reference to materiality or Company
Material Adverse Effect shall be true and correct in all
material respects as of the date of this Agreement and as of the
Effective Time, except to the extent such representations and
warranties are made as of another date, in which case such
representations and warranties shall be true and correct as of
such other date, and except in the case of either
clauses (i) or (ii), above, where any failure of such
representations and warranties to be true and correct would not
have a Company Material Adverse Effect. The Seller shall have
received a certificate signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the
Company, or individuals performing similar functions, to the
foregoing effect.
(b)
Agreements and Covenants
.
Each
of the Company and the Merger Sub shall have performed or
complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied
with by it on or prior to the Effective Time.
(c)
Consents
Obtained
.
(i) The Company and the Merger
Sub shall continue to possess all Company Approvals and
(ii) all Consents and Orders required to be obtained, and
all filings and notifications required to be made, by the
Company and the Merger Sub for the authorization, execution and
delivery of this Agreement and the consummation by the Company
and the Merger Sub of the transactions contemplated hereby shall
have been obtained and made by the Company and the Merger Sub,
except where the failure to obtain any such Consents or Orders,
or make any such filings or notifications, would not have a
Company Material Adverse Effect.
(d)
No Challenge
.
There shall not
be pending any Proceeding before any Governmental Authority or
any other Person (i) challenging or seeking material
damages in connection with the Merger or (ii) seeking to
restrain, prohibit or limit the exercise of full rights of
ownership or operation by the Company or the Company
Subsidiaries of all or any portion of the business or assets of
the Company and the Company Subsidiaries, which in either case
is reasonably likely to have a Company Material Adverse Effect
or a Seller Material Adverse Effect.
(e)
Opinion of Counsel
.
The Seller
shall have received from Godfrey & Kahn, S.C., or
other independent counsel to the Company reasonably satisfactory
to the Seller, an opinion dated as of the Closing Date, in form
and substance reasonably satisfactory to the Seller, covering
the matters set forth in
Annex C
attached
hereto, which opinion shall be based on such assumptions and
contain such qualifications and limitations as are appropriate
and reasonably satisfactory to the Seller. In rendering such
opinion, Godfrey & Kahn, S.C. may require and rely
upon representations and covenants contained in certificates of
officers of the Company.
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(f)
No Material Adverse
Changes
.
Since the date of this Agreement,
there shall have been no Company Material Adverse Effect and no
Effect shall have occurred that is reasonably likely to have a
Company Material Adverse Effect. The Seller shall have received
a certificate of the President and the Chief Financial Officer
of the Company, or individuals performing similar functions, to
that effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1
Termination
.
This Agreement
may be terminated at any time prior to the Effective Time,
whether prior to or after the stockholders of the Seller adopt
this Agreement, as applicable:
(a) by mutual written consent duly authorized by the
Companys Board of Directors and the Sellers Board of
Directors;
(b) by either the Seller or the Company if the Merger shall
not have been consummated by February 29, 2008 (or
March 31, 2008, if the reason the Merger has not been
consummated by such earlier date is due to the fact that the
Company, despite its prompt and diligent actions, has not
received the approval of the OCC or the Federal Reserve Board
pursuant to Section 3(a)(5) of the BHCA (12 U.S.C.
§ 1842(a)(5)), or any required waiting periods shall
have not yet expired or been terminated), unless extended by the
Companys Board of Directors and the Sellers Board of
Directors for any reason;
provided
,
however
, that
the right to terminate this Agreement under this
Section 8.1(b) shall not be available to any party whose
action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such
date if such action or failure to act constitutes a breach of
any provision of this Agreement;
(c) by either the Seller or the Company if a Governmental
Authority shall have issued a non-appealable final Order or
taken any other action having the effect of restraining,
enjoining or otherwise prohibiting the Merger;
(d) by either the Seller or the Company if: (i) the
Seller Stockholders Meeting (including any adjournments
thereof) shall have been held and completed and the stockholders
of the Seller shall have taken a final vote on a proposal to
adopt this Agreement and (ii) the required approval of the
stockholders of the Seller contemplated by this Agreement shall
not have been obtained;
provided
,
however
, that
the right to terminate this Agreement under this
Section 8.1(d) shall not be available to the Seller where
the failure to obtain approval by the Seller stockholders shall
have been caused by the action or failure to act of the Seller,
and such action or failure to act constitutes a breach by the
Seller of any provision of this Agreement;
(e) by the Seller, upon a breach of any covenant or
agreement on the part of the Company or the Merger Sub set forth
in this Agreement, or if any representation or warranty of the
Company shall have been untrue when made or shall have become
untrue, in either case such that the conditions set forth in
Section 7.3(a), above, would not be satisfied as of the
time of such breach or as of the time such representation or
warranty shall have become untrue,
provided
, that if such
inaccuracy in the Companys representations and warranties
or breach by the Company or the Merger Sub of a covenant or
agreement was unintentional and is curable by the Company or the
Merger Sub through exercise of commercially reasonable best
efforts, then the Seller may not terminate this Agreement
pursuant to this Section 8.1(e) for ten (10) days
after delivery of written notice from the Seller to the Company
of such breach,
provided
, that the Company or the Merger
Sub, as the case may be, continues to exercise commercially
reasonable best efforts to cure such breach (it being understood
that the Seller may not terminate this Agreement pursuant to
this Section 8.1(e) if such breach by the Company or the
Merger Sub is cured during such ten (10) day period);
(f) by the Company, upon a breach of any covenant or
agreement on the part of the Seller set forth in this Agreement,
or if any representation or warranty of the Seller shall have
been untrue when made or shall have become untrue, in either
case such that the conditions set forth in Section 7.2(a),
above, would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become
untrue,
provided
, that if such inaccuracy in the
Sellers representations and warranties or breach by the
Seller of a covenant or agreement was unintentional and is
curable by the Seller through exercise of its commercially
reasonable best efforts, then the Company may not terminate this
Agreement pursuant to this Section 8.1(f) for ten
(10) days after delivery of written notice from the Company
to the Seller of such breach,
provided
, that the
A-28
Seller continues to exercise commercially reasonable best
efforts to cure such breach (it being understood that the
Company may not terminate this Agreement pursuant to this
Section 8.1(f) if such breach by the Seller is cured during
such ten (10) day period);
(g) by the Company if there is a Change of Recommendation
or if the Sellers Board of Directors fails to include the
Sellers Board of Directors Recommendation in the Proxy
Statement;
(h) by the Seller prior to the vote of the stockholders of
the Seller, without further action, if the Seller shall have
entered into a definitive agreement with respect to a Superior
Offer pursuant to and in accordance with Section 4.3,
above;
provided
,
however
, that such determination
and the right to terminate under this Section 8.1(h) shall
not be effective until the Seller has made payment to the
Company of the amounts required to be paid pursuant to
Section 8.3(b)(i), below;
(i) by the Company:
(i) if any of the conditions to the obligation of the
Company and the Merger Sub to effect the Merger set forth in
Sections 7.1 or 7.2, above, have not been satisfied or
waived by the Company at Closing or the Company reasonably
determines that the timely satisfaction of any condition to the
obligation of the Company and the Merger Sub to effect the
Merger set forth in Sections 7.1 or 7.2, above, has become
impossible (other than as a result of any failure on the part of
the Company and the Merger Sub to comply with or perform any
covenant or obligation of the Company and the Merger Sub set
forth in this Agreement); or
(ii) in the event there has been a Seller Material Adverse
Effect between the date hereof and the Effective Time;
(j) by the Seller:
(i) if any of the conditions to the obligation of the
Seller to effect the Merger set forth in Sections 7.1 or
7.3, above, have not been satisfied or waived by the Seller at
Closing or the Seller reasonably determines that the timely
satisfaction of any condition to the obligation of the Seller to
effect the Merger set forth in Sections 7.1 or 7.3, above,
has become impossible (other than as a result of any failure on
the part of the Seller to comply with or perform any covenant or
obligation of the Seller set forth in this Agreement); or
(ii) in the event there has been a Company Material Adverse
Effect between the date hereof and the Effective Time.
8.2
Notice of Termination; Effect of
Termination
.
Any termination of this
Agreement under Section 8.1, above, will be effective
immediately upon (or if termination is pursuant to
Sections 8.1(e) or 8.1(f), above, and the proviso therein
is applicable, ten (10) days after) the delivery of written
notice thereof by the terminating party to the other party. In
the event of termination of this Agreement as provided in
Section 8.1, above, this Agreement shall be of no further
force or effect, with no liability of any party to the other
parties, except (i) the provisions set forth in this
Section 8.2, Section 8.3 and Article IX, shall
survive the termination of this Agreement indefinitely,
(ii) the provisions of the Confidentiality Agreement shall
survive the termination of this Agreement for the period set
forth therein, and (iii) nothing herein shall relieve any
party from liability for any intentional or willful breach of
this Agreement.
8.3
Fees and Expenses
.
(a) Except as set forth in Section 8.2, above, and
this Section 8.3, all fees and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees and
expenses whether or not the Merger is consummated. Within one
(1) Business Day after the effective date of any
termination of this Agreement under the circumstances described
in Sections 8.3(b)(i) through (b)(iii), the Seller shall
pay to the Company, in addition to any Termination Fee owed to
the Company pursuant to Section 8.3(b), all of the
Reimbursable Company Expenses by delivery of immediately
available funds.
(b) (i) The Seller shall pay to the Company in
immediately available funds, within one (1) Business Day
after demand by the Company, an amount equal to Eighteen Million
Three Hundred Thousand and No/100 Dollars
A-29
($18,300,000.00) (the Termination Fee) if this
Agreement is terminated by the Seller pursuant to
Section 8.1(h), above.
(ii) If this Agreement is terminated by the Company
pursuant to Section 8.1(g), above, and within twelve
(12) months following the termination of this Agreement an
Acquisition Proposal is consummated or the Seller enters into a
Contract providing for an Acquisition Proposal, then the Seller
shall pay or cause to be paid to the Company in immediately
available funds an amount equal to the Termination Fee within
one (1) Business Day after the Seller enters into such
Contract or such transaction is consummated, whichever is
earlier.
(iii) If (A) this Agreement is terminated by the
Company or the Seller, as applicable, pursuant to
Section 8.1(b), above (and prior to such termination the
Seller shall not have held a meeting of its stockholders
pursuant to Section 6.2, above), or Section 8.1(d),
above, (B) prior to such termination an Acquisition
Proposal (other than by the Company and the Merger Sub) shall
have been received by the Seller and not withdrawn, and
(C) within twelve (12) months following the
termination of this Agreement such Acquisition Proposal is
consummated or the Seller enters into a Contract providing for
such Acquisition Proposal, then the Seller shall pay or cause to
be paid to the Company in immediately available funds an amount
equal to the Termination Fee within one (1) Business Day
after the Seller enters into such Contract or such transaction
is consummated, whichever is earlier.
(iv) The Seller acknowledges that the agreements contained
in this Section 8.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without
these agreements, the Company and the Merger Sub would not enter
into this Agreement; accordingly, if the Seller fails to pay in
a timely manner the amounts due pursuant to this
Section 8.3(b) and, in order to obtain such payment, the
Company makes a claim that results in a judgment against the
Seller for the amounts set forth in this Section 8.3(b),
the Seller shall pay to the Company, in addition to the amount
of such judgment, the Companys reasonable costs and
expenses (including reasonable attorneys fees and
expenses) in connection with such suit, together with interest
on the amounts set forth in this Section 8.3(b) at
The
Wall Street Journal
prime rate in effect on the date such
payment was required to be made. Payment of the fees described
in this Section 8.3(b) shall be the exclusive remedy for a
termination of this Agreement as specified in this
Section 8.3(b) and shall be in lieu of damages incurred in
the event of any such termination of this Agreement.
8.4
Waiver
.
At any time prior to
the Effective Time, any party hereto may (a) extend the
time for the performance of any of the obligations or other acts
of the other parties hereto, (b) waive any inaccuracies by
the other parties hereto in the representations and warranties
contained herein or in any document delivered pursuant hereto
and (c) waive compliance by the other parties hereto with
any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument
in writing signed by the party or parties to be bound thereby,
but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to,
any subsequent other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1
Non-Survival of Representations, Warranties and
Agreements
.
The representations, warranties
and agreements in this Agreement shall terminate at the
Effective Time or upon termination of this Agreement pursuant to
Article VIII, except that the agreements set forth in
Article I, Sections 1.9, 6.4, 6.5 and 6.7, above,
shall survive the Effective Time indefinitely and those set
forth in Sections 4.8, 5.4, 8.2, 8.3 and Article IX
hereof shall survive termination indefinitely.
9.2
Notices
.
All notices and other
communications given or made pursuant hereto shall be in writing
and shall be deemed given and received when delivered
personally, three (3) Business Days after being mailed by
registered or certified mail (postage prepaid, return receipt
requested), one (1) Business Day after being delivered by
an express courier (with confirmation), or when sent by
facsimile (with confirmation), in each case to the parties at
the following addresses or telecopy numbers, as the case may be
(or at such other address or telecopy number for a
A-30
party as shall be specified by like notices of changes of
address or telecopy number) and shall be effective upon receipt:
(a) If to the Seller:
First Indiana Corporation
135 North Pennsylvania Street, Suite 2800
Indianapolis, IN 46204
|
|
|
|
Attention:
|
Reagan K. Rick
|
Secretary and General Counsel
Facsimile:
(317) 269-1292
(b) With a copy to:
Bose McKinney & Evans LLP
2700 First Indiana Plaza
135 North Pennsylvania Street
Indianapolis, IN 46204
Attention: David A. Butcher
Facsimile:
(317) 223-0123
(c) If to the Company or the Merger Sub:
Marshall & Ilsley Corporation
770 North Water Street
Milwaukee, WI 53202
|
|
|
|
Attention:
|
Randall J. Erickson
|
Senior Vice President, Chief Administrative Officer and
General Counsel
Facsimile:
(414) 765-7899
With a copy to:
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, WI 53202
|
|
|
|
Attention:
|
Christopher B. Noyes
|
Dennis F. Connolly
Facsimile: (414)
273-5198
9.3
Certain Definitions
.
For
purposes of this Agreement, the term:
Acquisition Proposal
shall mean any offer or
proposal (other than an offer or proposal by the Company)
relating to any Acquisition Transaction.
Acquisition Transaction
shall mean any
transaction or series of related transactions other than the
transactions contemplated by this Agreement involving:
(i) any acquisition or purchase from the Seller by any
Person of more than a fifteen percent (15%) interest in the
total outstanding voting securities of the Seller or any of the
Seller Subsidiaries or any tender offer or exchange offer that
if consummated would result in any Person beneficially owning
fifteen percent (15%) or more of the total outstanding voting
securities of the Seller or any of the Seller Subsidiaries, or
any merger, consolidation, business combination or similar
transaction involving the Seller or any of the Seller
Subsidiaries;
(ii) any sale, lease, exchange, transfer, license,
acquisition or other disposition of more than fifteen percent
(15%) of the assets of the Seller or any of the Seller
Subsidiaries; or
(iii) any liquidation or dissolution of the Seller or any
of the Seller Subsidiaries.
A-31
Affiliate
means a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first
mentioned Person including, without limitation, any partnership
or joint venture in which any Person (either alone, or through
or together with any other Person) has, directly or indirectly,
an interest of five percent (5%) or more. For purposes of this
definition, control shall mean the possession,
direct or indirect, of the power to direct or cause the
direction of management and policies of a Person, whether
through the ownership of voting securities, by Contract or
otherwise.
Business Day
means any day other than a day
on which banks in Wisconsin are required or authorized to be
closed.
Company SEC Reports
means all forms, reports
and documents filed by the Company or any Company Subsidiary
with the SEC since December 31, 2004, including, without
limitation, (i) the Companys Annual Reports on
Form 10-K
for the fiscal years ended December 31, 2004, 2005 and
2006, (ii) the Companys proxy statements relating to
the Companys meetings of stockholders (whether annual or
special) held since December 31, 2004, (iii) the
Companys Quarterly Reports on
Form 10-Q
filed with the SEC since December 31, 2004, (iv) the
Companys reports on
Form 8-K
filed with the SEC since December 31, 2004, (v) all
other reports or registration statements filed by the Company
with the SEC since December 31, 2004, and (vi) all
amendments and supplements to all such reports and registration
statements filed by the Company with the SEC since
December 31, 2004.
Consent
shall mean any consent, approval,
authorization, clearance, exemption, waiver, permit, franchise,
charter, license, easement, grant or similar affirmation by any
Person pursuant to any Contract, Law or Order.
Contract
shall mean any agreement,
arrangement, authorization, commitment, indenture, instrument,
license, lease, obligation, plan, practice, restriction,
understanding or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on
any Person or its capital stock, assets or business, including,
without limitation, any letter of intent or memorandum of
understanding.
Knowledge
as used with respect to a party
(including references to such party being aware of a particular
matter) shall mean (i) those facts that are actually known
by the Chairman, Chief Executive Officer, President or Chief
Financial Officer of such party, or individuals performing
similar functions, or any other officer of such party, and
(ii) those facts that would reasonably be expected to have
come to the attention of one or more of the officers referred to
in the preceding clause (i) had such officer conducted a
reasonable due diligence review of such partys operations
and business, including reasonable inquiries to key personnel
and a review of, and discussions with key personnel regarding,
the books, records and operations of such party.
Law
shall mean any federal, state, local,
municipal, foreign, international, multinational, territorial or
other administrative order, constitution, law, ordinance,
principle of common law, rule, regulation, statute or treaty and
any guidance issued thereunder, including any transitional
relief or rules provided in connection therewith.
Lien
shall mean any conditional sale
agreement, default of title, easement, encroachment,
encumbrance, hypothecation, infringement, lien, mortgage,
pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or
interest, charge or claim of any nature whatsoever of, on or
with respect to any property (real or personal) or property
(real or personal) interest, other than (i) Liens for
current Taxes upon the assets or property of a Person or its
subsidiaries which are not yet due and payable provided
appropriate reserves have been established therefor on the
financial statements of such Person and (ii) for depository
institution subsidiaries of a Person, pledges to secure deposits
and Liens incurred in the ordinary course of the banking
business.
Order
shall mean any award, decision, decree,
injunction, judgment, order, ruling, subpoena or verdict
entered, issued, made or rendered by any court, administrative
agency or any other Governmental Authority.
Person
means an individual, corporation,
partnership, association, trust, unincorporated organization,
limited liability company, other entity, group (as defined in
Section 13(d) of the Exchange Act) or Governmental
Authority.
Preferred Share Purchase Right
shall mean a
right to purchase certain capital stock of the Seller in the
manner described in the Rights Agreement.
A-32
Proceeding
shall mean any action,
arbitration, cause of action, claim, complaint, criminal
prosecution, demand letter, governmental or other examination or
investigation, hearing, inquiry, administrative or other
proceeding, or notice by any Person alleging potential liability
of another Person, or invoking or seeking to invoke legal
process to obtain information relating to or affecting another
Person, which affects such other Persons business assets
(including Contracts related to it), or obligations under the
transactions contemplated by this Agreement, but shall not
include regular, periodic examinations of depository
institutions and their Affiliates by Regulatory Authorities in
the ordinary course consistent with past practice.
Regulatory Authorities
shall mean,
collectively, the Federal Trade Commission, the United States
Department of Justice, the Federal Reserve Board, the FDIC, the
OCC, the OTS, the WI DFI, the SEC, and all other federal and
state regulatory agencies and public authorities having
jurisdiction over the parties and their respective subsidiaries.
Reimbursable Company Expenses
means all
reasonable out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to the Company, the
Merger Sub and their Affiliates) incurred by the Company, the
Merger Sub and their Affiliates or on their behalf in connection
with or related to the authorization, preparation and execution
of this Agreement, the Proxy Statement, the solicitation of
stockholder approvals and all other matters related to the
closing of the transactions contemplated hereby.
Rights
shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip,
warrants or other binding obligations of any character
whatsoever by which a Person is or may be bound to issue
additional shares of its capital stock or other Rights, or
securities or Rights convertible into or exchangeable for,
shares of the capital stock of a Person.
Subsidiary
means, with reference to any
corporation, partnership, limited liability company, business
trust, joint venture or other entity, ownership by such entity,
directly or indirectly, of fifty percent (50%) or more of the
voting equity of such entity, the holders of which are entitled
to vote for the election of a majority of the board of directors
or any similar governing body of such corporation, partnership,
limited liability company, business trust, joint venture or
other entity.
Superior Offer
means an unsolicited, bona
fide written offer made by a third Person to consummate any of
the following transactions or in one or a series of related
transactions:
(i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar
transaction involving the Seller pursuant to which those
stockholders of the Seller immediately preceding such
transaction will hold less than fifty percent (50%) of the
equity interest in the surviving or resulting entity of such
transaction;
(ii) a sale, lease, exchange, transfer, license or other
disposition by the Seller and the Seller Subsidiaries of all or
substantially all of their assets, as a consolidated
group; or
(iii) the acquisition by any Person (including by way of a
tender offer, merger, consolidation, business combination,
exchange offer or similar transaction or issuance by the
Seller), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in
excess of fifty percent (50%) of the voting power of the then
outstanding shares of capital stock of the Seller;
provided
,
however
, that in each of clause (i),
(ii) or (iii) immediately above, the Superior Offer
shall be on terms that the Sellers Board of Directors
determines, in its good faith judgment, to be more favorable to
the Seller stockholders (taking into account the relative value
and form of the consideration offered, all other terms and
conditions of the respective offers, including, without
limitation, the presence of a financial contingency, the
likelihood of obtaining financing on a timely basis if a
financing contingency is present, and the likelihood of
obtaining any required Consents or Orders from Governmental
Authorities) than the terms of the Merger (after receipt and
consideration of the written opinion of a financial advisor of
nationally recognized reputation (which includes the
Sellers current financial advisor) to the effect that the
consideration offered in such offer is superior, from a
financial point of view, to the Per Share Consideration).
A-33
9.4
Headings
.
The headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of
this Agreement.
9.5
Severability
.
If any term or
other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy,
all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to either party.
Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
9.6
Entire Agreement
.
This
Agreement (including the documents and instruments referred to
in this Agreement) constitute the entire agreement of the
parties and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to the
subject matter hereof and, except as set forth in
Section 9.9, below, are not intended to confer upon any
other Person any rights or remedies hereunder.
9.7
Assignment
.
This Agreement
shall not be assigned by operation of Law or otherwise, except
that the Company may assign all or any of its rights hereunder
and thereunder to any Affiliate, provided that no such
assignment shall relieve the Company of its obligations
hereunder.
9.8
Binding Effect
.
This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Without limiting the general applicability of the foregoing, the
Seller acknowledges receiving a copy or having access to the
Companys Current Report filed on
Form 8-K
on April 4, 2007, relating to the Companys
sponsored-spin transaction involving Warburg Pincus LLC and
Metavante Corporation, pursuant to which, among other things,
the Company will be converted (the Conversion) into
a Wisconsin limited liability company (M&I
LLC). The Seller further acknowledges that M&I LLC
shall succeed to the Companys rights and obligations under
this Agreement as a result of the Conversion without any action
by the parties.
9.9
Parties in Interest
.
Subject
to Section 9.7, above, this Agreement (including
Annex A
attached hereto) shall be binding
upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement,
other than Sections 6.4 and 6.5, above (which are intended
to be for the benefit of and may be enforced by the employees of
the Seller and the Seller Subsidiaries and the Indemnified
Parties).
9.10
Governing Law
.
Except to the
extent that the laws of the State of Indiana are mandatorily
applicable to the matters arising under or in connection with
this Agreement, this Agreement shall be governed by, and
construed in accordance with, the laws of the State of
Wisconsin, regardless of the Laws that might otherwise govern
under applicable principles of choice of law or conflicts of law.
9.11
Counterparts
.
This Agreement
may be executed in two or more counterparts, all of which shall
be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the
parties and delivered to the other party, it being understood
that each party need not sign the same counterpart.
9.12
Time is of the Essence
.
Time
is of the essence as to all performance under this Agreement.
9.13
Specific Performance
.
The
parties hereto acknowledge that monetary damages would not be a
sufficient remedy for breach of this Agreement. Therefore, upon
breach of this Agreement by either party, the aggrieved party
may proceed to protect its rights and enforce this Agreement by
suit in equity, action at law or other appropriate Proceeding,
including an action for the specific performance of any
provision herein or any other remedy granted by Law, equity or
otherwise, in each case without posting a bond. Any action for
specific performance hereunder shall not be deemed exclusive and
may also include claims for monetary damages as may be warranted
under the circumstances. The prevailing party in any such suit,
action or other Proceeding arising out of or related to this
Agreement shall be entitled to recover its costs, including
attorneys fees, incurred in such suit, action or other
Proceeding. The sole and exclusive venue for any action arising
out of this Agreement shall be a state or federal court having
jurisdiction in Milwaukee County, Wisconsin. Each party hereby
waives, to the fullest extent
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permitted by law: (i) any objections that it may now or
hereafter have to venue of any suit, action or other Proceeding
brought in such court; (ii) any claim that any suit, action
or other Proceeding brought in such court has been brought in an
inconvenient forum; and (iii) any defense it may now or
hereafter have based on lack of personal jurisdiction in such
forum.
9.14
Interpretation
.
When a
reference is made in this Agreement to Articles, Sections,
Annexes or Schedules, such reference will be to an Article or
Section of or Annex or Schedule to this Agreement unless
otherwise indicated. The table of contents contained in this
Agreement is for reference purposes only and will not affect in
any way the meaning or interpretation of this Agreement.
Whenever the words include, includes or
including are used in this Agreement, they will be
deemed to be followed by the words without
limitation. Unless the context otherwise requires
(i) or is disjunctive but not necessarily
exclusive, (ii) words in the singular include the plural
and vice versa, (iii) the use in this Agreement of a
pronoun in reference to a party hereto includes the masculine,
feminine or neuter, as the context may require, and
(iv) terms used herein that are defined in GAAP have the
meanings ascribed to them therein. No provision of this
Agreement will be interpreted in favor of, or against, either of
the parties to this Agreement by reason of the extent to which
either such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision
is inconsistent with any prior draft hereof, and no rule of
strict construction will be applied against either party hereto.
The Seller Disclosure Schedule and the Company Disclosure
Schedule, as well as all other Schedules and all Annexes hereto,
will be deemed part of this Agreement and included in any
reference to this Agreement. All of the representations and
warranties of the Seller are qualified by and subject to the
Seller Disclosure Schedule and the Seller SEC Reports even if
not expressly referenced in a section of Article II. This
Agreement will not be interpreted or construed to require either
party to take any action, or fail to take any action, if to do
so would violate any applicable Law. References to the
other parties will be deemed to refer to the Seller,
the Company or the Merger Sub, as the case may be.
[SIGNATURES
ON FOLLOWING PAGE]
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IN WITNESS WHEREOF,
the Company, the Merger Sub and the
Seller have caused this Agreement and Plan of Merger to be
executed as of the date first written above by their respective
officers thereunto duly authorized.
SELLER:
FIRST INDIANA CORPORATION
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By:
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/s/ Robert
H. Warrington
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Robert H. Warrington
President and Chief Executive Officer
COMPANY:
MARSHALL & ILSLEY CORPORATION
Mark F. Furlong
President and Chief Executive Officer
MERGER SUB:
FIC ACQUISITION CORPORATION
Mark F. Furlong
President
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ANNEX A
EMPLOYEE
BENEFIT MATTERS
1.
Conduct of Business Between Date of Signing the
Agreement and the Effective Time
.
Between the
date of signing of the Agreement and the Effective Time, unless
otherwise agreed between Seller and the Company (i) Seller
or Seller Subsidiaries will not increase the base salaries of
their respective employees except on such employees annual
review date or except to the extent necessary for limited
specific individuals to account for market adjustments, provided
however such increases shall be in the ordinary course of
business in accordance with past practices, shall not exceed in
the aggregate 4% on an annualized basis for those employees
without employment agreements and there shall be no increases
for employees with employment agreements; (ii) no bonuses
or incentive payments will be paid to employees of Seller or
Seller Subsidiaries except consistent with existing bonus or
incentive programs and in the ordinary course of business in
accordance with past practices; (iii) no new programs,
plans or agreements providing compensation or benefits for
employees or directors of Seller or Seller Subsidiaries will be
adopted or implemented, existing programs, plans or agreements
providing compensation or benefits for employees or directors of
Seller or Seller Subsidiaries will not be amended or modified
except as required by, or necessary to comply with, applicable
law, including to comply with Section 409A of the Internal
Revenue Code, or as provided herein or in agreements executed by
employees in connection herewith, and no further grants or
awards will be made under existing plans, programs or agreements
providing compensation or benefits for employees or directors of
Seller or Seller Subsidiaries, except as provided herein;
(iv) there will be no officer title promotions, except that
if an officer position becomes vacant, another officer may be
promoted to that position if he or she assumes the former
employees job responsibilities; (v) no new consulting
agreements or employment continuation agreements, if any, will
be granted to employees of Seller or Seller Subsidiaries and the
existing consulting and employment continuation agreements of
Seller and Seller Subsidiaries will not be amended, except as
provided herein or in the Consulting Agreements executed
simultaneously herewith; (vi) in no event will Seller make
employer contributions to its retirement programs except to the
extent consistent with past practice, and Seller will not make
any amendments or modifications to its retirement programs,
other than as provided herein or required to maintain the
tax-qualified status of any such retirement programs; and
(vii) Seller or Seller Subsidiaries will only pay severance
to those employees who are terminated by their employer and then
only in amounts and for a period consistent with past practice
of the employer, or as provided in the employees
employment agreement, if any. The Company agrees that it will
not knowingly amend or unreasonably omit to take any action with
respect to any existing arrangement in a manner that would
result in additional employee tax under Section 409A of the
Internal Revenue Code.
2.
General
.
(a)
Transferred Employees
.
Those
individuals who are employed by the Seller or any of the Seller
Subsidiaries as of the Effective Time shall be hereinafter
referred to as the Transferred Employees. After the
Effective Time, the Transferred Employees shall be integrated
into the Companys qualified retirement plans, health and
dental plans and other employee welfare benefit plans subject to
the terms and conditions of the referenced plans, except as
otherwise provided in the Agreement and this Annex A. If
the Company terminates a Transferred Employees employment
with the Company within the first twelve months after the
Effective Time, the amount of severance to which such
Transferred Employee would be entitled is as set forth in the
Companys
Reduction-In-Force
Severance policy provided to the Seller. Thereafter, if the
Company terminates a Transferred Employees employment, the
amount of severance to which such Transferred Employee may be
entitled will be as set forth in the Companys severance
plans as then in effect, and Transferred Employees will be given
full credit for their prior service with the Seller and the
Seller Subsidiaries (or any service credited as such in
connection with a previous acquisition by the Seller or any
Seller Subsidiary) for purposes of the Companys severance
plans as then in effect.
(b)
Credit for Past Service
.
After
the Effective Time, the Company and the Company Subsidiaries
shall give the Transferred Employees full credit for their prior
service with the Seller and the Seller Subsidiaries (or any
service credited as such in connection with a previous
acquisition by the Seller or any Seller Subsidiary):
(i) for purposes of eligibility (including, without
limitation, initial participation and eligibility for current
benefits) and vesting under any qualified or nonqualified
retirement or profit sharing plans maintained by the Company in
which
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Transferred Employees may be eligible to participate; and
(ii) for all purposes under any welfare benefit plans,
cafeteria plans (as defined in Code
Section 125), vacation plans and similar arrangements
maintained by the Company. Notwithstanding anything contained
herein to the contrary, the Company will not give credit for
prior service to Transferred Employees as regards the
Companys retiree health plan.
(c)
Waiver of Certain
Limitations
.
The Company will, or will cause
the Companys affiliates or the Seller Subsidiaries to,
waive all limitations as to preexisting conditions and waiting
periods with respect to participation and coverage requirements
applicable to the Transferred Employees under any welfare
benefit plans that such employees may be eligible to participate
in after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such
employees and that have not been satisfied as of the Effective
Time under any welfare plan maintained for the Transferred
Employees immediately prior to the Effective Time.
Notwithstanding the foregoing, the Transferred Employees still
have to meet the service requirements (recognizing past service
credit given in Section 2(b), above) and other eligibility
criteria under the Companys plans.
(d)
Companys Ability to Amend, Modify or
Terminate Plans
.
Nothing contained in this
Annex shall limit the right of the Company or its affiliates, at
any time and from time to time, to amend, modify or terminate,
in whole or in part, any of the plans referenced in this Annex,
except that no such amendment shall nullify the provisions of
this Annex, and the Company hereby reserves such right.
3.
Employee Welfare Plans
.
The
Sellers existing health and dental plans and other
employee welfare benefit plans shall remain in effect at least
until the Effective Time. Thereafter, Transferred Employees will
be integrated into the Companys health and dental plans
and other employee welfare plans at a time determined on a
plan-by-plan
basis by the Company in its sole discretion. If integration
occurs during a plan year, Transferred Employees shall receive
credit under the Companys plans for co-pays, deductibles
and similar limits incurred under Sellers plans during
such plan year. Until the Transferred Employees are integrated
into the Company plans, the respective Seller plans shall remain
in effect.
4.
401(k) Profit Sharing Plan, Pentegra Defined
Benefit Plan for Financial Institutions (the Pentegra
Plan) and Supplemental Benefit Plan Agreement With Key
Executives (Supplemental Plan)
.
(a) Prior to the Effective Time, Seller shall not make any
discretionary employer contributions to Sellers 401(k)
Profit Sharing Plan, its Supplemental Plan or the Pentegra Plan
except to the extent consistent with past practice, unless
otherwise agreed between Seller and the Company.
(b) At or prior to the Effective Time, Seller shall cause
the cessation of all benefit accruals under the Pentegra Plan by
its employees, and Seller shall provide all affected
participants and alternate payees with written notice at least
45 days in advance of such change, unless the parties agree
to a notice period as short as 15 days.
(c) At or prior to the Effective Time, Seller shall cause
all benefit accruals under the Supplemental Plan to cease.
(d) At or after the Effective Time, the Sellers
401(k) Profit Sharing Plan shall be frozen, and this plan will
be merged into the Companys Retirement Program subsequent
to the Effective Time. Immediately after the Effective Time, the
Transferred Employees will participate in the M&I
Retirement Program on the same basis as other M&I employees.
5.
Code Section 125
Plans
.
Company shall, or shall cause its
affiliates, to either (i) maintain any Code
Section 125 plans of the Seller and Seller Subsidiaries
(the Seller 125 Plans) for the remainder of the
calendar year in which the Effective Time occurs, or
(ii) terminate any Seller 125 Plans after the Effective
Time and either allow the Transferred Employees to participate
in the Companys Code Section 125 Plan or adopt a new
Code Section 125 plan (either alternative referred to
hereafter as the New 125 Plan) for the Transferred
Employees who were participating in the Seller 125 Plans and
transfer the account balances of such employees under the Seller
125 Plans to the New 125 Plan. Until the Transferred Employees
are integrated into the New 125 Plan, any Seller 125 Plans shall
remain in effect.
6.
Options, Deferred Shares and Restricted
Stock
.
(a)
Options
.
In accordance with
Section 1.9 of the Agreement and the provisions of the
relevant plan documents, each Option which is outstanding
immediately prior to the Effective Time, whether or not
exercisable, shall be cancelled as of the Effective Time, in
exchange for a lump-sum payment from the Surviving Corporation.
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(b)
Deferred Shares and Restricted Stock Issued
Pursuant to the
2006-2008
Long Term Incentive Plan
.
In accordance with
the provisions of the relevant plan documents (where change in
control is discussed) and previous disclosures in the Seller SEC
Reports, (i) all outstanding deferred shares that are
unvested at the Effective Time of the Merger shall become vested
and be paid in cash, before applicable withholding, based on a
$32.00 per share price, upon consummation of the Merger, and
(ii) all outstanding restricted shares issued pursuant to
the
2006-2008
Long Term Incentive Plan that are unvested at the Effective Time
of the Merger shall be canceled and cash payments, before
applicable withholding, in an amount equal to $32.00 per share
shall become vested and be paid in cash upon consummation of the
Merger.
(c)
Other Restricted Stock
.
Except
to the extent provided above, any other restricted stock issued
by the Seller shall be canceled and cash payments, before
applicable withholding, in an amount equal to $32.00 per share
plus interest at M&Is money market index account rate
from the date of the Merger to the date of payment, shall be
paid upon the earliest of: (i) the normal vesting date or
an agreed upon retention date (the Vesting Date),
provided the employee remains continuously employed with Company
or its subsidiaries through the Vesting Date, (ii) the date
of termination of the employees employment if the
employees position is involuntarily impacted or the
employee terminates employment for Good Reason prior to the
Vesting Date, otherwise no payment shall be due; or
(iii) an accelerated date relating to all or any portion of
any award, if and upon such conditions as determined in the sole
discretion of the Company. For purposes hereof, Good
Reason shall mean a reduction in the employees
annual base salary in effect at the Effective Time of the
Merger, or the Company requires the employee, without his or her
consent, to relocate his or her principal business office to a
location more than 30 miles from where the employee is
employed at the Effective Time of the Merger.
(d) Consistent with previous disclosures in the Seller SEC
Reports, any payment pursuant to this Section 6 will not be
included in compensation for purposes of determining benefits
under any nonqualified plan in which the employee participates.
(e) To avoid any ambiguity, the options, deferred shares
and restricted stock discussed in this Section 6 shall vest
and shall be payable in accordance with the terms set forth in
this Section 6.
(f) The Seller agrees to use its reasonable best efforts to
obtain any agreements necessary or advisable to effectuate the
foregoing.
7.
Section 409A
.
Adjustments
may need to made to the foregoing to the extent necessary to
comply with Section 409A of the Internal Revenue Code.
A-39
APPENDIX B
July 8, 2007
Board of Directors
First Indiana Corporation
135 North Pennsylvania Street, Suite 2800
Indianapolis, IN 46204
Ladies and Gentlemen:
First Indiana Corporation (First Indiana),
Marshall & Ilsley Corporation (M&I)
and FIC Acquisition Corporation, a wholly-owned subsidiary of
M&I (Merger Sub), have entered into an
Agreement and Plan of Merger, dated July 8, 2007
(collectively, the Agreement), pursuant to which
Merger Sub will merge with and into First Indiana, with First
Indiana as the surviving corporation (the Merger).
Pursuant to the terms of the Agreement, upon consummation of the
Merger, each share of common stock, $0.01 par value of
First Indiana, issued and outstanding immediately prior to the
Effective Time, other than certain shares, including those
shares held by M&I and Merger Sub, specified in the
Agreement, (the First Indiana Common Stock), will be
converted into the right to receive $32.00 in cash, without
interest (the Per Share Consideration). Capitalized
terms used herein without definition shall have the meanings
assigned to them in the Agreement. The other terms and
conditions of the Acquisition are more fully set forth in the
Agreement. You have requested our opinion as to the fairness,
from a financial point of view, of the Per Share Consideration
to the holders of First Indiana Common Stock.
Sandler ONeill & Partners, L.P., as part of its
investment banking business, is regularly engaged in the
valuation of financial institutions and their securities in
connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed,
among other things: (i) the Agreement; (ii) certain
publicly available financial statements and other historical
financial information of First Indiana that we deemed relevant;
(iii) certain publicly available financial statements and
other historical financial information of M&I that we
deemed relevant in determining M&Is financial
capacity to undertake the Merger; (iv) certain publicly
available financial estimates for First Indiana for the years
ending December 31, 2007 through December 31, 2008 as
published by I/B/E/S and internal financial projections for the
years ended December 31, 2009 through December 31,
2011 as prepared by senior management of First Indiana;
(v) to the extent publicly available, the financial terms
of certain recent business combinations in the commercial
banking industry; (vi) the current market environment
generally and the banking environment in particular; and
(vii) such other information, financial studies, analyses
and investigations and financial, economic and market criteria
as we considered relevant. We also discussed with certain
members of the senior management of First Indiana the business,
financial condition, results of operations and prospects of
First Indiana. In response to First Indianas inquires,
First Indiana received a solicitation of interest from M&I,
at the Per Share Consideration, which was a price superior to
any other indication, and First Indiana then ceased discussions
with other parties.
In performing our review, we have relied upon the accuracy and
completeness of all of the financial and other information that
was available to us from public sources for First Indiana and
M&I, that was provided to us by First Indiana or its
respective representatives or that was otherwise reviewed by us
and we have assumed such accuracy and completeness for purposes
of rendering this opinion. We have further relied on the
assurances of the senior management of each of First Indiana and
M&I at they are not aware of any facts or circumstances
that would make any of such information inaccurate or
misleading. We have not been asked to undertake, and have not
undertaken, an independent verification of any of such
information and we do not assume any responsibility or liability
for the accuracy or completeness thereof. We did not make an
independent evaluation or appraisal of the specific assets, the
collateral securing assets or the liabilities (contingent or
otherwise) of First Indiana and M&I or any of their
subsidiaries, or the collectibility of any such assets, nor have
we been furnished with any such evaluations or appraisals. We
did not make an independent evaluation of the adequacy of the
allowance for loan losses of First Indiana and M&I nor have
we reviewed any individual credit files relating to First
Indiana or M&I. We have
B-1
assumed, with your consent, that the respective allowances for
loan losses for First Indiana and M&I are adequate to cover
such losses.
With respect to the publicly available earnings estimates and
the long-term earnings estimates for First Indiana used by
Sandler ONeill in its analyses, the senior management of
First Indiana confirmed to us that those estimates (including
any assumptions related to such projections and estimates)
reflected the best currently available estimates and judgments
of the future financial performances of First Indiana. We
assumed that the financial performances reflected in all
projections and estimates used by us in our analyses would be
achieved. We express no opinion as to such financial projections
or estimates or the assumptions on which they are based. We have
also assumed that there has been no material change in the
assets, financial condition, results of operations, business or
prospects of First Indiana and M&I since the date of the
most recent financial statements reviewed by us. We have assumed
in all respects material to our analysis that First Indiana and
M&I will remain as going concerns for all periods relevant
to our analyses, that all of the representations and warranties
contained in the Agreement and all related agreements are true
and correct, that each party to the agreements will perform all
of the covenants required to be performed by such party under
the agreements and that the conditions precedent in the
agreements will not be waived. Finally, with your consent, we
have relied upon the advice First Indiana has obtained from its
legal, accounting and tax advisors as to all legal, accounting
and tax matters relating to the Merger and the other
transactions contemplated by the Agreement.
Our opinion is necessarily based on financial, economic, market
and other conditions as in effect on, and the information made
available to us as of, the date hereof. Events occurring after
the date hereof could materially affect this opinion. We have
not undertaken to update, revise, reaffirm or withdraw this
opinion or otherwise comment upon events occurring after the
date hereof. We are expressing no opinion herein as to the
prices at which the common stock of First Indiana and M&I
may trade at any time.
We have acted as First Indianas financial advisor in
connection with the Merger and will receive a fee for our
services, a substantial portion of which is contingent upon
consummation of the Merger. We will also receive a fee for
rendering this opinion. First Indiana has also agreed to
indemnify us against certain liabilities arising out of our
engagement. In the ordinary course of our business as a
broker-dealer, we may purchase securities from and sell
securities to First Indiana and M&I and their affiliates.
We may also actively trade the equity
and/or
debt
securities of First Indiana and M&I
and/or
their
respective affiliates for our own account and for the accounts
of our customers and, accordingly, may at any time hold a long
or short position in such securities.
Our opinion is directed to the Board of Directors of First
Indiana in connection with its consideration of the Merger and
does not constitute a recommendation to any shareholder of First
Indiana as to how such shareholder should vote at any meeting of
shareholders called to consider and vote upon the Agreement. Our
opinion is directed only to the fairness, from a financial point
of view, of the Per Share Consideration to holders of First
Indiana Common Stock and does not address the underlying
business decision of First Indiana to engage in the Merger, the
relative merits of the Merger as compared to any other
alternative business strategies that might exist for First
Indiana or the effect of any other transaction in which First
Indiana might engage. Our opinion is not to be quoted or
referred to, in whole or in part, in a registration statement,
prospectus, proxy statement or in any other document, nor shall
this opinion be used for any other purposes, without Sandler
ONeills prior written consent.
Based upon and subject to the foregoing, it is our opinion, as
of the date hereof, that the Per Share Consideration to be
received by the holders of First Indiana Common Stock is fair to
such shareholders from a financial point of view.
Very truly yours,
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Dear Shareholder:
On the reverse side of this card are instructions on how to vote your shares by telephone or over
the Internet. Please consider voting by telephone or over the Internet. Your vote is recorded as if
you mailed in your proxy card. We believe voting this way may be convenient for most shareholders.
Thank you for your attention to these matters.
First Indiana Corporation
ê Please fold and detach card at perforation before mailing. ê PROXY THIS PROXY WHEN PROPERLY
EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDERS. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. 1. Proposal to approve the
Agreement and Plan of Merger dated July 8, 2007, by and among Marshall & Ilsley Corporation, FIC
Acquisition Corporation and First Indiana Corporation q FOR q AGAINST q ABSTAIN 2. Proposal to
adjourn the Special Meeting, if necessary, to solicit additional proxies q FOR q AGAINST q
ABSTAIN 3. N I THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT OF IT. (CONTINUED AND TO BE
SIGNED ON REVERSE SIDE)
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V O T E B Y T E L E P H O N E Have your proxy card available when you call the Toll-Free number
1-888-693-8683 using a touch-tone telephone and follow the simple instructions to Shareholder
Services Operations record your vote. Locator 5352 P. O. Box 94509 Cleveland, OH 44101-4509 V O
T E B Y I N T E R N E T Have your proxy card available when you access the website www.cesvote.com
and follow the sim ple instructions to record your vote. V O T E B Y M A I L Please mark, sign
and date your proxy card and return it in the postage-paid envelope provided or return it to: First
Indiana Corporation, P.O. Box 535300, Pittsburgh PA 15253. Vote by Telephone Vote by Internet
Vote by Mail Call Toll-Free using a Access the Website and Return your proxy Touch-Tone phone:
Cast your vote: n i the Postage-paid 1-888-693-8683 www.cesvote.com envelope provided Vote 24
hours a day, 7 days a week! Your telephone or Internet vote must be received by 6:00 a.m. Eastern
Standard Time on December 19, 2007 to be counted in the final tabulation. IF YOU VOTE BY TELEPHONE
OR INTERNET, PLEASE DO NOT SEND YOUR PROXY BY MAIL. è Proxy must be signed and dated below ê
Please fold and detach card at perforation before mailing. ê This proxy is solicited by the Board
of Directors for the Special Meeting of Shareholders to be held on December 19, 2007. The
undersigned hereby appoints Gerald L. Bepko, Anat Bird, Pedro P. Granadillo, William G. Mays,
Phyllis W. Minott and Michael W. Wells, and each of them, attorneys-in-fact and proxies, with full
power of substitution, to attend the Special Meeting of Shareholders to be held on December 19,
2007 at 10:00 a.m. E.S.T., and at any adjournments or postponements of the Special Meeting, and to
vote as specified on the reverse all shares of the Common Stock of First Indiana Corporation which
the undersigned would be entitled to vote if personally present at the Special Meeting. The
undersigned acknowledges receipt of the Notice of Special Meeting of Shareholders and Proxy
Statement. Signature(s) Signature(s) Date, 2007 Please sign exactly as your name appears. Joint
owners should each sign personally. Where applicable, indicate your official position or
representative capacity. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
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First Ind Corp (MM) (NASDAQ:FINB)
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First Ind Corp (MM) (NASDAQ:FINB)
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