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RESTRICTED APPRAISAL REPORT Vacant Commercial Site 10th Street East Clark County Jeffersonville, Indiana 47130 PREPARED FOR: MainSource Bank 2310 Jonathan Moore Pike Columbus, Indiana 47202 DATE OF REPORT: December 7, 2016 EFFECTIVE DATE OF THE APPRAISAL: May 26, 2016 APPRAISER: Thomas W. Rohan, MAI Fore & Rohan Real Estate Appraisers, Inc. 201 Townepark Circle, Suite 201 Louisville, Kentucky 40243 502-253-1994 FORE & ROHAN REAL ESTATE APPRAISERS, INC. FILE NUMBER: 1600-711-16-RR-IN

December 7, 2016 MainSource Bank 2310 Jonathan Moore Pike Columbus, Indiana 47202 SUBJECT: Market Value Appraisal – Vacant Commercial Site 10th Street East Jeffersonville, Indiana 47130 Fore & Rohan, Inc. File #1600-711-16-RR-IN Dear Mr. Schultz: We are pleased to transmit this restricted appraisal report that was prepared on the above referenced property. The purpose of this appraisal is to derive the “as is” opinion of market value of the fee simple estate of the subject property, as of May 26, 2016, the effective date of this appraisal. In addition, at the request of the client, a “forced liquidation” market value is developed that considers the impact of a significantly reduced marketing period. Our opinion of market value is premised upon the Assumptions and Limiting Conditions. The definition of market value is in Addendum A. This report is intended to comply with the reporting requirements set forth under Standard Rule 2-2(b) of the 2016-2017 Uniform Standards of Professional Appraisal Practice for a restricted appraisal report. As such, the report presents limited, if any, discussion of the data, reasoning and analyses that have been used in the appraisal process to develop the opinion of market value. This report is restricted to the use of the client only and the value conclusions within may not be properly understood without referring to additional information contained in our work file. The subject site contains 3.255 acres, or 141,788 square feet, and is generally located on the northwest side of East 10th Street and south of Oakridge Drive in Jeffersonville, Indiana. East 10th Street is the primary commercial and commuter corridor within the Jeffersonville market supporting an interchange with Interstate 65 to the west and Interstate 265 to the northeast. The site characteristics include an irregular shape, level to slightly sloping topography, direct but limited frontage related to the site size and limited access. As of the date of inspection, the subject is vacant and available for development to its highest and best use.

VACANT COMMERCIAL SITE, 10TH STREET EAST, JEFFERSONVILLE, INDIANA

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Client: MainSoure Bank

2310 Jonathan Moore Pike Columbus, Indiana 47202

Purpose of the Appraisal: The purpose of this appraisal is to derive an “as is” opinion of the market value of the fee simple estate of the identified real property, as of May 26, 2016, the effective date of the appraisal.

In addition, at the client’s request, a “forced liquidation” value indication is developed that considers the impact on market value related to a significantly reduced marketing period.

Unless otherwise stated, all factors pertinent to a determination of market value have been considered as of the effective date. The property was inspected on May 26, 2016, by Thomas W. Rohan, MAI.

Type of Value:

Market Value - A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal.

Comment: Forming an opinion of market value is the purpose of many real property appraisal assignments, particularly when the client’s intended use includes more than one intended user. The conditions included in market value definitions establish market perspectives for development of the opinion. These conditions may vary from definition to definition but generally fall into three categories:

1. The relationship, knowledge, and motivation of the parties (i.e. seller and buyer)

2. The terms of sale (e.g., cash, cash equivalent, or other terms) and 3. The conditions of sale (e.g. exposure in a competitive market for a reasonable

time prior to sale.) (USPAP)

Intended User/Use: The intended user of this report is MainSource Bank, its successors and assigns. The intended use is for internal value review and potential sale negotiations. This appraisal report is restricted to the identified client use only.


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Real Property Appraised: The subject’s physical address is 10th Street

East, Jeffersonville, Indiana 47130. It is further identified by the Clark County, Jeffersonville Township Assessor’s office as tax parcel number 10-19-01-100-314.000-010.

Real Property Interest Appraised: Fee simple estate

Effective Date of Appraisal: May 26, 2016

Date of Report: December 7, 2016

Owner History The subject property is owned by MainSource Bank, who acquired title on August 21, 2012 from Apple 5, LLC. The transfer of title is recorded in the Clark County Recorder’s Office as Instrument Number 201216893. This title transfer is the result of a deed in lieu of foreclosure and not considered an arms’ length transaction.

To the best of our knowledge, no other sale or transfer of ownership has occurred within the past five years.

As of the effective date of this appraisal, the property is actively listed by Mr. Dave Davis of Remax Advantage with an asking price of $325,000. The listing broker confirmed there are no working offers or pending contracts associated with the subject site.

Real Estate Taxes Real estate taxes in this state and this jurisdiction represent ad valorem taxes, meaning a tax applied in proportion to value. The real estate taxes for an individual property may be determined by dividing the assessed value for a property by $100, then multiplying the estimate by the composite rate. The composite rate is based on a consistent state tax rate throughout this state, in addition to one or more local taxing district rates.


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For the most recent tax year, the estimated real estate taxes for the subject are based on the assess value of $223,800, divided by $100, then multiplied by the composite rate of 3.0 for a total of $6,714.00. As of the date of inspection, the real estate taxes are due for the Spring 2016 payment.

The assessment is scheduled to increase to $406,900 in the next tax year.

SCOPE OF APPRAISAL Fore & Rohan, Real Estate Appraisers Inc. was engaged by MainSource Bank on May 6, 2016 to provide an “as is” opinion of market value of the fee simple estate of the real property at 10th Street East, Jeffersonville, Indiana. In addition, the client has requested a “forced liquidation” value indication to address a significantly reduced marketing period. As part of this appraisal, we have completed the following steps to gather, confirm and analyze the data.

Physically inspected the subject site and the surrounding neighborhood. The neighborhood and subject property was inspected on May 26, 2016. The neighborhood was inspected by automobile. The major streets in the area were driven to recognize land use, development patterns and similar properties available for sale and rent. Sources of information for the neighborhood analysis include our visual confirmation, discussions with local real estate professionals, local publications and information in our database. Secondary data for population, households, and income levels was derived from the Site to Do Business. This information includes census data, projections, forecast, employment levels and income levels. The history of the subject was based on courthouse records and discussion with Mr. Dave Davis, the listing agent.

The commercial market analysis section summarizes land use trends impacting the competitive submarket as well as the supply, demand and prevailing retail price trends.

The description is based on the inspection of the site and applicable courthouse records. The inspection was restricted to a brief walk of the site and is not intended to identify property lines, location of utilities or wet lands.

Prepared a highest and best use analysis of the subject site, as though vacant.


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Collected and confirmed market information needed to consider one of the three traditional approaches to value: the sales comparison approach. The cost approach is most useful for proposed or recently constructed improvements that are consistent with the highest and best use of the site and exhibit minimal accrued depreciation. As the subject is a vacant site, this approach is not developed. The sales comparison approach is presented with adequate comparable sales data to support a reasonable value indication for the subject site via a qualitative and quantitative analysis. The comparative analysis of the properties focused on property rights, participant motivations, financing terms, market condition and those physical attributes that enable the subject to support an economic use. The data sources researched included courthouse records, conversations with real estate professionals, available regional multiple listing services and our database. The income approach is most appropriate for property that offers an investor a sustainable income stream. In the subject’s submarket, ground lease arrangements are rare and insufficient information is available to provide a reasonable indication of market value for the subject. As such, this approach is not developed.

Prepared a restricted appraisal report setting forth the conclusion derived in this analysis.

This report is restricted to the use of the client only and the value conclusions contained within it may not be understood without referring to additional information in the Fore & Rohan, Inc. work file.

The appraiser is capable of properly identifying the problem to be addressed at the request of the client and has the knowledge and experience to complete the assignment with competency.

This appraisal report conforms to the requirements of the 2016-2017 Uniform Standards of Professional Appraisal Practice (USPAP), the Appraisal Institute, and the appraisal guidelines set forth in the Financial Institutions Reform Recovery Enforcement Act (FIRREA).


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COMMERCIAL ANALYSIS A market analysis is a study that investigates both general economic factors and conditions affecting a specific type of property. This entails a process that defines the specific property’s characteristics, identifies users of the specific property type, reviews demand trends from the identified users, inventories current and expected competition, identifies residual demand from the interaction of supply and demand and using this information forecast the health of the subject’s sector type.

The focus of this analysis is the market influences impacting changes to established land uses in the competitive submarket.

PROPERTY PRODUCTIVITY ANALYSIS

The productivity analysis considers the subject’s ability to deliver the functional utility to satisfy the demand for a commercial site. This analysis is subdivided into the subject’s physical attributes, location attributes and legal attributes.

PHYSICAL ATTRIBUTES OF THE SITE

The general physical characteristics of the subject include an irregular, wedge shape, level to slightly sloping topography, approximately 180 feet of road frontage, including the ingress/egress easement and adequate commercial visibility to East 10th Street.

Related to the commercial potential of the subject, three characteristics are a concern. The ingress/egress is restricted to one curb cut along East 10th Street and is shared with the adjacent Arby’s restaurant, the shape of the site and the excessive depth to frontage ratio. The functional concern with the excess depth is compounded by the shape that “wraps around” an adjacent parcel to the southwest; further reducing visibility and development potential. Based on the road frontage and a depth of 300 feet, the portion of the site with commercial viability is estimated at less than 1.25 acres, accounting for the ingress/egress easement area. Therefore, 2.0048 acres, or 62% of the site, is considered surplus land with limited functional utility for a commercial use.

LOCATION - COMPETITIVE MARKET SUMMARY

The subject’s portion of East 10th Street is transitional between developed commercial nodes to the southwest and northeast. The subject’s portion continues to support commercial activity but the synergy is less intense.

Furthermore, the current commercial trend in the market is speculative land purchases further north along East 10th Street (Highway 62) both north and south of the interchange with Interstate 265. This trend is being supported by significant infrastructure improvements (East End Bridge project), job creation within River Ridge Commerce Center and continued residential development between Jeffersonville and Charlestown, Indiana.


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The common thought among market participants related to the “east end bridge” project and employment growth within River Ridge Commerce Center will alter and/or increase traffic to support a development push from the established commercial node focused on the East 10th Street and Allison Lane intersection to the north toward Interstate 265. However, the scope and development mix to be supported over the next several years along East 10th Street cannot be quantified. Nevertheless, in the current market, three competing land development companies have purchased or signed purchase agreements nearly 100 acres with initial development work on one project underway.

COMPETITIVE SUPPLY

The competitive supply has increased significantly in the last six months as developers begin the process of developing larger tracts to support commercial development projects.

For example, Kaden Company purchased several smaller parcels; some improved with residential and dated commercial structures, combined the parcels into a 45 acre tract and has started site work to support a commercial development with anchor, sub-anchor and commercial out parcels. In a similar manner, other developers to include Nicklies & Company, Brian Lenfert and Allan Muncy have made speculative land purchases with plans for commercial development.

However, in the current market, these projects are not being actively marketed, as the overall scope of the project, retail price points and development availability have not been finalized. Nevertheless, the focus of the market has shifted to the north of the subject and a potential buyer of a commercial site is likely to wait for these projects to be finalized before making a purchase decision. In this regard, the subject’s location is a secondary competitor in the current market.

The competitive inventory is anticipated to increase significantly in the next six months to one year. For example, the Kaden Company development has the potential for 10 commercial out parcels supporting direct commercial exposure to Highway 62.

DEMAND

The positive demand trend is evidenced by the speculative purchases of larger tracts for development potential and a couple of smaller commercial sites purchased by end users.

The purchase price range for the larger speculative purchases is from $90,000 per acre to $150,000 per acre. These parcels are in the process of obtaining zoning and development approvals, finalizing development plans and beginning stages of site work.


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The purchase price range for smaller sites to end users is from $150,000 per acre to $525,000 per acre but the sample set is restricted. In the current market, few sales of developed commercial sites have sold to end users.

MARKET CONCLUSION

The interest in the subject’s submarket will continue to be minimal, as the commercial development trend to the north dominates demand for the near and extended term.

PROPERTY DESCRIPTION

SITE DESCRIPTION

The subject is located along the East 10th Street corridor within Jeffersonville, Indiana, just south of Oakridge Drive. Oakridge Drive is a secondary road providing access to a limited number of single-family residences and a local elementary school. East 10th Street is the primary commercial and commuter corridor in the market.

The land uses located within proximity to the subject include an Arby’s restaurant to the east, an elementary school and residential to the north, residential and recently constructed government improvements (fire station/police station and storage facility) to the south and a commercial service use to the west. The most recent commercial development near the subject is the Clark County Auto Auction purchased a 30+ acre tract for relocation.

The subject site contains 3.255 acres or 141,788 square feet. The site has an irregular, wedge shape, level to slightly sloping topography, direct frontage and visibility to East 10th Street but restricted ingress/egress and excess depth. The site is zoned C-1, small to medium scale commercial.

Related to the commercial potential of the subject, three characteristics are a concern. The ingress/egress is restricted to one curb cut along East 10th Street and is shared with the adjacent Arby’s restaurant, the shape of the site and the excessive depth to frontage ratio. The functional concern with the excess depth is compounded by the shape that “wraps around” an adjacent parcel to the southwest, further reducing visibility and development potential. These concerns are addressed in the valuation discussion.

EXPOSURE TIME/MARKETING PERIOD If the subject were offered for sale within the market value range supported by this appraisal, we anticipate an exposure time and marketing period of 18 to 36 months.


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HIGHEST & BEST USE

AS THOUGH VACANT

Based on the location along a commercial and commuter corridor, supporting commercial linkages, current zoning and combination of related physical characteristics, a secondary commercial use is our conclusion for the highest and best use of the site, as though vacant. This use offers the highest present value to the land among reasonable alternatives.

MOST LIKELY BUYER

The most likely purchaser of the subject property is a local owner/user with a specific commercial oriented use.


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VALUATION DISCUSSION

SALES COMPARISON APPROACH In performing the sales comparison approach, we surveyed sales activity for vacant commercial sites within the Jeffersonville market that bracket or approximate key physical characteristics of the subject.

The selected sales are summarized in the sales comparison grid, which follows this discussion. Pertinent data, appropriate qualitative and quantitative adjustments are summarized in the sales comparison grid.

In analyzing the sales data, we have selected the price per acre as the unit of comparison. This is the unit of comparison most commonly quoted by brokers, sellers, and purchasers when discussing sales transactions and is considered the most relevant for the subject.

ADJUSTMENT COMMENTARY

If a comparable sale significantly differs from the subject, an adjustment compensates for that difference. The resulting final adjusted sale price for each comparable is consequently a more accurate indicator of the subject’s value.

The primary adjustment categories beyond property rights, condition of sale and financing terms include general location, site size, combination of primary and secondary commercial attributes and overall functional utility.

The three presented sales have occurred since June 2014 and are considered consistent with current market parameters. The presented sales support an unadjusted sale price per square foot range of $90,475 per acre to $145,631 per acre.

After consideration of the indicated adjustment categories, the adjusted sale price range is $81,428 per acre to $101,942 per acre with a simple average of $94,581 per acre.

RECONCILIATION

Primary weight given to Sale 1 and supports a value indication of $100,000 per acre for the subject. Consequently, the sales comparison approach indicates an “as is” value calculated as follows:

3.255 Acres x $100,000/Acre = $325,500, rounded to $325,000

“As Is” Value Indication

by the Sales Comparison Approach: $325,000


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FORCED LIQUIDATION VALUE INDICATION

The liquidation value is defined as follows:

“The most probably price which a specified interest in real property is likely to bring under all of the following conditions.

1. Consummation of a sale will occur within a severely limited future marketing period specified by the client.

2. The buyer is acting prudently, knowledgeably and typically motivated.

3. The seller is under extreme compulsion to sell.

4. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto.

The marketplace has been investigated to ascertain distressed sales. Sales within the past five to six years have been considered to determine the discount of the liquidation value compared to the market value. This is due to the economic conditions prevalent at that time.

The sales are grouped to illustrate the relationship between marketing period and discount to market value.

Percent of Normal Marketing Time

Percent Discount from Market Value

A Market Value 100 % None

B Forced Sale Approx. 75% to 90% 4% to 25%

C Orderly Liquidation Approx. 40% to 75% 10% to 60%

D Forced Liquidation Approx. 0% 30% to 60%

Based on the data and conclusions, an appropriate discount range for the “forced liquidation” is 30% to 60%. Considering the subject’s location, current market trends and overall appeal, we have selected a discount rate of 40%.

Therefore, the indicated values are as follows:

“As Is” Market Value

Discount Indicated Forced Liquidation Value

Forced Liquidation $325,000 40% $195,300, Rounded To: $200,000


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COMPARABLE IMPROVED SALES ADJUSTMENT GRID

LAND SALES COMPARISON GRID

Fore & Rohan

File # 1600-711-16-RR-IN 2705 East 10th Street

Jeffersonville IndianaSUBJECT 1 2 3 4

KEY NUMBER 3681 3732 3682

NAME

ADDRESS 2705 East 10th Street 10th Street & Vissing Park 2710 Allison Lane Highway 62

CITY Jeffersonville Jeffersonville Jeffersonville Jeffersonville

STATE Indiana Indiana Indiana Indiana

DATE OF SALE N/A 17-Dec-14 24-Jun-15 02-Jun-14

SALE PRICE N/A $215,000 $300,000 $436,000

CASH EQUIV/AMT N/A $215,000 $300,000 $436,000

# OF SQ FT 141,788 93,306 89,734 209,916

# OF ACRES 3.26 2.14 2.06 4.82

BUILDING SF

UNITS 1 1 1

ZONING C-1, Commercial C-2, Commercial C-2, Commercial C-2, Commercial

LAND USE Vacant Vacant - Speculative Comm. Commercial End User Speculative Comm. Develop.

TOPOGRAPHY Level to slightly sloping Level to slightly sloping Level Level to slightly sloping

PRIMARY TO SECONDARY Secondary Commercial Secondary Commercial Secondary Commercial

FUNCTIONAL UTILITY Reduced - Excess Depth Good Adequate

COMMENTS Secondary Comm. Tendencies Bisecting Creek Indirect Access

COMMENTS Reduced Functional Utility

PRICE PER ACRE $100,373 $145,631 $90,475

PROPERTY RIGHTS

DOLLAR ADJUSTMENT $0.00 $0.00 $0.00

PERCENTAGE ADJUSTMENT 0.00% 0.00% 0.00%

FINANCING TERMS



CONDITIONS OF SALE



TIME/MARKET CONDITIONS $0.00 $0.00 $0.00

% ADJUSTMENT 0% 0.00% 0.00% 0.00%

TIME ADJ PRICE PER ACRE $100,373 $145,631 $90,475

GENERAL LOCATION Similar Similar Inferior

DOLLAR ADJUSTMENT $0.00 $0.00 $18,095


SITE SIZE Similar Similar Similar



PRIMARY TO SECONDARY LOCATION Similar Similar Similar



FUNCTIONAL UTILITY Similar Superior Superior

DOLLAR ADJUSTMENT $0.00 ($43,689) ($27,143)

PERCENTAGE ADJUSTMENT 0.00% -30.00% -30.00%

NET ADJUSTMENT $0.00 ($43,689.32) ($9,047.52)

NET PERCENT ADJUSTMENT 0.00% -30.00% -10.00%ADJUSTED PRICE $100,373.48 $101,941.75 $81,427.68

MAXIMUM = $101,942

MINIMUM = $81,428

MEAN = $94,581

….MARKET RANGE PER ACRE….


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RECONCILIATION Reconciliation involves the analysis of alternative value indications to determine a final value conclusion. The values indicated by our analyses are as follows.

“As Is” Market Value Cost Approach Not Considered Sales Comparison Approach $325,000 Income Capitalization Approach Not Considered

OPINION OF MARKET VALUE CONCLUSION Based on the analyses and conclusions, and subject to the definitions, assumptions, and limiting conditions expressed in this report, it is our opinion that the “as is” market value of the fee simple estate of the subject, as of May 26, 2016, is:

THREE HUNDRED TWENTY-FIVE THOUSAND DOLLARS $325,000

EXTRAORDINARY ASSUMPTIONS/LIMITING CONDITIONS: The preceding value conclusion is subject to the following Extraordinary Assumptions and Limiting Conditions. If these assumptions, which are directly related to this specific assignment, are found to be false, it could alter the appraiser’s opinions and conclusions.

1. The subject is environmentally clean of all surface and subsurface contaminants. During the inspection, no environmental concerns were noted; however, appraisers are not qualified to inspect for hazardous chemicals or other environmental concerns. Further, the appraiser is not qualified to determine the presence or cause of mold, the type of mold or whether the mold might pose any risk to the property or its inhabitants.

2. Financing is available to a credit-worthy purchaser for the subject property at current market rates.


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CERTIFICATION I certify that, to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.

3. I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.

4. I have performed services, as an appraiser, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

5. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

6. My engagement in this assignment was not contingent upon developing or reporting predetermined results.

7. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

8. My analyses, opinions and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of professional Appraisal Practice.

9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

10. Thomas W. Rohan, MAI has made a personal inspection of the property that is the subject of this report.

11. As of the date of this appraisal, Thomas W. Rohan, MAI has completed the requirements of the continuing education program of the Appraisal Institute.

Thomas W. Rohan, MAI Certified General Real Estate Appraiser

Kentucky Certificate #1991


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ASSUMPTIONS AND LIMITING CONDITIONS

In conducting this appraisal, we have assumed, except as otherwise noted in our report, as follows:

1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use.

2. There are no existing judgments or pending or threatened litigation that could affect the value of the property.

3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property.

4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction.

5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes.

Our appraisal report is subject to the following limiting conditions, except as otherwise noted in our report.

1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised.

2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the affect of subsequent events.

3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated.

4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies.

5. We are not required to give testimony or to be in attendance in court or any government or other hearing with reference to the property without written contractual arrangements having been made relative to such additional employment.

6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct.


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7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal.

8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters, geologic considerations, such as soils and seismic stability, and civil, mechanical, electrical, structural and other engineering and environmental matters.

9. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. This appraisal report shall be considered only in its entirety. No part of this appraisal report shall be utilized separately or out of context.

10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without prior written consent from the appraiser.

11. Information, estimates and opinions contained in this report, obtained from sources outside of the office of the undersigned, are assumed to be reliable and have not been independently verified.

12. Any income and expense estimates contained in this appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results.

13. No assurance is provided that the methodology and/or results of the appraisal will not be successfully challenged by the Internal Revenue Service. In particular, the methodology for appraising certain types of properties, including without limitation, government subsidized housing, which has been the subject of debate.

14. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate.

15. No consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered.

16. The current purchasing power of the dollar is the basis for the value stated in our appraisal; we have assumed that no extreme fluctuations in economic cycles will occur.

17. The value found herein is subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of assumptions and limiting conditions.


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18. The analyses contained in this report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material.

19. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of this property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. In as much as compliance matches each owner's financial ability with the cost to cure the non-conforming physical characteristics of a property, we cannot comment on compliance to ADA. Given that compliance can change with each owner's financial ability to cure non-accessibility, the value of the subject does not consider possible non-compliance. Specific study of both the owner's financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance.

20. This appraisal report has been prepared for the exclusive benefit of MainSource Bank, 2310 Jonathan Moore Pike, Columbus, Indiana. It may not be used or relied upon by any other party. All parties who use or rely upon any information in this report without our written consent do so at their own risk.

21. No studies have been provided to us indicating the presence or absence of hazardous materials on the site or in the improvements, and our valuation is predicated upon the property being free and clear of any environment hazards.

22. We have not been provided with any evidence or documentation as to the presence or location of any flood plain areas and/or wetlands. Wetlands generally include swamps, marshes, bogs, and similar areas. We are not qualified to detect such areas. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non-existent or minimal.

23. The appraisers are not qualified to determine the cause of any mold, if present, the type of mold, or whether the mold might pose any risk to the property or its inhabitants. Additional inspection by a qualified professional is recommended.


ADDENDUM A

DEFINITIONS


The definitions included in this addendum have been extracted, solely or in combination, from definitions and descriptions printed in:

The Uniform Standards of Professional Appraisal Practice 2016-2017 Edition (USPAP);

The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois, 2010 (Dictionary);

The Appraisal of Real Estate, 13th Edition, Appraisal Institute, Chicago, Illinois, 2008 (13th Edition); and/or

Income/Expense Analysis, Institute of Real Estate Management of the National Association of REALTORS, 2007 (IREM).

APPRAISAL

The act or process of developing an opinion of value; an opinion of value. (USPAP)

EFFECTIVE DATE OF THE APPRAISAL The date at which the value opinion is an appraisal applies, which may or may not be the date of inspection; the date of the market conditions that provide the context for the value opinion. Current appraisals occur when the effective date of the appraisal is contemporaneous with the date of the report. Prospective value opinions (effective date of the appraisal subsequent to the date of the report) are intended to reflect the current expectations and perceptions along with available factual data. Retrospective value opinions are likely to apply as of a specific historic date; the opinions are intended to reflect the expectations and perceptions of market participants at the specified date, along with available factual data. Data subsequent to the effective date may be considered in estimating a retrospective value as a confirmation of trends. (Dictionary and USPAP)

FEE SIMPLE ESTATE Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. (Dictionary)

INSURABLE VALUE The Appraisal Institute defines insurable value as the value based on the replacement and/or reproduction cost of physical items that are subject to loss from hazards. It is that portion of an asset or asset group that is acknowledged or recognized under the provisions of an applicable loss insurance policy. Marshall & Swift defines insurable value as the “replacement or reproduction cost less deterioration and non-insurable items.” (MVS and Dictionary)

LEASED FEE ESTATE An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease. (Dictionary)


LEASEHOLD ESTATE The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions. (Dictionary)

LIQUIDATION VALUE The most probable price that a specified interest in real property is likely to bring under all of the following conditions: Consummation of a sale will occur within a severely limited future marketing period

specified by the client. The actual market conditions currently prevailing are those to which the appraised

property interest is subject. The buyer is acting prudently and knowledgeably. The seller is under extreme compulsion to sell. The buyer is typically motivated. The buyer is acting in what he or she considers his or her best interest. A limited marketing effort and time will be allowed for the completion of a sale. Payment will be made in cash in U.S. dollars or in terms of financial arrangements

comparable thereto. (Dictionary) MARKET VALUE (INTERAGENCY GUIDELINES)* The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 2. both parties are well informed or well advised and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. " * This example definition is from regulations published by federal regulatory agencies pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 between July 5, 1990, and August 24, 1990, by the Federal Reserve System (FRS), National Credit Union Administration (NCUA), Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), and the Office of Comptroller of the Currency (OCC). This definition is also referenced in regulations jointly published by the OCC, OTS, FRS, and FDIC on June 7, 1994, and in the Interagency Appraisal and Evaluation Guidelines, dated October 27, 1994.


MARKET VALUE (USPAP) A type of value, states as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. Comment: Forming an opinion of market value is the purpose of many real property appraisal assignments, particularly when the client’s intended use includes more than one intended user. The conditions included in market value definitions establish market perspectives for development of the opinion. These conditions may vary from definition to definition but generally fall into three categories: 4. The relationship, knowledge, and motivation of the parties (i.e. seller and buyer) 5. The terms of sale (e.g., cash, cash equivalent, or other terms) and 6. The conditions of sale (e.g. exposure in a competitive market for a reasonable time

prior to sale.) (USPAP)


ADDENDUM B

SUBJECT PROPERTY INFORMATION


ASSESSMENT CARD & TAX BILL


AERIAL VIEW

ZONING MAP


FLOOD MAP


ADDENDUM C

SUBJECT PHOTOGRAPHS


Northeast View of East 10th Street

Southwest View of East 10th Street

Northwest View of Subject Site


ADDENDUM D

QUALIFICATIONS OF APPRAISER


PROFESSIONAL QUALIFICATIONS OF THOMAS W. ROHAN, MAI

EXPERIENCE: Partner of Fore & Rohan Real Estate Appraisers, Inc.

Twenty plus years of real estate appraisal and feasibility study experience. Management of a general appraisal and consulting practice covering a wide variety of industrial, commercial, special purpose and development real estate primarily in Southern Indiana and Kentucky. Assignments range from valuation of apartments, shopping centers, office buildings, industrial properties, general commercial buildings, subdivisions, and special use properties to consulting, feasibility analysis and litigation support.

PROFESSIONAL ACTIVITIES:

Member: Licensed:

Appraisal Institute (MAI No. 12332) Bluegrass Chapter of the Appraisal Institute (2007 – 2009 Board of Directors) (2010 – Vice President) (2011 - President) (2012 – Immediate Past President) Kentucky General Appraiser License No. 001991 Indiana General Appraiser License No. CG49900317

EDUCATION: B.A. Degree, Business, Eastern Kentucky University, Richmond, Kentucky Second major in General Real Estate Principals and Valuation. Successfully completed numerous real estate related courses and seminars sponsored by the Appraisal Institute including the Valuation of Conservation Easements.

CLIENTS: FINANCIAL INSTITUTIONS: Your Community Bank, First Financial Bank, Old National Bank, JPMorgan Chase Bank, PNC Bank, Bank of America, MainSource Bank, Fifth Third Bank, BB&T, Community Trust Bank, US Bank, New Washington State Bank, First Saving Bank and Regions Bank. LAW FIRMS: Stites & Harbison, Frost Brown Todd, Maschmeyer & Maschmeyer and Young, Lind, Endres & Kraft. CORPORATIONS & DEVELOPERS: Robert Lynn Developers, Thieneman Development, Nicklies & Company, City of Jeffersonville, Indiana, New Albany – Floyd County School Corporation and Clark County Hospital, River Ridge Development Authority.


ADDENDUM E

ENGAGEMENT LETTER

restricted appraisal report vacant commercial site · restricted appraisal report vacant commercial...

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