(b)Option to Change Method of Merger. City may at any time prior to the Effective Time change the method of effecting the Parent Merger and/or the Subsidiary Merger (including, without limitation, changing the provisions of this Article II)II), if and to the extent City deems such change to be necessary, appropriate or desirable; provided, however, that no such change shall:
(i)alter Alter or change the amount or kind of consideration to which the holders of PoageCitizens Common SharesStock are entitled in accordance with the terms and subject to the conditions of this Agreement;
(ii)materially Materially impede or delay consummation of the transactions contemplated by this Agreement; or
(iii)adversely affect the Tax consequences to the holders of Poage Shares resulting from receiving the consideration in the Merger as set forth in Article III, including by causing Cause the Merger to fail to qualify as a “reorganization” under Code Section 368(a)(1)(A) of the Code.
Poage,Citizens, if requested by City, shall enter into one or more amendments to this Agreement in order to effect any such change.
2.02The Subsidiary Merger. At the time specified by City National in its certificate of merger filed with the OCC (which shall not be earlier than the Effective Time), Town Square shall merge with and into City National (the “Subsidiary Merger”) pursuant to an agreement to merge (the “Agreement to Merge”) to be executed by Town Square and City National and filed with the OCC. Upon the consummation of the Subsidiary Merger, the separate corporate existence of Town Square shall cease and City National shall survive the Subsidiary Merger and continue to exist as a national bank and the separate corporate existence of Town Square shall cease. The Parent Merger and the Subsidiary Merger are sometimes collectively referred to herein as the “Merger.”
2.03Effectiveness of Parent Merger. Subject to the satisfaction or waiver of the conditions set forth in Article VII of this Agreement, the Parent Merger shall become effective upon the latestlater to occur of the following: (a)(i) the filing of the certificatearticles of merger with the Maryland DepartmentKSS and the WVSS; or (b)(ii) such later date and time as may be set forth in such certificatearticles of merger.merger with the approval of City and Citizens. The Parent Merger shall have the effects prescribed in the MGCLKBCA and WVBCA.
2.042.03 Effective Date and Effective Time. Subject to the satisfaction or waiver of the conditions set forth in Article VII of this Agreement, City and PoageCitizens shall cause the effective date of the Parent Merger (the “Effective Date”) to occur as soon as practicable after the last of the conditions set forth in Article VII shall have been satisfied or waived in accordance with the terms of this Agreement; provided, however, that the Effective Date shall not fall after the date specified in Section 8.01(c), unless City and Citizens agree in writing to extend such date, or after the date or dates on which any Regulatory Authority approval or any extension thereof expires. The time on the Effective Date when the Parent Merger shall become effective is referred to herein as the “Effective Time”.
2.052.04 Absence of ControlClosing. ItSubject to the terms and conditions of this Agreement, the closing of the Merger (the “Closing”) will occur by electronic exchange of documents at 10:00 am, Charleston, West Virginia time, and filings, as applicable, with the KSS and WVSS on a date which is no later than three (3) business days after the intentsatisfaction or waiver (subject to applicable law) of the latest to occur of the conditions set forth in Article VII hereof (other than those conditions that by their nature can be satisfied only at the Closing, but subject to the satisfaction or waiver of all conditions at the Closing), unless extended by mutual agreement of the parties hereto.
2.05 The Subsidiary Merger.
(a) Immediately following the Parent Merger, or at such later time as City may determine, Citizens Commerce Bank will merge with and into City National Bank (the “Subsidiary Merger”). City National Bank shall be the surviving entity in the Subsidiary Merger and, following the Subsidiary Merger, the separate corporate existence of Citizens Commerce Bank shall cease and City National Bank shall survive and continue to this Agreement that City, by reasonexist as a national bank. Promptly after the date of this Agreement, City National Bank and Citizens Commerce Bank shall not be deemed (until consummationenter into an agreement and plan of merger in substantially the transactions contemplated herein) to control, directly or indirectly, Poage or Town Square and shall not exercise or be deemed to exercise, directly or indirectly, a controlling influence over the management or policies of Poage or Town Square.form attached hereto as Exhibit B (the “Subsidiary Merger Agreement”).
(b) Each of City and Citizens shall approve the Subsidiary Merger Agreement and the Subsidiary Merger as the sole shareholders of each subsidiary bank, respectively. Prior to the Effective Time, Citizens shall cause Citizens Commerce Bank, and City shall cause City National Bank, to execute such certificates or articles of merger and such other documents and certificates as are necessary to effectuate the Subsidiary Merger (“Subsidiary Merger Certificate”). The Parent Merger and the Subsidiary Merger shall sometimes collectively be referred to herein as the “Merger.” ARTICLE III
Merger Consideration.
3.01Merger ConsiderationConversion of Citizens Common Stock.
At the Effective Time, by virtue of the Parent Merger and without any action on the part of City, Citizens, or the holder thereof:of any shares of Citizens Common Stock:
(a) Conversion of Poage Common Shares. Subject to SectionsSection 3.02 and Second 3.03, and 3.04,except as otherwise provided by paragraph (b) of this Section 3.01, each Poageshare of Citizens Common ShareStock (other than Treasury Shares and Dissenting Shares) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive, without interest, a number of City Common Shares (the “Per Share Consideration”) equal to the Exchange Ratio. The aggregate Per Share Consideration is sometimes referred to herein as theRatio (the “Merger Consideration.”); and
(b)Adjustments All of the shares of Citizens Common Stock converted into the right to receive the Merger Consideration.
(i)If the number shall no longer be outstanding and shall automatically be cancelled and shall cease to exist as of Poage Common Shares issued and outstanding immediately prior to the Effective Time, exceeds the number of Poage Common Shares issued and outstanding as of the date hereof, excepteach certificate (each, an “Old Certificate,” it being understood that any reference herein to “Old Certificate” shall be deemed to include reference to book‑entry accounts relating to the extentownership of uncertificated shares of Citizens Common Stock) previously representing any such increase is dueshares of Citizens Common Stock shall thereafter represent only the right to the exercise of Poage Options,receive (i) the Merger Consideration, will not(ii) cash in lieu of a fractional share which the shares of Citizens Common Stock represented by such Old Certificate have been converted into the right to receive pursuant to Section 3.01(a) and Sections 3.02(b)(v), and (iii) any dividends or distributions which the holder thereof has the right to receive pursuant to Section 3.02, in each case without any interest thereon. Old Certificates previously representing shares of Citizens Common Stock shall be adjustedexchanged for certificates or, at City’s option, evidence of shares in book entry form representing whole shares of City Common Shares as set forth in Section 3.01(a) (together with any dividends or distributions with respect thereto and cash in lieu of fractional shares issued in consideration therefor) upon the surrender of such Old Certificates
in accordance with Section 3.02, without any interest thereon. If, between the date of this Agreement and the Effective Time, the outstanding shares of City Common Shares or Citizens Common Stock shall have been increased, decreased, changed into or exchanged for a different number or kind of shares or securities, in any such case as a result of such excess, thougha reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar change in capitalization, or there shall be any extraordinary dividend or extraordinary distribution, an appropriate and proportionate adjustment willshall be made to the Exchange Ratio.
(ii)If City changes (or establishes a record date for changing) the numberRatio to give holders of CityCitizens Common Shares issued and outstanding prior to the Effective Time by way of a stock split, stock dividend, recapitalization or similar transaction with respect to the outstanding City Common Shares, and the record date therefor shall be prior to the Effective Time, the Exchange Ratio shall be adjusted so the shareholders of Poage at the Effective Time shall receive Merger Consideration that producesStock the same economic effect as contemplated by this Agreement prior to such action.event; provided, that nothing in this sentence shall be construed to permit Citizens to take any action with respect to its securities that is prohibited by the terms of this Agreement.
3.02Rights as Shareholders; Share Transfers. At(c) Notwithstanding anything in this Agreement to the contrary, at the Effective Time, holdersall shares of PoageCitizens Common SharesStock that are owned by Citizens (in each case other than shares (i) held in trust accounts, managed accounts, mutual funds or similar accounts, or otherwise held in a fiduciary or agency capacity that are beneficially owned by third parties, or (ii) held, directly or indirectly, as a result of debts previously contracted) shall be cancelled and cease to exist and no Merger Consideration shall be delivered or exchanged therefor.
(d) Notwithstanding anything in this Agreement to the contrary, shares of Citizens Common Stock which are issued and shall have no rights as, shareholders of Poage, other than (a) to receive any dividend or other distribution with respect to such Poage Common Shares with a record date occurringoutstanding immediately prior to the Effective Time and (b)which are held by Persons who have properly exercised, and not withdrawn or waived, appraisal rights with respect thereto (“Dissenting Shares”) in accordance with the KBCA will not be converted into the right to receive the Merger Consideration, but will be entitled in lieu thereof to receive payment of the fair value of their Dissenting Shares in accordance with the provisions of the KBCA unless and until the holders fail to perfect or effectively withdraw or lose their rights to appraisal and payment under the KBCA. If, after the Effective Time, any holder fails to perfect or effectively withdraws or loses their rights referred to in the preceding sentence, the applicable holder’s shares of Citizens Common Stock will thereupon be treated as if the shares had been converted at the Effective Time into the right to receive the Merger Consideration, without any interest thereon. Citizens will give City prompt notice of any notices of intent to demand payment under the KBCA received by Citizens with respect to shares of Citizens Common Stock. Prior to the Effective Time, Citizens will not, except with the prior written consent of City, make any payment with respect to, or settle or offer to settle, any demands referred to in this Section 3.01(d).
3.02 Exchange and Payment Procedures.
(a) Exchange Fund. Prior to the Effective Time, City shall deposit, or shall cause to be deposited, with Computershare Trust Company N.A. (the “Exchange Agent”), for the benefit of the holders of Old Certificates for exchange in accordance with this Article III, (i) certificates or, at City’s option, evidence in book-entry form, representing shares of City Common Shares to be issued to holders of Citizens Common Stock (collectively, referred to herein as “New Certificates”), and (ii) cash in an amount sufficient to pay cash in lieu of any fractional shares (such New Certificates and cash described in the foregoing clauses (i) and (ii), together with any dividends or distributions with respect thereto payable in accordance with Section 3.02(b)(ii), being hereinafter referred to as the “Exchange Fund”).
(b) Exchange Procedures.
(i) As promptly as practicable after the Effective Time, but in no event later than five (5) business days thereafter, City shall cause the Exchange Agent to mail to each holder of record of one or more Old Certificates representing shares of Citizens Common Stock immediately prior to the Effective Time that have been converted at the Effective Time into the right to receive the Merger Consideration, a letter of transmittal, in customary form as reasonably agreed to by City and Citizens (which shall specify that delivery shall be effected, and risk of loss and title to the Old Certificates shall pass, only upon proper delivery of the Old Certificates to the Exchange Agent) and instructions for use in effecting the surrender of the Old Certificates in exchange for certificates representing the number of whole shares of City Common Shares and any cash in lieu of fractional shares, as applicable, which the shares of Citizens Common Stock represented by such Old Certificate or Old Certificates shall have been converted into the right to receive pursuant to this Agreement as well as any dividends or distributions to be paid pursuant to Section 3.02(b)(ii). From and after the Effective Time, upon proper surrender of an Old Certificate or Old Certificates for exchange and cancellation to the Exchange Agent, together with such properly completed letter of transmittal, duly executed, the holder of such Old Certificate or Old Certificates shall be entitled to receive in exchange therefor, as applicable, (A)(1) a New Certificate representing that number of whole shares of City Common Shares to which such holder of Citizens Common Stock shall have become entitled pursuant to the provisions of Section 3.01 and (2) a check representing the amount of (x) any cash in lieu of a fractional share which such holder has the right to receive in respect of the Old Certificate or Old Certificates surrendered pursuant to the provisions of this Article III and (y) any dividends or distributions which the holder thereof has the right to receive pursuant to Section 3.02(b)(ii), and the Old Certificate or Old Certificates so surrendered shall forthwith be cancelled. No interest will be paid or accrued on the City Common Shares or any cash in lieu of fractional shares or dividends or distributions payable to holders of Old Certificates. Until surrendered as contemplated by this Section 3.02(b), each Old Certificate shall be deemed at any time after the Effective Time to represent only the right to receive, upon surrender, the Merger Consideration as provided for in Section 3.01 and any cash in lieu of fractional shares or in respect of dividends or distributions as contemplated by Section 3.02(b)(ii).
(ii) No dividends or other distributions declared with respect to City Common Shares shall be paid to the holder of any unsurrendered Old Certificate until the holder thereof shall surrender such Old Certificate in accordance with Section 3.02(b). After the surrender of an Old Certificate in accordance with Section 3.02(b), the record holder thereof shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to the whole shares of City Common Shares which the shares of Citizens Common Stock represented by such Old Certificate have been converted into the right to receive (after giving effect to Section 6.15).
(iii) In the event that any New Certificate representing shares of City Common Shares is to be issued in a name other than that in which the Old Certificate or Old Certificates surrendered in exchange therefor is or are registered, it shall be a condition of the issuance thereof that the Old Certificate or Old Certificates so surrendered shall be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise
in proper form for transfer, and that the Person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other similar Taxes required by reason of the issuance of a New Certificate representing shares of City Common Shares in any name other than that of the registered holder of the Old Certificate or Old Certificates surrendered, or required for any other reason, or shall establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.
(iv) After the Effective Time, there shall be no transfers on the stock transfer books of Poage orCitizens of the Surviving Corporationshares of any PoageCitizens Common Shares.
3.03ExchangeStock that were issued and Payment Procedures.
(a)Exchange Agent. City’s transfer agent will act as agent (the “Exchange Agent”) for purposes of conducting the exchange and payment procedures as described in this Section 3.03.
(b)Exchange Fund. Prior to the Effective Time, but no later than one business dayoutstanding immediately prior to the Effective Date, City shall deposit, or shall causeTime. If, after the Effective Time, Old Certificates representing such shares are presented for transfer to be deposited, with the Exchange Agent,, they shall be cancelled and exchanged for the benefitNew Certificates representing shares of the holders of Old Certificates,for exchange in accordance with this Article III, (i) certificates representing City Common Shares, (subject to Section 3.03(i)), (ii) cash in an aggregate amount sufficient to make appropriate payment of (A) cash in lieu of fractional shares pursuant to Section 3.03(d), and (B) any dividends or distributions on account of City Common Shares to be exchanged for Poage Common Shares with a record date occurring on or afterthat the Effective Time, and without any interest on anyholder presenting such cash, dividends or distributions (such cash being hereinafter referredOld Certificates is entitled to, as the “provided in Exchange Fund”)to be paid pursuant to this Article III in exchange for outstanding Poage Common Shares. Promptly after the Effective Time, the Exchange Agent shall distribute City Common Shares and make payment of such cash as provided herein. The Exchange Agent shall not be entitled to vote or to exercise any rights of ownership with respect to the City Common Shares held by it from time to time hereunder, except that it shall receive and hold in trust for the recipients of the City Common Shares until distributed thereto pursuant to the provision of this Agreement all dividends or other distributions paid or distributed with respect to such City Common Shares for the account of the persons entitled thereto.
(c)Exchange Procedures.
(i)Within five business days after the Effective Time, City shall instruct the Exchange Agent to mail to each holder of record of an outstanding certificate or certificates which, as of the Effective Time, represented Poage Common Shares (“Old Certificates”) or uncertificated shares (i) a letter of transmittal which shall specify that delivery shall be effected, and risk of loss and title(v) Notwithstanding anything to the shares of Oldcontrary contained herein, no New Certificates shall pass, only upon proper delivery of the Old Certificates, if applicable, or upon delivery of the letter of transmittal in the case of uncertificated shares, to the Exchange Agent, and which shall be in customary form as directed by City and reasonably acceptable to Poage, and (ii) instructions for use in effecting the surrender of the Old Certificates, if applicable, or the letter of transmittal in exchange for the Merger Consideration. Upon the proper surrender of the Old Certificates, if applicable, and a properly completed and duly executed letter of transmittal to the Exchange Agent, and such other documents as may reasonably be required by City or the Exchange Agent, the holders of such Old Certificates or uncertificated shares shall be entitled to receive the number of whole shares of City Common Shares that such holder has the right to receive pursuant to Section 3.01(a) and a check in the amount equal to the cash in lieu of fractional shares, if any, that such holder has the right to receive pursuant to Section 3.03, and any dividends or other distributions to which such holder is entitled pursuant to Section 3.02. Old Certificates so surrendered shall forthwith be canceled. Within ten days following receipt of the properly completed letter of transmittal and any necessary accompanying documentation, the Exchange Agent shall distribute City Common Shares and cash as provided
herein. If there is a transfer of ownership of any shares of Poage Common Shares not registered in the transfer records of Poage, the Merger Consideration shall be issued to the transferee thereof if the Old Certificates representing such Poage Common Shares are presented to the Exchange Agent, accompanied by all documents required, in the reasonable judgment of City and the Exchange Agent, to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid.
(ii)No dividends or other distributions declared or made after the Effective Time with respect to City Common Shares issued pursuant to this Agreement shall be remitted to any person entitled to receive shares of City Common Shares hereunder until such Person surrenders his, her or its Old Certificates, if applicable, and the letter of transmittal in accordance with this Section 3.03. Upon the surrender of such Person’s Old Certificates, if applicable, and the letter of transmittal, such Person shall be entitled to receive any dividends or other distributions, without interest thereon, which subsequent to the Effective Time had become payable but not paid with respect to shares of City Common Shares represented by such Person’s Old Certificates or uncertificated shares.
(d)No Fractional City Common Shares.
(i)No certificates or scrip representing fractional shares of City Common Shares shall be issued upon the surrender for exchange of Old Certificates and such fractionalor otherwise pursuant to this Agreement, no dividend or distribution with respect to City Common ShareShares shall be payable on or with respect to any fractional share, and fractional share interests willshall not entitle the owner thereof to vote or to any other rights of a shareholder of City. In lieu of the Surviving Corporation.
(ii)Each holderissuance of Poage Common Sharesany fractional share, City shall pay to each former shareholder of Citizens who otherwise would otherwise be entitled to receive asuch fractional Cityshare (after taking into account all shares of Citizens Common Share shall receive fromStock held by such shareholder immediately prior to the Exchange AgentEffective Time) an amount ofin cash without interest, in an amount (rounded to the nearest whole cent) equal todetermined by multiplying (i) the productaverage of (a) the fractionalclosing-sale prices of City Common Shares on the NASDAQ Stock Market (the “NASDAQ”) as reported by the Wall Street Journal for the five (5) consecutive full trading days ending on the trading day immediately preceding the Closing Date (the “City Common Share Closing Price”) by (ii) the fraction of a share interest (rounded to the nearest thousandthone-thousandth when expressed in decimal form) toof City Common Shares which such holder would otherwise be entitled multiplied by (b)to receive pursuant to Section 3.01(a). The parties acknowledge that payment of the volume weighted average closing price per sharecash consideration in lieu of City Common Shares on the NASDAQ Global Select Market®issuing fractional shares is not separately bargained-for-consideration, but merely represents a mechanical rounding off for the ten consecutive trading days ending onpurposes of avoiding the expense and includinginconvenience that would otherwise be caused by the day immediately preceding the Effective Date.issuance of fractional shares.
(e) Release of Exchange Fund.(vi) Any portion of the Exchange Fund that remains unclaimed by the shareholders of PoageCitizens for six months after the Effective Time shall be paid to City.the Surviving Corporation. Any shareholdersformer holders of PoageCitizens Common Stock who have not theretofore complied with this Article IIIexchanged their Old Certificates pursuant to Section 3.02 shall thereafter look only to Citythe Surviving Corporation for payment of the Merger Consideration.
(f)No Liability. Noneshares of City Poage,Common Shares and cash in lieu of any fractional shares and any unpaid dividends and distributions on the City Common Stock deliverable in respect of each former share of Citizens Common Stock that such holder holds as determined pursuant to this Agreement, in each case, without any interest thereon. Notwithstanding the foregoing, none of City, Citizens, the Surviving Corporation, the Exchange Agent or the Surviving Corporationany other Person shall be liable to any former holder
of Poageshares of Citizens Common SharesStock for any payment of the Merger Consideration, any cashamount delivered in lieu of a fractional City Common Share interest, or any dividends or distributions with respect to City Common Shares deliveredgood faith to a public official if required by anypursuant to applicable abandoned property, escheat or similar law.laws.
(g) Lost Certificates. If(vii) Each of City and the Exchange Agent shall be entitled to deduct and withhold from any consideration otherwise payable pursuant to this Agreement all amounts required to be deducted and withheld with respect to the making of the consideration payment under the Code or any provision of state, local or foreign Tax law. To the extent that amounts are so withheld by City or the Exchange Agent, as the case may be, the withheld amounts (i) will be paid over by City or the Exchange Agent to the appropriate governmental authority and (ii) will be treated for all purposes of this Agreement as having been paid to the Person in respect of which the deduction and withholding was made.
(viii) In the event any Old Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Old Certificate to be lost, stolen or destroyed in form and substance acceptable to City and, if required by City or the Exchange Agent or City, the posting by such Person of a bond in such amount as City or the Exchange Agent may direct,determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such Old Certificate, the Exchange Agent
shall pay will issue in exchange for such lost, stolen or destroyed Old Certificate the Merger Consideration payable in respect of the shares of Poage Common Shares represented by such Old Certificate.
(h)Withholding Rights. City or the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Poage Common Shares such amounts as City or the Exchange Agent is required to deduct and withhold with respect to the making of such payment under the Code or any other provision of domestic or foreign tax law (whether national, federal, state, provincial, local or otherwise). To the extent that amounts are so withheld and paid over to the appropriate taxing authority by City or the Exchange Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Poage Common Shares.
(i)Book Entry. All shares of City Common Shares, to be issuedand any cash in lieu of fractional shares and dividends or distributions deliverable in respect thereof pursuant to this Agreement may be issued in book entry form without physical certificates in City’s discretion.Agreement.
(j)(c) Waiver. The Surviving Corporation may from time to time, in the case of one or more Persons, waive one or more of the rights provided to it in this Article III to withhold certain payments, deliveries and distributions; and no such waiver shall constitute a waiver of its rights to withhold any such payment, delivery or distribution in the case of any Person.
3.04Treatment of Poage Options and Restricted Stock.
(a)Treatment of StockCitizens Options. Immediately prior to the Effective Time, each outstanding option to acquire shares of PoageCitizens Common SharesStock (the “Poage Options”“Citizens Options”) issued pursuant to Poage’s equity-based compensation plans identified in Section 3.04 of Poage’s Disclosure Schedule (the “Poage Stock Plans”)Citizen’s Equity Plan shall: (i) become fully vested and exercisable (without regard to whether the PoageCitizens Options are then vested or exercisable), and (ii) each option holder shall be entitled to receive a cash payment, without interest and less applicable withholding taxes, in an amount equal to the product of (i) the number of shares of PoageCitizens Common Shares subject to the Poage OptionCitizens Options as of immediately prior to the Effective Time and (ii) the excess, if any, of the Per Share Merger Consideration over the exercise price per share of PoageCitizens Common SharesStock subject to such PoageCitizens Option as of the Effective Date (the “Option“Option Cash-Out Amount”Amount”). The Option Cash-Out Amount shall be paid by PoageCitizens to the applicable former option holder aton the Effective Time.Closing Date. In the event the exercise price per share of PoageCitizens Common SharesStock subject to a PoageCitizens Option is equal to or greater than the Option Cash-Out Amount,Per Share Merger Consideration, such PoageCitizens Option shall be cancelled without consideration and have no further force or effecteffect.
(b)3.03 TreatmentTax Consequences . For federal income tax purposes, the Parent Merger is intended to constitute a reorganization within the meaning of Restricted Stock. Immediately prior toSection 368(a) of the Effective Time, any vesting restrictions on each share of restricted stock outstanding immediately prior thereto (“Code. The
Poage Restricted Stock
”) issued pursuant to the Poage Stock Plans shall automatically lapse and shall be treated as issued and outstanding shares of Poage Common Shares for purposes of
parties hereto adopt this Agreement including but not limited to,as a "plan of reorganization" within the provisionsmeaning of Section 3.01.
Treasury Department regulation sections 1.368-2(g) and 1.368-3(a). ARTICLE IV
Actions Pending Consummation of Merger
4.01Forbearances of PoageCitizens. From the date hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement requestedor the Citizens Disclosure Schedule (as hereafter defined), as required by City,law (including Pandemic Measures) or required by applicable law, regulation or policy of a Governmental Authority or an applicable Regulatory Order, without the prior written consent of City, which consent shall not be unreasonably withheld, conditioned or delayed, PoageCitizens shall not, and shall cause Town Squareits Subsidiaries not to:
(a)Ordinary Course. (i) Conduct the business of PoageCitizens and Town Squareits Subsidiaries other than in the ordinary and usual course or fail to use commercially reasonable efforts to preserve intact their respective business organizations and assets (ii)and maintain their respective rights, franchises and existing relations with customers, suppliers, vendors, employees and business associates, (iii)or voluntarily take any action which, at the time taken, is reasonably likely to have a Material Adverse Effect,an adverse effect upon Citizens’ ability to perform any of its obligations under this Agreement or (iv)prevent or materially delay the consummation of the transactions contemplated by this Agreement, or enter into any new line of business or materially change its lending, investment, underwriting, risk, asset liability management or other banking and operating policies.policies, except as required by applicable law or policies imposed by any Governmental Authority or by any applicable Regulatory Order.
(b)Capital Stock. (i) Issue,Except upon the exercise of Citizens Options outstanding on the date hereof in accordance with their terms, issue, sell grant or otherwise permit to become outstanding, or authorize the creation of, any additional PoageCitizens Common Shares,Stock or other capital stock of Poage or any Rights (except pursuant to the exercise of Poage Options);Citizens, (ii) enter into any agreement relatedwith respect to or amend or modify, the Poage Option Plan;foregoing, (iii) permit any additional Poage SharesCitizens Common Stock to become subject to new grants of employee or director stock options, otherany Rights, or similar stock-based employee rights, whether under the Poage Option Plan or otherwise; or (iv) effect any recapitalization, reclassification, stock split, or similar change in capitalization.
(c)Dividends; Distributions; AdjustmentsDistributions. (i) Except for the payment of its regular quarterly cash dividend of not more than $0.06 per share payable consistent with past practice for each quarter prior to the quarter in which the Effective Date shall occur and only if Poage reported positive net earnings in its most recently available reported quarterly earnings, make,Make, declare, pay or set aside for payment any dividend or distribution on any shares of its capital stock, other than dividends from Town SquareCitizens Commerce Bank to Poage;Citizens and, subject to Section 6.15, quarterly cash dividends by Citizens to its shareholders in a manner consistent with past practices, but under no circumstances in an amount greater than $.07 per share per quarter, or (ii) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock.
(d)Compensation; Employment Agreements. Enter into, modify, amend, renew or terminate any employment, consulting, severance, retention, change in control, or similar agreements or arrangements with any director, consultant, officer or employee of PoageCitizens or Town Square,any of its Subsidiaries, hire or engage any full-time employee or consultant, other than as replacements for positions existing on the Agreement Date,date hereof, or grant any salary or wage increase or bonus or increase any employee benefit (including incentive or bonus payments).
(e)Benefit Plans. Enter into, establish, adopt, add participants to, amend, modify, make any contributions to or terminate (except (i) as may be required by applicable law, (ii) as contemplated
by this Agreement, or (iii) pursuant to the regular annual renewal of insurance contracts) any pension, retirement, stock option, phantom stock, stock purchase, savings, profit sharing, deferred compensation, change in control, salary continuation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract (including related administrative services contracts), plan or arrangement, or any trust agreement (or similar arrangement) related thereto, in respect of any director, consultant, officer or employee of PoageCitizens or Town Square,any of its Subsidiaries, or take any action to accelerate the payment of benefits or the vesting or exercisability of the Poage Options,any restricted stock, phantom stock or other compensation or benefits payable thereunder, except (i) as may be required by applicable law, (ii) as contemplated by this Agreement or (iii) the regular annual renewal of insurance contracts or the regular payment of the Poage ESOP loan.thereunder.
(f)Dispositions. Excluding sales of loans in the secondary market in the ordinary course of Town Square’s business, sell,Sell, transfer, mortgage, pledge, encumber or otherwise dispose of or discontinue any of its material properties or assets deposits,or any business to any Person other than a wholly owned Subsidiary, or properties exceptcancel, release or assign any indebtedness of any Person or any claims against any Person, in each case other than in the ordinary and usual course, of business for full and fair consideration actually received.consistent with past practices, including any debt collection or foreclosure transactions.
(g)Acquisitions. Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each
case in the ordinary and usual course of business consistent with past practice) all or any portion of the assets, business, deposits or properties of any other Person.
(h)Governing Documents. Amend the PoageCitizens Articles, the PoageCitizens Bylaws or the charter, articlesorganizational and governing documents of association or bylaws of Town Square.its Subsidiaries.
(i)Accounting Methods. Implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP.
(j)Material Contracts. Enter into(i) Terminate, amend, or waive any new contractprovision of, any Material Contract; (ii) make any change in any instrument or agreement that would otherwise be required to be disclosed under Section 5.03(l), terminategoverning the terms of any of its securities, or any Material Contract, other than normal renewals of leases and other Material Contracts without material adverse changes of terms with respect to Citizens or amend, modify, renewany Citizens Subsidiary; (iii) enter into any Material Contract that (A) would constitute a Material Contract if it were in effect on the date of this Agreement or extend(B) that has a term of one year or longer and that requires payments or other obligations by Citizens or any Citizens Subsidiary of $25,000 or more under the Material Contract; or (iv) enter into any Material Contract if the Material Contract, in the aggregate with all Material Contracts entered into by Citizens or any material respectCitizens Subsidiary from and after the date of this Agreement, would result in aggregate required payments by Citizens or any Citizens Subsidiary in excess of its existing Material Contracts.$100,000.
(k)Claims. Settle any claim, suit, action or proceeding brought against Citizens, except for any claim, action or proceeding which does not involve precedent for other material claims, suits, actions or proceedings and which involves solely money damages in an amount, individually not to exceed $5,000 and$25,000 or in the aggregate not to exceed $30,000$100,000 for all such settlements.claims, actions or proceedings.
(l)Adverse Actions. Take any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (ii) any of the conditions to the Merger set
forth in Article VII not being satisfied, or (iii) a violation of any covenant contained inprovision of this Agreement except, in each case, as may be required by applicable law or by any Governmental Authority.
(m)Risk Management. Except pursuant to applicable law or as required by any Governmental Authority, (i) implement or adopt any material change in its interest rate andor other risk management policies, procedures or practices;practices, (ii) fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk;risk, (iii) fail to use commercially reasonable means to avoidaddress any material increase in its aggregate exposure to interest rate risk;risk, or (iv) fail to follow its existing policies or practices with respect to managing its fiduciary risks.
(n)Borrowings. Borrow Other than in the ordinary course, consistent with past practice, assume guarantee, endorse or agree to borrow any funds, including but not limited to pursuant to repurchase transactions, or directly or indirectly guarantee or agree to guarantee anyotherwise as an accommodation become responsible for the obligations of any other Person, except in each caseindividual, corporation or other entity (it being understood and agreed that incurrence of indebtedness in the ordinary course, consistent with past practices shall include the creation of businessdeposit liabilities, issuance of letters of credit, purchases of federal funds, borrowings from any of the Federal Home Loan Banks, sales of certificates of deposits, and with a final maturity of not later than January 31, 2019.entry into repurchase agreements).
(o)Indirect Loans; Participations. (i) Make or purchase any indirect or brokered loansLoans, or (ii) purchase from or sell to any financial institution or other non-depository lender anyan interest in a loan and/or other type of credit facility,Loan, except for such credit facilities made to borrowers in Town Square’sCitizens’ Territory which are secured by collateral located in the Town Square’sCitizens’ Territory in the ordinary course and consistent with past practices.
(p)Capital Expenditures. Except asMake, or commit to make, any capital expenditures that exceed by more than five percent (5%) of Citizens’ capital expenditure budget set forth in Poage’sSection 4.01(p) of the Citizens Disclosure Schedule, Section 4.01(o)Schedule.
(q) Lending. (i) Enter into any new line of business, change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operating, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital applicable with respect to its loan portfolio or any segment thereof); (ii) make or acquire, or modify, renew or extend any capital expenditureLoan except for Loans made acquired, renewed or capital addition or improvement or purchase other assets outside ofextended in the ordinary course, consistent with past practices and in compliance in all material respects with Citizens Commerce Bank’s loan policies and underwriting guidelines and standards as in effect as of the date of this Agreement; (iii) make or acquire, or modify, renew or extend any Loan (A) in the case of any Loan to a Person who does not have an existing lending relationship with Citizens, if immediately after making the Loan the Person obtaining the Loan and the Person’s Affiliates would have debt owed to Citizens or any of its Subsidiaries that is, in the aggregate, in excess of $500,000, (B) in the case of any Loan to a Person who has an existing lending relationship with Citizens, if immediately after the modification, renewal, or extension of any existing Loan, or the making of a new Loan, the Person obtaining the modification, renewal, extension or new Loan and the Person’s Affiliates would have an aggregate credit exposure to Citizens or any of its Subsidiaries that is, in excess of $1,000,000, or (C) that is in excess of $500,000 and that is classified by Citizens Commerce Bank as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,”
“Criticized,” “Watch List” or words of similar import, in each case, except pursuant to existing commitments entered into prior to the date hereof; (iv) grant, or renew the prior grant of, the deferral of any payments under any Loan or make or agree to make any other modification that would result in the Loan being, or continue the status of the Loan as, a CARES Act Modified Loan; provided that in the case of each of items (i) – (iv) above City shall be required to respond (and will be deemed to consent if it fails to respond) to any request for a consent to make such Loan or extension of credit in writing within five (5) business days after the loan package is delivered to City.
(r) Investment Securities Portfolio. Restructure or materially change its investment securities portfolio or its portfolio duration, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported, or invest in any mortgage-backed or mortgage-related securities which would be considered “high risk” securities under applicable regulatory pronouncements, or, except as may be reasonably required to maintain safety and soundness, otherwise purchase or sell securities in the portfolio individually exceeds $5,000that exceed $1,000,000 or in the aggregate that would exceed $30,000.$10,000,000.
(q)(s) Lending. (i) Establish any new lending programs or make any changes in the policies of any Subsidiary of Poage concerning which Persons may approve loans, (ii) price or reprice any loans inconsistent with Town Square’s current pricing methodology, (iii) originate or issue any loans except in accordance with existing lending policies, lending limits and authorities, or (iv) originate or
issue a commitment to originate any loan (except renewals of lines of credit) in a principal amount in excess of $500,000.
(r) Taxes. (i) Fail to prepare or file or cause to be prepared or filed in a timely manner consistent with past practice all Tax Returns that are required to be filed (with extensions) at or before the Effective Time;Time, (ii) fail to timely pay any Tax due (whether or not required to be shown on any such Tax Returns);, or (iii) make, change or revoke any Tax election or Tax accounting method; (iv)method, file any amended Tax return; (v)Return, settle any Tax claim or assessment; (vi)assessment or consent to the extension or waiver of any statute of limitations with respect to any Tax; (vii)Taxes (or offer or agree to do any of the foregoing;foregoing or (viii) surrender its rights to do any of the foregoing or to claim any refund of any TaxTaxes or file any amended Tax Return.Return).
(s)(t) Offices and Facilities. (i) Open, close or relocate any officesbranch office, ATMS, loan production office or other significant office or operations facility of Citizens or its Subsidiaries at which its business is conducted, (including any ATMs) or (ii) fail to use commercially reasonable efforts to maintain and keep itstheir respective properties and facilities in their present condition and working order, ordinary wear and tear excepted.
(t)(u) Interest Rates. Increase or decrease the rate of interest paid on time deposits or certificates of deposit, or any other type of deposit accounts, except in a manner consistent with past practices in relation to rates prevailing in the relevant market.
(u)(v) Foreclosures. Foreclose upon or otherwise cause PoageCitizens or Town Squareany of its Subsidiaries to take title to or possession or control of any real property or entity thereon with a principal balance of $250,000 or more at the time of foreclosure without first obtaining a Phase I Environmental Site Assessment in accordance with the requirements of ASTM E1527-13 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” (“Phase I”) on such real propertythereon which indicates that the property is free of Hazardous Material; provided,, however,, that no such report shall be required to be obtained with respect to single-family residential real property of one acre or less to be foreclosed upon unless Poage or Town SquareCitizens has reason to believe that such real property may contain any such Hazardous Material.
(v)(w) Deposit Liabilities. Cause or permit any material change in the amount or general composition of Citizens Commerce Bank’s deposit liabilities, excluding withdrawals or increases of deposits in the ordinary course of business and the maturity of certificates of deposit.liabilities.
(x) Reorganization 368(a). PrepayNot take, or fail to take, any indebtedness, lease payment, rental payment,action that would reasonably be expected to prevent or expense, whether in whole or in part, in excessimpede the Merger from qualifying as a “reorganization” within the meaning of $5,000 individually, or $15,000inSection 368(a) of the aggregate.Code.
(x)Commitments.(y) Commitments. Agree or commit to do any of the foregoing.
4.02Forbearances of City. From the date hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement, requestedas required by Poage,law (including Pandemic Measures) or required by applicable law, regulation or policy of a Governmental Authority or an applicable Regulatory Order, without the prior written consent of Poage, which consent shall not be unreasonably withheld, conditioned or delayed.Citizens, City shall not, and shall cause its Subsidiaries not to:
(a)Ordinary CourseCapital Stock. (i) Fail to use commercially reasonable efforts to preserve intact their respective business organizations and assets, (ii) maintain their respective rights, franchises and existing relations with customers, suppliers, vendors, employees and business associates,Effect any recapitalization, reclassification, stock split, or (iii) voluntarily take any action which, at the time taken, is reasonably likely to have a Material Adverse Effect.similar change in capitalization.
(b)Governing Documents. Amend the City Articles or the City Bylaws in a material manner that would materially and adversely impactsaffect the rightsholders of Citizens Common Stock, or obligationsadversely affect the holders of Citizens Common Stock relative to other holders of City Common Shares;Shares.
(c)DelayAdverse Actions. Knowingly takeTake any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming materially inaccurate at any time at or prior to the Effective Time, (ii) any of the conditions to the Merger set forth in Article VII not being satisfied, (iii) a violation of any provision of this Agreement except, in each case, as may be required by applicable law or by any Governmental Authority, or (iv) a delay in the consummation of the transactions contemplated by this Agreement.
(d) Reorganization 368(a). Not take, or fail to take, any action that is intended to or would reasonably be likelyexpected to adversely affectprevent or materially delayimpede the abilityMerger from qualifying as a “reorganization” within the meaning of Poage, City or their Subsidiaries to obtain any necessary approvalsSection 368(a) of any Governmental Authority required for the transactions contemplated hereby or to perform its covenants and agreements under this Agreement or to consummate the transactions contemplated hereby; orCode.
(d)(e) �� Agreements to Take ActionCommitments. Agree or commit to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of,do any of the actions prohibited by this Section 4.02.foregoing.
ARTICLE V
Representations and Warranties
5.01Disclosure SchedulesRepresentations and Warranties of Citizens. On or prior toExcept as disclosed in the Agreement Date, Poagedisclosure schedule delivered by Citizens to City a schedule,concurrently herewith (as the same may be supplemented and City delivered to Poage a schedule (each respectively, itsamended as permitted by Section 6.11, the “Citizens Disclosure Schedule”), setting forth, among other things, items the disclosure of which are necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof, as an exception to one or more representations or warranties contained in Section 5.03 or 5.04 or to one or more of its respective covenants contained in Article IV or Article VI;; provided, however, that (i) the mere inclusion of an item in athe Citizens Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by a partyCitizens that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to have or result in a Material Adverse Effect, on the party making the representation.
5.02Standardand (ii) any disclosures made with respect to a section of . Article VNo party hereto shall be deemed to have breached a representationqualify any other section of Article V specifically referenced or warranty as a consequence of the existence of any fact, event or circumstance unless such fact, circumstance or event, individually or taken together with all other facts, events or circumstances inconsistent with any representation or warranty contained in Section 5.03 or 5.04, has had or is reasonably likely to have, a Material Adverse Effect without giving any effect to any qualification as to materiality or Material Adverse Effect set forth in such representations and warranties.
5.03Representations and Warranties of Poage. Subject to Sections 5.01 and 5.02 and except as Previously Disclosed in a Section of its Disclosure Schedule corresponding to the relevant Section below, Poagecross-referenced, Citizens hereby represents and warrants to City that the following are true and correct:as follows:
(a)Organization, Standing and Authority.
(i)Poage Citizens is a corporation duly organized, validly existing and in good standing under the laws of the StateCommonwealth of MarylandKentucky and is a bank holding company duly registered with the FRB under the BHCA. Citizens has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted. Citizens Commerce Bank is a Kentucky banking corporation and is supervised and regulated by the KDFI and FDIC. Citizens Commerce Bank is duly organized, licensed, validly existing and in good standing under the laws of the Commonwealth of Kentucky, has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed and qualified to do business and is in good standing in any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. TheSection 5.01(a)(i) of the Citizens Disclosure Schedule sets forth the foreign jurisdictions in which Poage conducts businessCitizens or its Subsidiaries are set forthqualified to conduct business.
(ii) There are no restrictions on the ability of any Subsidiary of Citizens to pay dividends or distributions, except, in Poage’sthe case of a Subsidiary that is an insured depository institution, for restrictions on dividends or distributions generally applicable to all such regulated entities. Section 5.01(a)(ii) of the Citizens Disclosure Schedule Section 5.03(a). Poage is registeredsets forth a true and complete list of all Subsidiaries of Citizens as a savings and loanholding company underof the HOLA.date hereof.
(ii)(b) Town Square is a federal savings association chartered under the laws of the United States, and has all the requisite power and is duly qualified to do business and is in good standing in any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified.
(b)Capital Structure of PoageCitizens.
(i) TheAs of date hereof, the authorized capital stock of PoageCitizens consists of 30,000,000 Poage45,000,000 shares of Citizens Common Shares, par valueStock, of $0.01 per share,which 3,821,101 shares are currently issued and 1,000,000outstanding and 0 shares of preferred stock, par value of $0.01 per sharewhich no shares are issued and outstanding (“PoageCitizens Preferred Shares”). The PoageCitizens Common SharesStock and PoageCitizens Preferred Shares are collectively referred to herein as “PoageCitizens Shares.” As of the date hereof, there are: (A) 3,497,2430 shares of Poage CommonTreasury Shares issued and outstanding; and (B) 70,529 Poage Common Shares reserved for issuance pursuant to the Poage Option Plan. Additionally, noheld by Citizens or otherwise owned by Citizens or its Subsidiaries. No shares of PoageCitizens Preferred Shares are issued and outstanding or reserved for issuance and no Poage Shares are held in treasury by Poage.issuance. All of the issued and outstanding PoageCitizens Shares have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. Except forrights, with no personal liability attaching to the options, plans and other obligations set forth in this Subsection (i), and except as set forth in Poage’s Disclosure Schedule Section 5.03(b), Poageownership thereof. Citizens does not have, and is not bound by, any outstanding or issued Rights with respect to any Poage Shares.Citizens Shares except the Citizens Options.
(ii)The Poage Options have been granted in compliance in all material respects with the terms Neither Citizens nor any of the applicable Poage Option Plan and all applicable laws. With respect to each Poage Option outstanding as of the date hereof, the name of each optionee, the date of each option to purchase Poage Shares granted, the number of shares subject to each such option and the price at which each such option may be exercised are set forth in Poage’s Disclosure Schedule Section 5.03(b). The exercise price of each Poage Option is no less than the fair market value of the applicable Poage Shares determined on the date of grant of such stock option (and as of any later modification thereof within the meaning of Section 409A of the Code). Each Poage Option intended to qualify as an “incentive stock option” under Section 422 of the Code has been structured to so qualify.
(iii)Neither Poage nor Town Square hasits Subsidiaries have any authorized, issued, or outstanding bonds, debentures, notes or other indebtedness for which the holders thereof have the right to vote on any matters on which the shareholders have the right to vote. There are no registration rights, and there is no voting trust, proxy, rights agreement, “poison pill” anti-takeover plan or other agreement or understanding to which Poage or any of Town SquareCitizens is a party or by which it is bound with respect to any equity security of them are boundany class of Citizens or with respect to any equity security, membershippartnership interest or similar ownership interest of Poage or Town Square.any class of any of its Subsidiaries.
(iii) Section 5.01(b)(iii) of the Citizens Disclosure Schedule contains a detailed description of the Citizens Options, including name of grantee, number of option shares, grant date, strike price, vesting terms, and expiration as of the date hereof.
(c)SubsidiariesAuthority; No Violation.
(i) (A)Section 5.03(c) of Poage’s Disclosure Schedule contains a list of Poage’s Subsidiaries, (B) Poage owns all of the issued and outstanding equity securities of its Subsidiaries (other than the preferred securities of Town Square Statutory Trust I), (C) no equity securities of its Subsidiaries are or may become required to be issued (other than to Poage) by reason of any Right or otherwise, (D) there are no contracts, commitments, understandings or arrangements by which Poage’s Subsidiaries are or may be bound to sell or otherwise transfer any equity securities of such Subsidiaries (other than to Poage), (E) there are no contracts, commitments, understandings, or arrangements relating to Poage’s rights to vote or to dispose of its Subsidiaries’ equity securities, and (F) all of the equity securities of the Subsidiaries held by Poage are fully paid and nonassessable and are owned by Poage free and clear of any Liens.
(ii)Poage and Town Square do not own beneficially, directly or indirectly, any equity securities or similar interests of any Person, or any interest in a partnership or joint venture of any kind, other than Poage’s ownership of Town Square.
(d)Corporate Power. Each of Poage and Town SquareCitizens has full corporate power and authority to carry on its business as it is now being conductedexecute and to own all of its properties and assets. Poage has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and, subject to certain required approvals of Poage’s shareholders (the “Poage Shareholder Adoption”)the shareholder and applicable Regulatory Authorities, and Town Square has the corporate power and authorityother actions described below, to consummate the Subsidiary Merger in accordance with the termstransactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Parent Merger and the Subsidiary Merger have been duly and validly approved by the Board of Directors of Citizens. As of the date hereof, the Board of Directors of Citizens has determined, subject to certain required approvalsSection 6.06 of applicable Regulatory Authorities. No holderthis Agreement, that the Parent Merger, on the terms and conditions set forth in this Agreement, is in the best interests of Poage SharesCitizens and its shareholders and has or will have, any dissenter or appraisal right with respect to such holder’s Poage Shares, or any right to demand and/or receive payment of the fair value of such holder’s Poage Shares, in connection with or as a result of the transaction contemplated hereby.
(e)Corporate Authority; Authorized and Effective Agreement. Subject to the Poage Shareholder Adoption,directed that this Agreement and the transactions contemplated hereby have been authorizedbe submitted to Citizens’ shareholders for approval (with the Citizens Board of Directors’ recommendation in favor of approval) at a meeting of the shareholders, and has adopted a resolution to the foregoing effect. Except for the approval of this Agreement by all necessary corporate actionthe affirmative vote of Poagethe holders of a majority of the outstanding shares of Citizens Common Stock (the “Requisite Citizens Vote”), and the Poage Board. Theadoption and approval of the Subsidiary Merger Agreement to Merge, when executed by Town Square, shall have been approved by the board of directors of Town Square and by Poage,Citizens as the sole shareholder of Town Square.Citizens Commerce Bank, no other corporate proceedings on the part of Citizens are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement ishas been duly and validly executed and delivered by Citizens and (assuming due authorization, execution and delivery by City) constitutes a valid and legally binding obligation of Poage,Citizens, enforceable against PoageCitizens in accordance with its terms except(except in all cases as enforcementenforceability may be limited by receivership, conservatorship and supervisory powers of bank regulatory agencies generally, as well as bankruptcy, insolvency, moratorium, reorganization moratoriumor similar laws affecting the rights of creditors generally and the availability of equitable remedies).
(ii) Neither the execution and delivery of this Agreement by Citizens nor the consummation by Citizens of the transactions contemplated hereby, including the Parent Merger and the Subsidiary Merger, nor compliance by Citizens with any of the terms or provisions hereof, will (A) violate any provision of the Citizens Articles or Citizens Bylaws or (B) assuming that the consents and approvals referred to in Section 5.01(d) are duly obtained, (1) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Citizens or any Citizens Subsidiaries or any of their respective properties or assets or (2) except as set forth in Section 5.01(c)(ii) of the Citizens Disclosure Schedule, violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or payments, rebates, or reimbursements required under, or result in the creation of any Lien upon any of the respective properties or assets of Citizens or any Citizens Subsidiaries under, any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other lawsinstrument or obligation to which Citizens or any Citizens Subsidiary is a party, or by which they or any of general applicability relating totheir respective properties or affecting creditors’ rights, or the limiting effect of rules of law governing specific performance, equitable reliefassets may be bound.
(d) Consents and other equitable remedies or the waiver of rights or remedies.
(f)Regulatory Approvals; No DefaultsApprovals.
(i) Except as set forth in NoSection 5.01(d)(i) of the Citizens Disclosure Schedule, no consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by PoageCitizens or Town Squareany of its Subsidiaries in connection with the execution, delivery or performance by PoageCitizens of this Agreement or the consummation of the transactions contemplated hereby, including the Merger, except for (A) the filings of applications, waivers or notices, and the Agreement to Merge, as applicable, with Regulatory Authorities to approve the transactions contemplated by the Agreement;Agreement, (B) the filing of the certificate of merger with the Maryland Department pursuant to the MGCL; (C) the filing with the SEC and declaration of effectiveness of a registration statement on Form S-4 (the “Registration Statement”) under the Registration Statement;Securities Act including the proxy statement/prospectus (the “Proxy Statement/Prospectus”) relating to the meeting, including any adjournment or postponements thereof, of Citizens shareholders to be held in connection with this Agreement and the Merger (the “Citizens Meeting”), and any necessary state securities law or “blue sky” permits and approvals, (C) Requisite Citizens Vote, (D) Poage Shareholder Adoption;the filing of the articles of merger with the KSS pursuant to the KBCA and WVSS pursuant to the WVBCA, and filing the Subsidiary Merger Certificate, and (E) the receipt of the approvals set forth in Section 7.01(b).
(ii)As of the date hereof, PoageCitizens is not aware of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b).
(iii)Subject to the consents and approvals noted in Section 5.03(f)(i) and the expiration of related regulatory waiting periods, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, do not and will not (A) result in a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of Poage or Town Square or to which Poage or Town Square or any of their respective properties are subject or bound; (B) constitute a breach or violation of, or a default under, the Poage Articles or the Poage Bylaws; or (C) require any consent or approval under any law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.
(g)SEC Reports.
(i)(e) Except as set forth in Section 5.03(g) of Poage’s Disclosure Schedules, Poage has timely filed all reports, registration statements, proxy statements and other materials, together with any amendments required to be made with respect thereto, that it was required to file with the SEC, and all such reports, registration statements, proxy statements, other materials and amendments have complied in all material respects with all legal requirements relating thereto, and has paid all fees and assessments due and payable in connection therewith.
(ii)An accurate and complete copy of each final registration statement, prospectus, report, schedule and definitive proxy statement filed with or furnished to the SEC by Poage pursuant to the Securities Act or the Exchange Act prior to the date of this Agreement (the “Poage’s SEC Reports”) is publicly available. No such Poage’s SEC Report, at the time filed, furnished or communicated (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of the relevant meetings, respectively), and considering all amendments to any of Poage’s SEC Report filed prior to the date hereof, contained any untrue statement of a material fact or omitted 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 in which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) shall be deemed to modify information as of an earlier date. As of their respective dates, all Poage’s SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto. No executive officer of Poage has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). As of the date hereof, there are no outstanding comments from or unresolved issues raised by the SEC with respect to any of the Poage’s SEC Reports.
(h)Financial Statements; Material Adverse Effect; Internal Controls.
(i)The Citizens has delivered or will deliver to City (A) audited consolidated financial statements for each of Poagethe fiscal years ended December 31, 2021, 2020 and 2019, respectively, consisting of consolidated balance sheets and the related consolidated statements of income, comprehensive income and shareholders’ equity and cash flows for the fiscal years ended on such dates, including the footnotes thereto and the reports prepared with respect thereto by MCM CPAs & Advisors LLP, Citizens’ independent registered public accounting firm; (B) unaudited consolidated financial statements for the eight-month interim period ended August 31, 2022 and each subsequent quarter thereafter, consisting of balance sheets and the related statements of income; and (C) unaudited consolidated monthly financial statements as of September 30, 2022 and each subsequent month thereafter, consisting of balance sheets and the related statements of income (collectively, the “Citizens Financial Statements”). The Citizens Financial Statements, as of the dates thereof and for the periods covered thereby, have been prepared in conformity with GAAP, consistently applied throughout the periods indicated, and fairly present the financial position of Citizens and its Subsidiaries included (or incorporated by reference) in Poage’s SEC filings (includingas of the related notes, where applicable) (i) have been prepared from,dates thereof and are in accordance with, the books and records of Poage and its Subsidiaries, (ii) fairly present in all material respects the consolidated results of operations and cash flows changes in shareholders’ equity and consolidated financial position of Poage and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subjectindicated, subject in the case of unauditedthe interim financial statements to recurring year-end auditnormal year‑end adjustments normal in nature and amount), (iii) complied as to form, asthe absence of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, and (iv) have been prepared in accordance with generally accepted accounting principles, consistently applied during the periods involved, except, in each case, as indicated in such statements or in the notes thereto. As of the date hereof, the books and records of PoageCitizens and its Subsidiaries have been maintained in all material respects in accordance with generally accepted accounting principlesGAAP and any other applicable legal and accounting requirements and reflect only actual transactions. As of the date hereof, CroweMCM CPAs & Advisors LLP has not resigned (or informed PoageCitizens that it intends to
resign) or been dismissed as independent public accountants of PoageCitizens as a result of or in connection with any disagreements with PoageCitizens on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
(ii)Neither PoageCitizens nor any of its Subsidiaries has incurred any liability or obligation of any nature whatsoever, except for (A) those liabilities that are reflected or reserved against on the consolidated balance sheet of PoageCitizens included in its Quarterly Report on Form 10-Qthe Citizens Financial Statements for fiscal quarteryear ended MarchDecember 31, 20182021 (including any notes thereto), (B) liabilities incurred in the ordinary course of business consistent in nature and amount with past practice since MarchDecember 31, 20182021, except as set forth in Section 5.01(e)(ii) of the Citizens Disclosure Schedules, or (C) liabilities and obligations in connection with this Agreement and the transactions contemplated hereby.
(iii)Since MarchDecember 31, 2018,2021, (A) PoageCitizens and its Subsidiaries have conducted their respective businesses in the ordinary and usual course consistent with past practice, and (B) no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events is reasonably likely to have a Material Adverse Effect with respect to PoageCitizens or any of its Subsidiaries.
(iv)Poage Citizens has established and each of its Subsidiaries maintains a system of “disclosureinternal accounting controls for Citizens and procedures” (as definedits Subsidiaries sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in Rules 13a-15(e)accordance with GAAP and 15d-15(e) promulgated underapplicable law, including policies and procedures that (A) pertain to the Exchange Act) reasonably designedmaintenance of records that in reasonable detail accurately and maintainedfairly reflect the transactions and dispositions of the assets of Citizens and its Subsidiaries in all material respects; (B) provide reasonable assurance that transactions are recorded as necessary to ensurefacilitate preparation of financial statements in conformity with GAAP, and that all information (bothreceipts and expenditures of Citizens and its Subsidiaries are being made only in accordance with authorizations of management and directors of Citizens and its Subsidiaries, as the case may be; and (C) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of Citizens or its Subsidiaries that could have a material effect on their financial and non-financial) required to be disclosed by Poagestatements. Citizens has no Knowledge of any deficiency in the reports that it files or submits under the Exchange Act is recorded, processed, summarizedeffectiveness of Citizens’ and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to Poage’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of Poage required under the Exchange Act with respect to such reports. Poage has disclosed, based on its most recent evaluation prior to the date of this Agreement, to Poage’s outside auditors and the audit committee of the Poage Board (i) any significant deficiencies and material weaknesses in the design or operation ofSubsidiaries’ internal controls over financial reporting (as defined in Rule 13a-15(f)as of the Exchange Act) that would be reasonably likelyend of the periods covered by the Citizens Financial Statements and, to adversely affect Poage ’s ability to accurately record, process, summarize and report financial information, and (ii)Citizens’ Knowledge, any fraud, whether or not material, that involves management or other employees who have a significant role in Poage’sof Citizens or its Subsidiaries. Citizens has provided City access to all documentation related to Citizens’ internal controlscontrol over financial reporting. Since December 31, 2017, neither Poage, its Subsidiaries nor any director, officer, employee, auditor, accountant or representative of Poage or its Subsidiaries2020, to Citizens’ Knowledge, except as set forth in Citizens’ Disclosure Schedule, there has received or otherwise had or obtained Knowledge of any materialbeen no complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of PoageCitizens or any of its Subsidiaries or their respective internal accounting controls, including without limitation any material complaint, allegation, assertion or claim that PoageCitizens or its SubsidiariesCitizens Commerce Bank has engaged in questionable accounting or auditing practices.
(i)(f) Litigation. There is no suit, action, claim, proceeding, review or investigation pending, and, to Poage’s Knowledge,Except as set forth in Section 5.01(f) of Citizens Disclosure Schedule, there is no suit, action, investigation, claim, proceeding review or investigationreview
pending, or to Citizens’ Knowledge, threatened against Poageit or Town Squareany of its Subsidiaries or any of the current or, to the Knowledge of Citizens, former directors or executive officers of Poageit or Town Squareany of its Subsidiaries in their capacities as such (and Poageit is not aware of any basis for any such suit, action, investigation, claim, or proceeding or to Poage’s Knowledge, investigation or review) (i) that involves a Governmental Authority, or (ii) that, individually or in the aggregate, is (A) material to Poageit and Town Square,its Subsidiaries, taken as a whole, or is reasonably likely to result in a material restriction on its or Town Square’sany of its Subsidiaries’ businesses or, after the Effective Time, the business of City or any of its Affiliates, or (B) reasonably likely to materially prevent or delay it from performing its obligations under, or consummating the transactions contemplated by, this Agreement. There is no injunction, order, award, judgment, settlement, decree or decreeregulatory restriction imposed upon or entered into by Poage, Town SquareCitizens, any of its Subsidiaries or the assets of Poageit or Town Squareany of its Subsidiaries (or that, upon consummation of the Merger, would apply to City or any of its Affiliates) that is or could reasonably be expected to be material to Poage or Town Square.
have a Material Adverse Effect.
(j)(g) Regulatory Matters.
(i)Neither PoageCitizens nor Town Squareany of its Subsidiaries nor any of their respective properties is a party to or is subject to any order, decree, formal or informal agreement, memorandum of understanding or similar arrangement with, or a commitment letter, board resolution or similar submission to, or extraordinary supervisory letter (any of the foregoing, a “Regulatory Order”) from any federal or state governmental agency or authority charged with the supervision or regulation of financial institutions (or their holding companies), or issuers of securities or engaged in the insurance of deposits including,(including, without limitation, the FDIC, the FRB, FDIC and the OCCKDFI) or the supervision or regulation of it or any of its Subsidiaries (collectively, the “Regulatory Authorities”); .provided, however, that Regulatory Order shall not be deemed to include
(ii) Neither Citizens nor any of the foregoing that is subject to confidentiality restrictions of any Regulatory Authority prohibiting its disclosure to third parties under applicable law, rule or regulation.
(ii)Neither Poage nor Town Square haveSubsidiaries has been advised by any Regulatory Authority that such Regulatory Authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, formal or informal agreement, memorandum of understanding, commitment letter, board resolution, supervisory letter or similar submission described in the immediately preceding clause (i).
(k)(h) Compliance with Laws. EachExcept as set forth in Section 5.01(h) of Poagethe Citizens Disclosure Schedules, Citizens and Town Square: (i) iseach of its Subsidiaries hold all licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to each (and have paid all fees and assessments due and payable in compliance with allconnection therewith), except where neither the cost of failure to hold nor the cost of obtaining and holding the applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orderslicense, franchise, permit or decrees applicable theretoauthorization (nor the failure to pay any fees or assessments) would, either individually or in all material respects; (ii) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities and Regulatory Authorities that are required in orderthe aggregate, reasonably be expected to permit them to own or lease their propertieshave a Material Adverse Effect on Citizens, and, to conduct their businesses as presently conducted; (iii) all such permits, licenses, certificatesthe Knowledge of authority, orders and approvals are in full force and effect and, to Poage’s Knowledge,Citizens, no suspension or cancellation of any of them is threatened; and (iv) has not received any notification or communication from any Governmental Authority (A) asserting that Poage or Town Square is not in compliance with any of the statutes, regulations, or ordinances which such Governmental Authority enforces or (B) threatening to revoke anynecessary license, franchise, permit or governmental authorization nor dois threatened. Citizens and each of its Subsidiaries have, during the past five (5) years, complied in all material respects with and, to Citizens’ Knowledge, are not in default or violation under any grounds forapplicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Authority relating to Citizens or any of the foregoing exist.its Subsidiaries, including without
limitation all laws related to data protection or privacy, the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, any regulations promulgated by the Consumer Financial Protection Bureau, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the SAFE Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, and any other law relating to bank secrecy, discriminatory lending, financing or leasing practices, money laundering prevention, Sections 23A and 23B of the Federal Reserve Act, and all agency requirements relating to the origination, sale and servicing of mortgage and consumer Loans.
(i) Material Contracts; Defaults.
(i)Except as set forth in Poage’sthe Citizens Disclosure Schedule listed under Section 5.03(l)5.01(i)(i), neither PoageCitizens nor Town Squareany of its Subsidiaries is a party to or is bound by any contract or agreement (whether written or verbal) of the following types as of the date of this Agreement, and no such contract or agreement is presently being negotiated or discussed:
(A)any contract involving commitments to others to make capital expenditures or purchases or sales of capital assets in excess of $10,000$25,000 in any one case or $50,000$75,000 in the aggregate duringin any period of 12 consecutive months;
(B)any contract relating to any direct or indirect indebtedness of PoageCitizens or Town Squareany of its Subsidiaries for borrowed money (including loan agreements, lease purchase arrangements, guarantees, agreements to purchase goods or services or to supply funds or other undertakings relating to the extension of credit)credit but excluding any contract relating to indebtedness of Citizens Commerce Bank with respect to deposit liabilities (including cash sweep accounts), letters of credit, repurchase agreements, purchases of federal funds and other borrowings entered into by Citizens Commerce Bank in the ordinary course of its banking business, consistent with past practice), or any conditional sales contracts, equipment lease agreements and other security arrangements with respect to personal
property with an obligation in excess of $10,000$25,000 in any one case or $50,000$75,000 in the aggregate duringin any period of 12 consecutive months;
(C)any employment, severance, consulting or management services contract or any confidentiality or nondisclosure contract with any director, officer, employee or consultant of PoageCitizens or Town Square;any of its Subsidiaries;
(D)any contract containing covenants limiting the freedom of PoageCitizens or Town Squareany of its Subsidiaries to compete in any line of business or with any Person or in any area or territory;
(E)any partnership, joint venture, limited liability company arrangement or other similar agreement;
(F)any profit sharing, phantom stock award, stock option, stock purchase, stock appreciation, deferred compensation, issuance, or other plan or arrangement for the benefit of Poage’sCitizens’ or Town Square’sany of its Subsidiaries’ current or former directors, officers, employees or consultants;
(G)any license agreement, either as licensor or licensee, or any other contract of any type relating to any intellectual property, except for license agreements relating to off-the-shelf software or software components pursuant to a non-negotiable standard form or “shrink wrap” license agreement;
(H) any contract with any insider of Citizens or any of its Subsidiaries or any arrangement under which PoageCitizens or Town Squareany of its Subsidiaries has advanced or loaned any amount to any of their respective directors, officers, employees, insiders or consultants, or any Associate or immediate family member of any of the foregoinginsider (the terms “insider” and “immediate family member” have the meanings given to them under Regulation O (12 C.F.R. Part 215) as promulgated by the FRB);
(I)any contract, whether exclusive or otherwise, with any sales agent, representative, franchisee or distributor;distributor acting for and on behalf of Citizens or its Subsidiaries;
(J)other than this Agreement and any ancillary agreements being executed in connection with this Agreement, and agreements entered into by Citizens Bank in the ordinary course in connection with the purchase and sale of marketable securities or stock of the Federal Home Loan Bank of Cincinnati, any contract providing for the acquisition or disposition of any portion of the assets, properties or securities of PoageCitizens or Town Square;any of its Subsidiaries in excess of $25,000 in any one case or $75,000 in the aggregate in any period of 12 consecutive months;
(K)any contract that requires the payment of royalties;
(L)any contract pursuant to which PoageCitizens or Town Squareany of its Subsidiaries has any obligation to share revenues or profits derived from PoageCitizens or Town Squareany of its Subsidiaries with any other Person;
(M)any contract between (i) PoageCitizens or Town Square,any of its Subsidiaries, on the one hand, and any officer, director, employee or consultant of PoageCitizens or Town Square,any of its Subsidiaries, on the other hand;hand, and (ii) PoageCitizens or Town Square,any of its Subsidiaries, on the one hand, and any person known by Citizens to be an Associate or other Affiliate of any director, officer, employee or consultant of PoageCitizens or Town Square,any of its Subsidiaries, on the other hand;
(N) any contract that is a “material contract” (as defined in Item 601(b)(10) of Regulation S-K of the SEC); and
(N)(O) any other legally binding contract not of the type covered by any of the other items of this Section 5.03(l)5.01(i) involving money or property (other than loans and having andeposits of Citizens Bank) and imposing on Citizens and its
Subsidiaries an obligation in excess of $25,000 in the aggregate duringin any period of 12 consecutive months orand which is otherwise not in the ordinary and usual course of business.
(ii)“Material Contracts” shall mean those contracts on Poage’sthe Citizens Disclosure Schedule listed under Section 5.03(l)5.01(i)(i). True, complete and correct copies of all of the written Material Contracts have been made available to City. Except as set forth on the Citizens Disclosure Schedule, neither Citizens nor any of its Subsidiaries is a party to or is bound by any verbal contract or agreement requiring payments by Citizens or its Subsidiaries in excess of $5,000. All of the Material Contracts are in full force and effect and are legal, valid, binding and enforceable in accordance with their terms (A) as to PoageCitizens or Town Square,any of its Subsidiaries, as the case may be, and (B) to the Knowledge of Poage,Citizens, as to the other parties to such Material Contracts. Except as disclosed in Poage’sthe Citizens Disclosure Schedule, Section 5.03(l), Poage Citizens and/or Town Square,its Subsidiaries, as applicable, and to the Knowledge of Poage,Citizens, each other party to the Material Contracts, has performed and is performing all material obligations conditions and covenants required to be performed by it under the Material Contracts. Neither PoageCitizens nor Town Square,its Subsidiaries, and to the Knowledge of Poage,Citizens, no other party, is in violation, breach or default of any material obligation, condition or covenant under any of the Material Contracts, and neither PoageCitizens nor Town Square,its Subsidiaries, and to the Knowledge of Poage,Citizen, no other party has, as of the date of this Agreement, received any notice that any of the Material Contracts will be terminated or will not be renewed. Neither PoageCitizens nor Town Square haveany of its Subsidiaries has received from or given to any other Person any notice of default or other violation under any of the Material Contracts, nor to the Knowledge of Poage,Citizens, does any condition existexists or has any event has occurred which with notice or lapse of time or both would constitute a default under any of the Material Contracts.
(m)(j) Brokerage and Finder’s Fees. Except for Sandler O’Neill & Partners, L.P.,as set forth in Section 5.01(j) of Citizens Disclosure Schedule, neither PoageCitizens nor Town Squareany of its Subsidiaries has engaged or employed any broker, finder, or agent, or agreed to pay or incurred any brokerage fee, finder’s fee, commission or other similar form of compensation (including any break-up or termination fee) in connection with this Agreement or the transactions contemplated hereby.
(n)(k) Employee Benefit PlansPlans; Employee Matters.
(i)Section 5.03(n)5.01(k) of Poage’sCitizens Disclosure Schedule contains a complete and accurate list of all bonus, incentive, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, severance, welfare and fringe benefit plans, employment, retention, change in control, severance agreements, and all similar practices, policies and arrangements, whether written or unwritten, that are currently effective or were in effect at any time in the previous five years, in which any employee or former employee (the “Employees”“Employees”), consultant or former consultant (the“Consultants”) or director or former director (the “Directors”“Directors”) of PoageCitizens or Town Squareany of its Subsidiaries or any ERISA Affiliate participates, sponsors or contributes, or to which any such Employees, Consultants or Directors are a party or under which PoageCitizens or Town Squareits Subsidiaries or any ERISA Affiliate has any present or future liability (the “Compensation and Benefit Plans”). Schedule 5.03(n)Neither Citizens nor any of Poage’s Disclosure Schedule contains a complete and accurate description and schedule of all existing and future financial obligations of Poage or Town Square under the SERP and Split Dollar Agreements as of the date of this Agreement. Neither Poage nor Town Squareits Subsidiaries nor any ERISA Affiliate has any commitment to create
any additional Compensation and Benefit Plan or to modify or change any existing Compensation and Benefit Plan except as required by applicable law.Plan. No Compensation and Benefit Plan holds any PoageCitizens Common Shares other than the Poage ESOP, Poage 401(k) Plan and the Poage Common Shares that may be issued under the Poage Stock Plans.
Stock.
(ii)Each Compensation and Benefit Plan has been operated and administered in all material respects in accordance with its terms and with applicable law, including, but not limited to, ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act, andor any regulations or rules promulgated thereunder, and all filings, disclosures and notices required by ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act and any other applicable law have been timely made. Each Compensation and Benefit Plan which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a “Pension Plan”) and which is intended to be qualified under Section 401(a) of the Code has either (A) received a favorable determination letterDetermination Letter from the Internal Revenue Service (“IRS”), and no circumstances exist which are likely to result in revocation of any such favorable determination letterDetermination Letter; or (B) has been adopted on a prototype plan which has received a current opinion letter from the national office of the IRS. There is no pending or, to the Knowledge of Poage,Citizens, threatened legal action, suit or claim relating to any of the Compensation and Benefit Plans. Neither PoageCitizens nor Town Squareany of its Subsidiaries nor any ERISA Affiliate has engaged in anya transaction, or omitted to take any action, with respect to any Compensation and Benefit Plan that would reasonably be expected to subject PoageCitizens or Town Squareany of its Subsidiaries or any ERISA Affiliate to a tax or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA. NoTo the Knowledge of Citizens, no event has occurred or circumstance exists that could result in a material increase in premium cost of a Compensation and Benefit Plan that is insured, or a material increase in benefit cost of asuch Compensation and Benefit Plans that are self-insured. Except as set forth on Schedule 5.01(k)(ii), no Compensation and Benefit Plan that is self-insured.has been terminated or amended since December 31, 2021.
(iii)None of the Compensation and Benefit Plans is subject to Title IV of ERISA. No liability under Title IV of ERISA has been or is expected to be incurred by PoageCitizens or Town Squareany of its Subsidiaries with respect to any terminated “single-employer plan” (within, within the meaning of Section 4001(a)(15) of ERISA)ERISA, formerly maintained by any of them, or any single-employer plan of any entity (an “ERISA Affiliate”) which is considered one employer with PoageCitizens under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (an “ERISA Affiliate Plan”). None of Poage, Town SquareCitizens, its Subsidiaries or any ERISA Affiliate has contributed, or has been obligated to contribute, to either a defined benefit pension plan subject to Title IV of ERISA or to a multiemployer plan under Subtitle E of Title IV of ERISA at any time.time since September 26, 1980. No notice of a “reportable event” (withinevent,” within the meaning of Section 4043 of ERISA)ERISA, has been required to be filed for any Compensation and Benefit Plan or by any ERISA Affiliate Plan. To the Knowledge of Poage,Citizens, there is no pending investigation or enforcement action by the U.S. Department of Labor or the IRS or any other Governmental Authority with respect to any Compensation and Benefit Plan.
(iv)All contributions required to be made by Citizens under the terms of any Compensation and Benefit Plan or ERISA Affiliate Plan or any employee benefit
arrangements under any collective bargaining agreement to which PoageCitizens or Town Squareany of its Subsidiaries was or is a party have been timely made or have been reflected on Poage’sin the Citizens Financial Statements.
(v)Except as set forth in Poage’s Disclosure Schedule otherwise provided under Section 5.03(n)6.10(c), (A) neither PoageCitizens nor Town Squareany of its Subsidiaries has any obligationobligations to provide retiree health and life insurance or other retiree death benefits under any Compensation and Benefit Plan, other than benefits mandated by Section 4980B of the Code, (B) anyand each such retiree health and life insurance or other retiree death benefits under any Compensation and Benefit Plan may be amended or terminated without incurring liability thereunder, and (C) therethereunder. There has been no communication to Employees by PoageCitizens or Town Squareits Subsidiaries that would reasonably be expected to promise or guarantee such EmployeesEmployees’ retiree health or life insurance or other retiree death benefits on a permanent basis.
(vi)Neither PoageCitizens, any of its Subsidiaries nor Town Squareany ERISA Affiliate maintain any Compensation and Benefit Plans covering leased or foreign (i.e., non-United States) Employees, independent contractors or non-employees other than non-employee Directors of Poage and Town Square.non-employees.
(vii)With respect to each Compensation and Benefit Plan, if applicable, PoageCitizens has provided or made available to City, true and complete copies of:of existing (A) Compensation and Benefit Plan documents and amendments thereto, including a written description of any Compensation and Benefit Plan or any other employee benefit obligation that is not otherwise in writing;writing, and all board actions approving the same, (B) trust instruments and insurance contracts, including renewal notices;notices, (C) the three most recent Forms 5500 filed with the IRS (including all schedules thereto and the opinions of independent accountants);, (D) the most recent actuarial report and financial statement;statement, (E) the most recent summary plan description or wrap document and summaries of material modifications;modifications, (F) notices or forms filed with the PBGC (other than for premium payments);, (G) the most recent determination letter issued by the IRS;IRS, (H) any Form 5310 or Form 5330 filed with the IRS;IRS, (I) the most recent nondiscrimination tests performed under ERISA and the Code including(including 401(k) and 401(m) tests;tests), and (J) all contracts with third party administrators, actuaries, investment managers, compensation consultants and other independent contractors that relate to a Compensation and Benefit Plan.
(viii)Except as set forth in Poage’sSection 5.01(k)(viii) of the Citizens Disclosure Schedule Section 5.03(n),Schedules, the consummation of the transactions contemplated by this Agreement would not, directly or indirectly (including, without limitation, as a result of any termination of employment prior to or following the Effective Time) reasonably be expected to (A) entitle any Employee, Consultant or Director to any payment (including severance pay or similar compensation) or any increase in compensation, (B) result in the vesting or acceleration of any benefits under any Compensation and Benefit Plan, or (C) result in any material increase in benefits payable under any Compensation and Benefit Plan.
(ix)Neither PoageCitizens nor Town Square maintainany of its Subsidiaries or any ERISA Affiliate maintains any compensation plans, programs or arrangements the payments under which would not reasonably be expected to be deductible as a result of the limitations under Section 162(m) of the Code and the Treasury regulations promulgatedissued thereunder.
(x)Except as set forth in Poage’s Disclosure Schedule Section 5.03(n), as As a result, directly or indirectly, of the transactions contemplated by this Agreement (including, without limitation, as a result of any termination of employment prior to or following the Effective Time), none ofneither Citizens, nor City Poage,as its successor following the Surviving Corporation, or any of their respective SubsidiariesParent Merger, nor Citizens Bank, nor City National Bank as its successor following the Subsidiary Merger, will be obligated to make a payment that would be characterized as an “excess parachute payment” to an individual who is a “disqualified individual” (as such terms are defined in Section 280G of the Code and applicable regulations thereunder) of PoageCitizens on a consolidated basis or which would violate 12 U.S.C. Section 1828(k) or regulations thereunder.
(xi) Citizens and each of its Subsidiaries are in compliance in all material respects with all applicable federal, state and local laws, regulations, ordinances and rulings respecting employment and employment practices, terms and conditions of employment, and wages and hours, including, without limitation, any such laws respecting employment discrimination and occupational safety and health requirements, and (i) none of Citizens or any of its Subsidiaries are engaged in any unfair labor practice or other employment and/or wage-related policy, practice or action in violation of any federal, state or local law, regulation, ordinance or ruling, including without limitation those related to wages and hours under the Fair Labor Standards Act (FLSA), and (ii) there is no unfair labor practice or employment-related complaint against Citizens or any of its Subsidiaries pending or, to the Knowledge of Citizens, threatened before any state or federal court, the National Labor Relations Board, the Equal Employment Opportunity Commission (EEOC) or any other federal, state or local administrative body relating to employment or employment-related policies, practices or conditions.
(o)(l) Labor Matters. Neither PoageCitizens nor Town Squareany of its Subsidiaries is a party to or is bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is PoageCitizens or Town Squareany of its Subsidiaries the subject of a proceeding asserting that it or any such Subsidiary has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel PoageCitizens or Town Squareany such Subsidiary to bargain with any labor organization as to wages or conditions of employment, nor is there any strike or other labor dispute involving Poageit or Town Squareany of its Subsidiaries pending or, to Poage’sCitizens’ Knowledge, threatened, nor does Poage have Knowledgeis Citizens aware of any activity involving its or any of Town Square’sits Subsidiaries’ employees seeking to certify a collective bargaining unit or engaging in other
organizational activity. PoageCitizens and Town Squareits Subsidiaries are in compliance in all material respects with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours.
(p)(m) Takeover Laws. PoageCitizens has taken all action required to be taken by PoageCitizens in order to exempt this Agreement, the Voting AgreementSupport Agreements and the transactions contemplated hereby and thereby from, and this Agreement, the Voting AgreementSupport Agreements and the transactions contemplated hereby and thereby are exempt from, (i) the requirements of any “moratorium,” “control share,” “fair price,” “affiliate transaction,” “business combination” or other antitakeoveranti-takeover laws and regulations of the StateCommonwealth of MarylandKentucky including Sections 271B.12-200 through 271B.12-220 of the KBCA (“Takeover Laws”), and (ii) any enhanced requirements under any similar applicable provisions of the PoageCitizens Articles, the PoageCitizens Bylaws and/or the governing documents of Town Square.any Citizens Subsidiary.
(n) Environmental Matters. To Poage’s Knowledge, neitherNeither the conduct nor the operation of PoageCitizens or Town Squareany of its Subsidiaries nor any condition of any property presently or previously owned, leased or operated by any of them (including, without limitation, in a fiduciary or agency capacity), or on which any of them holds a Lien, violates or violated any Environmental Law,Laws and to Poage’sCitizens’ Knowledge, no condition exists or has existed or event has occurred with respect to any of them or any such property that is reasonably likely to result in liability on the part of Citizens under Environmental Laws. Neither Citizens nor any Environmental Law. Neither Poage nor Town Squareof its Subsidiaries has received any notice from any Person that PoageCitizens or any of Town Squareits Subsidiaries or the operation or condition of any property owned, leased, operated, or held as collateral or in a fiduciary capacity by any of them are or were in violation of or otherwise are alleged to have liability under any Environmental Law, including, but not limited to, responsibility or(or potential responsibilityresponsibility) for the cleanup or other remediation of any Hazardous Materials at, on, beneath, or originating from any such property.
(r)(o) Tax Matters.
(i)(A)All Tax Returns that were or are required to be filed by or with respect to PoageCitizens and Town Squareits Subsidiaries have been duly and timely filed, or an appropriate extension has been granted, and all such Tax Returns are true, correct and complete in all respects;material respects, (B) all Taxes due (whether or not required to be shown to be due on the Tax Returns referred to in clause (i)(A) of this Section 5.03(r)(i)(A)5.01(o)) have been paid in full;full, and (C) no unexpired waivers of statutes of limitation have been given by or requested with respect to any Taxes of PoageCitizens or Town Square. Poageits Subsidiaries. Citizens has made available to City true and correct copies of the United States federal income Tax Returns filed by PoageCitizens and Town Squareits Subsidiaries prior to the date hereof for each of the three most recent fiscal years. Neither PoageCitizens nor Town Squareany of its Subsidiaries has any liability with respect to any Taxes in excess of the amounts accrued with respect thereto that are reflected in Poage’sthe Citizens Financial Statements or that have arisen in the ordinary and usual course of business since MarchDecember 31, 2018.2019. The accruals and reserves for Taxes reflected in Poage’sthe Citizens Financial Statements are adequate for the periods covered. There are no Liens for Taxes upon the assets of PoageCitizens or Town Squareany of its Subsidiaries other than Liens for current Taxes not yet due and payable.
(ii)No Tax is required to be withheld pursuant to Section 1445 of the Code as a result of the transactions contemplated by this Agreement.
(iii)Poage Citizens and Town Squareits Subsidiaries have withheld or collected and paid over to the appropriate Governmental Authorities, or are properly holding for such payment, all Taxes required by law to be withheld or collected.
(iv)No claim has ever been made by any Governmental Authority in a jurisdiction where PoageCitizens or Town Squareany of its Subsidiaries do not file Tax Returns that PoageCitizens or Town Squareany of its Subsidiaries is or
may be subject to taxation by that jurisdiction nor to Poage’s Knowledge, is there any factual basis for any such claim.
(v)Neither PoageCitizens nor Town Squareany of its Subsidiaries has applied for any ruling from any Governmental Authority with respect to Taxes nor entered into a closing
agreement (or similar arrangement) with any Governmental Authority.Authority with respect to Taxes.
(vi)Neither PoageCitizens nor Town Squareany of its Subsidiaries has been audited by any Governmental Authority for taxable years endedending on or subsequent to December 31, 2011.2016. No Tax audit or administrative or judicial Tax proceedings of any Governmental Authority are pending or being conducted with respect to PoageCitizens or Town Squareany of its Subsidiaries and, to the Knowledge of Poage,Citizens, no such audit or other proceeding has been threatened. No Governmental Authority has asserted, is now asserting, or, to the Knowledge of Poage,Citizens, is threatening to assert against PoageCitizens or Town Squareany of its Subsidiaries any deficiency or claim for additional Taxes.
(vii)Except as set forth on Poage’s Disclosure Schedule Section 5.03(r), neither Poage Neither Citizens nor Town Squareany of its Subsidiaries (A) is a party to any Tax allocation or sharing agreement (other than a tax allocation agreement between and among Citizens and its Subsidiaries), (B) has ever been a member of an affiliated group of corporations, (withinwithin the meaning of Section 1504 of the Code)Code, other than an affiliated group of which PoageCitizens is or was the common parent corporation (the “PoageCitizens Group”), or (C) has any liability for the Taxes of any personPerson (other than members of the PoageCitizens Group) as a transferee or successor, by contract, or otherwise.
(viii)Neither PoageCitizens nor Town Squareany of its Subsidiaries has agreed to any extension of time with respect to any Tax Return or a Tax assessment or deficiency, and no such extension of time has been requested.
(ix)Neither PoageCitizens nor Town Squareany of its Subsidiaries has agreed, nor is it required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise that will affect its liability for Taxes.
(x)There are no joint ventures, partnerships, limited liability companies, or other arrangements or contracts to which PoageCitizens or Town Squareits Subsidiaries is a party that could be treated as a partnership for Tax purposes.
(xi)Except as set forth on Poage’sSection 5.01(o) of the Citizens Disclosure Schedule, Section 5.03(r), neither PoageCitizens nor Town Squareany of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted, or could result, individually or in the aggregate, in the payment of “excess parachute payments” within the meaning of Section 280G of the Code.
(xii)None of the assets of Poage or Town Squarethe Citizens Commerce Bank are “tax exempt use property” or “tax exempt bond financed property” within the meaning of Section 168 of the Code and neither Poage nor Town Square arethe Citizens Commerce Bank is not a party to a “long-term contract” within the meaning of Section 460 of the Code.
(xiii) Citizens has not taken any action and is not aware of any fact or circumstance that would reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
(s)(p) Risk Management Instruments. Neither PoageExcept as set forth in Section 5.01(p) of the Citizens Disclosure Schedules, neither Citizens nor Town Squareany of its Subsidiaries is a party to or otherwise bound by any interest rate swaps, caps, floors, option agreements, futures or forward contracts or other similar risk management arrangements.
(t)(q) Books and Records. Except for minutes and actions related to the process leading up to this Agreement and the transactions contemplated hereunder or related to meetings held in the month prior to the date of this Agreement, which have not yet been prepared, approved, executed and/or placed
in Poage’s minute books, theThe books of account, minute books, stock record books, and other records of PoageCitizens and Town Square,its Subsidiaries, all of which have been made available to City, are complete and correct in all material respects and since January 1, 2016, have been maintained in accordance with sound business practices and, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of PoageCitizens and Town Square,its Subsidiaries, including the maintenance of an adequate system of internal controls that is sufficient to provide reasonable assuranceassurances that (i) transactions are executed in accordance with management’s authorization, (ii)that transactions are recorded as necessary, (iii)that access to assets is permitted only in accordance with management’s authorization, and (iv)that the recorded accountability for assets is compared at reasonable intervals and appropriate action is taken with respect to any differences. The minute books of PoageCitizens and Town Squareits Subsidiaries contain accurate and complete records of all meetings held by,of, and corporate action taken by, the shareholders, of Poage, the PoageCitizens Board and the boardgoverning bodies of directors of Town Square,its Subsidiaries, and the committees of the PoageCitizens Board and the boardgoverning bodies of directors of Town Square, and no meeting of any such shareholders, Poage Board and board of directors of Town Square, or committee thereof has been held for which minutes have been prepared and are not contained in such minute books.its Subsidiaries.
(u)(r) Insurance. Poage’sSection 5.01(r) of the Citizens Disclosure Schedule Section 5.03(u) sets forth all of the insurance policies, binders, or bonds maintained by PoageCitizens or Town Square. Poageits Subsidiaries. Citizens and Town Squareits Subsidiaries are insured with reputable insurers against such risks and in such amounts as is prudent in accordance with safe and sound industry practices. (i) All such insurance policies are in full force and effect, (ii) Poageeffect; Citizens and Town Squareits Subsidiaries are not in material default thereunder, and (iii) all claims thereunder have been filed in due and timely fashion.fashion and Citizens and its Subsidiaries will cause to be filed in due and timely fashion any claims that have not yet been filed as of the date of this Agreement or which arise before the Effective Time of the Merger.
(v)(s) Title to Real Property and Assets.
(i)Poage’sSection 5.01(s) of the Citizens Disclosure Schedule Section 5.03(v) lists and describes all real property, and any leasehold interest in real property, owned or held by PoageCitizens or Town Square. Poageits Subsidiaries. Citizens and Town Squareits Subsidiaries have good and marketable title, free and clear of all Liens, to all of the properties and assets, real and personal, reflected on Poage’sthe Citizens Financial Statements as being owned by PoageCitizens as of MarchDecember 31, 20182021, or acquired after such date, except (i)(A) statutory Liens for amounts not yet due and payable, (ii)(B) pledges to secure deposits and other Liens incurred in the ordinary course of banking business, (iii)(C) with respect to real property, such imperfections of title, easements, encumbrances, Liens, charges, defaults or equitable interests, if any, as do not affect the use of properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties, and (iv)(D) dispositions and encumbrances in the ordinary course of business. No portion of any real property owned by Citizens or its Subsidiaries is (Y) operated as a nonconforming use under applicable zoning codes, (Z) located in either a “Special Flood Hazard Area” pursuant to the Federal Insurance Rate Maps created by the Federal Emergency Management Agency or an area which is inundated by a “100 year” flood as provided by any Governmental Authority.
(ii)Each lease agreement set forth in Poage’son Section 5.01(s) of the Citizens Disclosure Schedule Section 5.03(v) is, as to Citizens or any of its Subsidiaries, as the case may be, and, to the Knowledge of Citizens, as to the other parties thereto, valid, legally binding, in full force and effect, and enforceable in accordance with its terms. Other than as Previously Disclosed, thereThere is not under any such lease agreements any default of any material obligations thereunder by PoageCitizens or Town Square,its Subsidiaries, or to Poage’sthe Knowledge of Citizens, to the other party under any such lease agreement which with notice or lapse of time, or both, would constitute a default. Except as set forth in Poage’s Disclosure Schedule Section 5.03(v), theThe consummation of the transactions contemplated hereby will not result inconstitute a breach or default under any such lease agreements.agreements by Citizens. Neither PoageCitizens nor Town Squareany of its Subsidiaries has received written notice that the landlord or tenants under such lease agreements, as applicable, would refuse to renew such lease agreement upon expiration of the period thereof upon substantially the same terms, except for rent increases consistent with past experience or market rentals.
(iii)All leases pursuant to which Poage The real property owned or Town Square, as lessee, leases personal property (except for leases that have expiredleased by their termsCitizens or that Poage or Town Square have agreed to terminate since the date hereof) are valid without default thereunder by the lessee or, to Poage’s Knowledge, the lessor.
(w)Loans; Certain Transactions. As of the date hereof:
(i)All loans owned by Town Square, or in which Town Square has an interest, have been made or acquired in accordance with currently effective policies and procedures approved by the board of directors of Town Square and complyits Subsidiaries complies in all material respects with all laws, including, but not limited to, applicable usury statutes, underwritingprivate agreements, zoning codes, ordinances and recordkeeping requirements and other governmental laws and regulations relating thereto and there are no litigation or condemnation proceedings pending or, to Citizens’ Knowledge, threatened with respect to any such real property. All licenses and permits necessary for the Truthoccupancy and use of the real property owned or leased by Citizens or its Subsidiaries, as used in Lending Act, the Equal Credit Opportunity Act,ordinary course, consistent with past practices of Citizens and its Subsidiaries, have been obtained and are in full force and effect. All buildings, structures and improvements located on, fixtures contained in, and appurtenances attached to the Real Estate Settlement Procedures Act,real property owned or leased by Citizens or its Subsidiaries are in good condition and repair, subject to normal wear and tear, and no condition exists which materially interferes with the economic value or use thereof.
(iv) All leases pursuant to which Citizens or its Subsidiaries, as lessee, leases personal property are, as to Citizens or any of its Subsidiaries, as the case may be, and, to the Knowledge of Citizens, as to the other applicable consumer protection statutesparties thereto valid , and neither Citizens and its Subsidiaries nor, to Citizens’ Knowledge, the regulations promulgated thereunder;other parties thereto, is in default thereunder.
(t) Loans.
(i) The allowance for loan and lease losses as reflected on the Citizens Financial Statements was (A) adequate to meet all reasonably anticipated loan and lease losses, net of recoveries related to loans previously charged off as of those dates, (B) consistent with GAAP and reasonable and sound banking practices and (C) in conformance with recommendations and comments in reports of examination in all material respects.
(ii)All loans owned by Town Square, Each loan, extension of credit, loan agreement, credit agreement, note or in which Town Square has an interest, have been made in good faith; areborrowing arrangement (including financing leases, credit enhancements, commitments, guarantees and interest-bearing assets) (collectively, “Loans”) of Citizens and its Subsidiaries (A) is evidenced by notes, agreements or other evidences of indebtedness whichthat are true, genuine and what they purport to be;be, (B) to the extent carried on
the books and arerecords of Citizens and its Subsidiaries as a secured Loan, has been secured by valid charges, mortgages, pledges, security interests, restrictions, claims, liens or encumbrances, as applicable, which have been perfected and (C) to Citizens’ Knowledge, is the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, exceptsubject to enforceability as may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors’the rights of creditors generally and except as may be limited by the exerciseavailability of judicial discretion in applying principlesequitable remedies. Section 5.01(t) of equity. Town Square holds mortgages contained in its loan portfolio for its own benefit to the extent of its interest shown therein; such mortgages evidence liens having the priority indicated by the terms of such mortgages, including the associated loan documents, and, to the Knowledge of Poage, were subject,Citizens Disclosure Schedule lists each Loan that has as of the date hereof an outstanding balance of recordation$100,000 or filingmore and that (A) is over 90 days or more delinquent in payment of applicable security instruments,principal or interest, (B) is classified by Citizens or its Subsidiaries as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Watch List” or words of similar import, (C) has undergone troubled debt restructuring, or (D) is entirely or predominantly unsecured.
(iii) Each outstanding Loan of Citizens and its Subsidiaries (including Loans held for resale to investors, and any participation Loans, only to such exceptions as are discussed in the title insurance policies in the mortgage files relating to the loans secured by real property or are not material as to the collectabilityextent Citizens has Knowledge of such loans;participation Loans) was solicited and all loans ownedoriginated, and is and has been administered and, where applicable, serviced, and the relevant Loan files are being maintained, by Town Square are with full recourse to the borrowers (except as set forth in Poage’s Disclosure Schedule Section 5.03(w)) subject to limitations imposed by applicable laws, and neither Poage nor Town Square have taken action which would result in a waiver or negation of any rights or remedies available against the borrower or guarantor, if any, on any loan. All applicable remedies available pursuant to the applicable loan documents against all borrowers and guarantors are enforceable except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights and except as may be limited by the exercise of judicial discretion in applying principles of equity. Except as set forth in Poage’s Disclosure Schedule Section 5.03(w), all loans purchased or originated by Town Square and subsequently sold by Town Square have been sold without recourse to Poage and without any liability under any yield maintenance or similar obligation. True, correct and complete copies of loan delinquency reports as of June 30, 2018, prepared by Town Square, which reports include all loans delinquent or otherwise in default, have been furnished to City. True, correct and complete copies of the currently effective lending policies and practices of Town Square also have been furnished to City.
(iii)Except as set forth in Poage’s Disclosure Schedule Section 5.03(w) each outstanding loan participation sold by Town Square was sold with the risk of non-payment of all or any portion of that underlying loan to be shared by each participant (including Poage) proportionately to the share of such loan represented by such participation without any recourse of such other lender or participant to Poage for payment
or repurchase of the amount of such loan represented by the participation or liability under any yield maintenance or similar obligation. Town Square has properly fulfilledCitizens in all material respects in accordance with the relevant notes or other credit or security documents, the written underwriting standards of Citizens and its contractual responsibilitiesSubsidiaries (and, in the case of Loans held for resale to investors, the underwriting standards, if any, of the applicable investors) and dutieswith all applicable federal, state and local laws, regulations and rules.
(iv) None of the agreements pursuant to which Citizens or any of its Subsidiaries has sold Loans or pools of Loans, or participations in Loans or pools of Loans, contains any obligation to repurchase the Loans or interests therein solely on account of a payment default by the obligor on the Loan (other than first payment defaults and other than mortgage Loans sold to government sponsored entities).
(v) There are no outstanding Loans made by Citizens or any of the Citizens Subsidiaries to any “executive officer” or other “insider” (as each term is defined in Regulation O promulgated by the FRB) of Citizens or the Citizens Subsidiaries, other than Loans that are subject to and that were made and continue to be in compliance with Regulation O or that are exempt therefrom, which are listed in Section 5.01(t) of the Citizens Disclosure Schedule.
(vi) Neither Citizens nor any of the Citizens Subsidiaries is (A) now nor has it ever been since January 1, 2018, subject to any fine, suspension, settlement or other contract or other administrative agreement or sanction by, or any reduction in any loan in which it acts aspurchase commitment from, any Governmental Authority or Regulatory Authority relating to the lead lenderorigination, sale or servicerservicing of mortgage or consumer Loans, and has(B) aware of any actual or threatened claim, proceeding or investigation with respect thereto by any Person.
(vii) Without limitation of the foregoing, Citizens and each of its Subsidiaries have complied in all material respects with its dutiesand are not in material default or violation under any applicable provision of, or any applicable regulation, policy and/or
guideline of any Governmental Authority promulgated under or relating to, the CARES Act. Section 5.01(t) of the Citizens Disclosure Schedule lists (A) each Loan of Citizens or any Citizens Subsidiary as requiredof the date of this Agreement that was made in connection with the Paycheck Protection Program established under applicable regulatory requirements.
(iv)Town Squarethe CARES Act, and (B) each Loan of Citizens and the Citizens Subsidiaries that is subject to payment deferral or otherwise has properly perfected or caused to be properly perfectedundergone troubled debt restructuring under the CARES Act as of the date of this Agreement (including all security interests, liens,outstanding amounts and the expiration date for any deferral or other interestsmodification) (each Loan referred to in (C) a “CARES Act Modified Loan”). For purposes of this Agreement, “CARES Act” means, collectively, the Coronavirus Aid, Relief, and Economic Security Act, as amended, any collateral securingextension thereof, and any loans made by it, if applicable.
(v)Poage’s Disclosure Schedule Section 5.03(w) sets forth a list of all loansother economic stimulus or other extensions of credit to all directors, officers and employees, or any other Person covered by 12 C.F.R. § 337.3 and 12 C.F.R. Part 215 and have been made in compliance therewith.
(x)Allowance for Loan Losses. Except as set forth in Poage’s Disclosure Schedule Section 5.03(x), there is no loan which was made by Town Square and which is reflected as an asset of Poage or Town Square on Poage’s Financial Statements that (i) is 90 days or more delinquent, (ii) has been classified by management of Poage or Town Square as “substandard,” “doubtful,” “loss” or “special mention,” or (iii) has been identified by accountants or auditors (regulatory or internal) as having a significant risk of uncollectability. The allowance for loan losses reflected on Poage’s Financial Statements was, as of each respective date, determined in accordance with GAAP and in accordance with alllaws, rules, and regulations applicablerelated to Poage and Town Square and was, as of the respective date thereof, adequate in all material respects under the requirements of GAAP and applicable regulatory requirements and guidelines to provide for reasonably anticipated losses on outstanding loans, net of recoveries as determined by the management of Poage and Town Square. Neither Poage nor Town Square has been notified by the OCC, or Poage’s independent auditor, in writing or otherwise, that such reserves are inadequate or that the practices and policies of Town Square in establishing its reserves for the periods reflected in Poage’s Financial Statements, and in accounting for delinquent and classified assets, generally fail to comply with applicable accounting or regulatory requirements, or that the OCC or Poage’s independent auditor believes such reserves to be inadequate or inconsistent with the historical loss experience of Town Square.Pandemic.
(y)(u) Repurchase Agreements. With respect to all agreements pursuant to which PoageCitizens or Town Squareits Subsidiaries has purchased securities subject to an agreement to resell, if any, PoageCitizens or Town Square,any of its Subsidiaries, as the case may be, has a valid, perfected first Lien onin or evidence of ownership in book entry form of the government securities or other collateral securing the repurchase agreement, and the value of such collateral equals or exceeds the amount of the debt secured thereby.
(z)(v) Investment Securities Portfolio. All investment securities held by PoageCitizens or Town Square,its Subsidiaries, as reflected in Poage’sthe Citizens Financial Statements are carried in accordance with GAAP and in a manner materially consistent with the applicable guidelines issued by the Regulatory Authorities. PoageCitizens or Town Square,any of its Subsidiaries, as applicable, have good, valid and marketable title to all securities held by them, respectively, except securities held in any fiduciary or agency capacity, free and clear of any Lien, except as set forth in Poage’sthe Citizens Financial Statements and except to the extent any such securities are pledged in the ordinary course of business consistent with prudent banking practices to secure obligations of PoageCitizens or Town Square.its Subsidiaries.
(aa)(w) Deposit Insurance. All of the deposits held by Citizens or any Citizens Subsidiary (including the records and documentation pertaining to the held deposits) have been established and are held in compliance in all material respects with (i) all applicable policies, practices and procedures of Citizens or the Citizens Subsidiary, as applicable and (ii) all applicable laws. The deposit accounts of Town SquareCitizens Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by law, all premiums and assessments required to be paid in accordance withconnection therewith have been paid when due, and no proceedings for the FDIA, and Town Square has timely paid alltermination or revocation of the insurance are pending or, to Citizens’ Knowledge, threatened.
assessments and filed all reports required by the FDIA. All interest has been properly accrued on the deposit accounts of Town Square, and Town Square’s records accurately reflect such accrual of interest.(x) Information Security. Except as Previously Disclosed, the deposit accounts of Town Square have been originated and administeredset forth in accordance with the termsSection 5.01(x) of the respective governing documents. Neither Poage nor Town SquareCitizens Disclosure Schedule, to Citizens’ Knowledge, no third party has received written noticegained unauthorized access to any information systems or networks controlled by or material to the operation of the business of Citizens and the Citizens Subsidiaries (including without limitation any information system or networks owned or controlled by any third party (a “Third Party System”)), and, to Citizens’ Knowledge, there are no data security or other technological vulnerabilities with respect to its information technology systems or networks or any Third Party System material to the operation of the business of Citizens and the Citizens Subsidiaries, in each case that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Citizens. Citizens maintains an information privacy and security program that maintains reasonable measures
designed to protect the privacy, confidentiality and security of all data or information collected or stored by Citizens that constitutes personal data or personal information under applicable law against any (i) loss or potential lossmisuse of any material businessthe data, (ii) unauthorized or customers related tounlawful operations performed upon the deposit accountsdata, or (iii) other act or omission that compromises the security or confidentiality of Town Square.
the data.
(bb)(y) Bank Secrecy Act, Anti-Money Laundering and OFAC and Customer Information. PoageCitizens is not aware of, has not been advised in writing of, and has no reason to believe that any facts or circumstances exist, which would cause PoageCitizens or Town Squareany of its Subsidiaries to be deemed (i) to be operating in material violation of the Bank Secrecy Act, the Patriot Act, any order issued with respect to anti-money laundering by the Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering law, or (ii) not to be in satisfactory compliance in any material respect with the applicable privacy and customer information requirements contained in any federal and state privacy laws, including without limitation, in Title V of the Gramm-Leach-Bliley Act. PoageCitizens is not aware of any facts or circumstances that would cause PoageCitizens to believe that any non-public customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause PoageCitizens or Town Squareany of its Subsidiaries to undertake any material remedial action. The PoageCitizens Board or,(or, where appropriate, the boardgoverning bodies of directors of Town Square,its Subsidiaries) has adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with the Patriot Act and such anti-money laundering program meets the requirements of the Patriot Act and the regulations thereunder, and Poage and Town Square haveCitizens (or its Subsidiaries) has complied in all material respects with any requirements to file reports and other necessary documents as required by the Patriot Act and the regulations promulgated thereunder.
(cc)(z) CRA Compliance. Neither PoageCitizens nor Town Squareany of its Subsidiaries has received any notice of non-compliance with the applicable provisions of the Community Reinvestment Act (“CRA”) and the regulations promulgated thereunder, and Town SquareCitizens Commerce Bank has received a CRA rating of satisfactory“satisfactory” or better as a result of its most recent CRA examination. Neither PoageCitizens nor Town Squareany of its Subsidiaries has Knowledge of any fact or circumstance or set of facts or circumstances which could cause PoageCitizens or Town Squareany of its Subsidiaries to receive notice of non-compliance with such provisions or cause the CRA rating of Town Squareany Citizens Subsidiary to fall below satisfactory.“satisfactory.”
(dd)(aa) Related Party Transactions. Neither PoageCitizens nor Town Squareany of its Subsidiaries has entered into any transactions with any Affiliate of PoageCitizens or Town Squareits Subsidiaries or any Affiliate of any director or executive officer of PoageCitizens or Town Square (theits Subsidiaries (collectively, the “Related Parties”). except banking transaction in the ordinary course of Citizens Bank’s business. None of the Related Parties presently (i) owns, directly or indirectly, any interest in (except(excepting not more than 5% stock holdings for investment purposes in securities of publicly held and traded companies), or is an officer, director, employee or consultant of, any Person which is, or is engaged in business as, a competitor, lessor, lessee, customer, distributor, sales agent, or supplier of PoageCitizens or Town Square;any of its Affiliates, (ii) owns, directly or indirectly, in whole or in part, any tangible or intangible property that PoageCitizens or Town Squareany of its Subsidiaries uses or the use of which is necessary for conduct of their respective business;business, (iii) has brought any action against Citizens or owes any amount to, Poage or Town Square;its Subsidiaries, or (iv) on behalf of PoageCitizens or Town Square,any of its Subsidiaries, has made any payment or commitment to pay any commission, fee or other amount to, or purchase or obtain or otherwise contract to purchase or obtain any goods or services from, any other Person of which any executive officer or director of PoageCitizens or Town Squareits
Subsidiaries, is a partner or stockholder (except(excepting stock holdings solely for investment purposes in securities of publicly held and traded companies)companies and excepting banking transactions in the ordinary course of Citizens Bank’s banking business). Section 5.03(dd)5.01(aa) of Poage’sthe Citizens Disclosure Schedule contains a complete list of all contracts between Poage, Town SquareCitizens, its Subsidiaries and any Related Party (the(collectively, the “Related Party Agreements”) entered into on or prior to the date of this Agreement Date or contemplated under this Agreement to be entered into before closingthe Effective Date (other than those contracts entered into after the date of this Agreement Date for which City has given its prior written
consent) consent and contracts entered into in the ordinary course of Citizens Bank’s banking business). Town SquareCitizens Commerce Bank is not party to any transaction with any Related Party on other than arms’-lengtharm’s-length terms.
(ee)(bb) Prohibited Payments. Poage and Town Square have not,None of Citizens, or the Citizens Subsidiaries, or to the Knowledge of Citizens, any director, officer, employee, agent or other Person acting on behalf of Citizens or any of the Citizens Subsidiaries has, directly or indirectly:indirectly, (i) used any funds of Citizens or any of the Citizens Subsidiaries for unlawful contributions, unlawful gifts, unlawful entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or agreeddomestic governmental officials or employees or to makeforeign or domestic political parties or campaigns from funds of Citizens or any contribution, paymentof the Citizens Subsidiaries, (iii) violated the Foreign Corrupt Practices Act of 1977, as amended, or gift to any government official, employee or agent where either the contribution, payment or gift or the purpose thereof was illegal under the laws of any federal, state, local or foreign jurisdiction; (ii)similar law, (iv) established or maintained any unrecordedunlawful fund of monies or asset forother assets of Citizens or any purpose orof the Citizens Subsidiaries, (v) made any false entriesfraudulent entry on the books andor records of PoageCitizens or Town Square for any reason; (iii)of the Citizens Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or agreed to make any contribution, or reimbursed any political gift or contribution made by any other Person,unlawful payment to any candidatePerson, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business for federal, state, localCitizens or foreign public office;any of the Citizens Subsidiaries, to pay for favorable treatment for business secured or (iv) paidto pay for special concessions already obtained for Citizens or delivered any fee, commissionof the Citizens Subsidiaries, or other sum of money or item of property, however characterized,is currently subject to any finder, agent, government official or other party, in the United States or any other country, which in any manner relates tosanctions administered by the assets, business or operationsOffice of Poage or Town Square, which Poage or Town Square knows, or has reason to believe, has been illegal under any federal, state or local lawsForeign Assets Control of the United States or any other country having jurisdiction.Treasury Department.
(ff)(cc) Fairness Opinion of Financial Advisor. The PoageCitizens Board has received the written opinion of Sandler O’Neill & Partners, L.P.,Hovde Group, LLC to the effect that, as of the Agreement Date,date hereof, the Exchange RatioMerger Consideration to be received by the Citizens shareholders in the Parent Merger is fair to the holders of PoageCitizens Common SharesStock from a financial point of view.
(gg)(dd) Absence of Undisclosed Liabilities. Neither PoageCitizens nor Town Squareany of its Subsidiaries has any liability (whether accrued, absolute, contingent or otherwise) that, either individually or when combined with all liabilities as to similar matters, would have a Material Adverse Effect on Poage and Town SquareCitizens on a consolidated basis, except as disclosed in Poage’sthe Citizens Financial Statements.Statements or as set forth in Section 5.01(dd) of the Citizens Disclosure Schedule.
(hh)(ee) Material Adverse Effect. Poage and Town Square haveCitizens has not, on a consolidated basis, suffered a change in its business, financial condition or results of operations since MarchDecember 31, 2018,2021, that has had or could reasonably be expected to have a Material Adverse Effect on Poage or Town Square.Citizens.
(ii)(ff) DisclosureTax Treatment of Merger. As of the date of this Agreement, Citizens is not aware of any fact or state of affairs relating to Citizens that could cause the Merger not to be treated as a “reorganization” under Section 368(a) of the Code
(gg) Citizens Information. The representationsinformation provided in writing by Citizens relating to Citizens and warrantiesits Subsidiaries that is to be contained in this Section 5.03 dothe Registration Statement, the Joint Proxy Statement/Prospectus, any filings or approvals under applicable state securities laws, any filing pursuant to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under the Exchange Act, or in any other document filed with any other Governmental Authorities in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading and will comply in all material respects with the provisions of the Securities Act, the Exchange Act, the rules and regulations thereunder, and any other governing laws or regulations, as applicable. No representation or warranty by Citizens, and no statement by Citizens in any certificate, agreement, schedule or other document furnished or to be furnished in connection with the transactions contemplated by this Agreement, was or will be inaccurate, incomplete or incorrect in any material respect as of the date furnished or contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary in order to make such representation, warranty or statement not misleading to City.
(hh) No Further Representations. Except for the statementsrepresentations and information containedwarranties set forth in this Section 5.035.01, Citizens does not misleading.make, and shall not be deemed to make, any representation or warranty to City, express or implied, with repect to the transactions contemplated by this Agreement, and Citizens hereby disclaims any such representation or warranty not set forth in this Section 5.01.
5.045.02 Representations and Warranties of City. Except (a) as disclosed in the disclosure schedule delivered by City to Citizens concurrently herewith to the extent applicable (the “City SubjectDisclosure Schedule”); provided that (i) the mere inclusion of an item in the City Disclosure Schedule as an exception to Section 5.01 and 5.02 and except as Previously Discloseda representation or warranty shall not be deemed an admission by City that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a SectionMaterial Adverse Effect and (ii) any disclosures made with respect to a section of its Disclosure Schedule correspondingArticle V shall be deemed to the relevant Section below,qualify any other section of Article V specifically referenced or cross-referenced, City hereby represents and warrants to Poage that the following are true and correct:Citizens as follows:
(a)Organization, Standing and Authority.
(i)City is a corporation duly organized, validly existing and in good standing under the laws of the State of West Virginia.Virginia and is a financial holding company duly registered with the FRB under the BHCA. City has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted in all material respects. City is duly qualified to do business and is in good standing in any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. True and complete copies of the City is registeredArticles and City Bylaws, as a financial holding company underin effect as of the BHCA.date of this Agreement, have previously been made available by City to Citizens.
(ii) Except, in the case of clauses (B) and (C) only with respect to Subsidiaries other than City National isBank, as would not reasonably be likely to have, individually or in the aggregate, a national banking associationMaterial Adverse Effect on City, each Subsidiary of City (A) is duly organized and validly existing and in good standing under the laws of the United States. City National has all the requisite power andits jurisdiction of organization, (B) is duly licensed or qualified to do business and, where such concept is recognized under applicable law, in good standing in any foreignall jurisdictions (whether federal,
state, local or foreign) where its ownership, leasing or leasingoperation of property or assets or the conduct of its business requires it to be so qualified.
licensed or qualified or in good standing and (C) has all requisite corporate power and authority to own, lease or operate its properties and assets and to carry on its business as now conducted. There are no restrictions on the ability of any Subsidiary of City to pay dividends or distributions, except, in the case of a Subsidiary that is an insured depository institution, for restrictions on dividends or distributions generally applicable to all such regulated entities. The deposit accounts of City National Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or, to the Knowledge of City, threatened.
(b)Capital Structure of City. As of June 30, 2018,date hereof, the authorized capital stock of City consists of 50,000,000 City Common Shares, par value $2.50 per share, of which 15,452,45614,855,734 shares are outstanding and 500,000 shares of preferred stock, par value $25of $25.00 per share, noneshare. No shares of whichpreferred stock of City are issued and outstanding. The outstanding City Common Shares have been duly authorized, are validly issued and outstanding, fully paid and nonassessable, and were not issued in violation of any preemptive rights. As of June 30, 2018, 3,595,092date hereof, 4,191,814 City Common Shares arewere held in treasury by City.
(c)Subsidiaries. (A) Section 5.04(c) of City’s Disclosure Schedule contains a list of City’s Subsidiaries; (B) City owns all As of the issueddate hereof, no City Common Shares or shares of preferred stock of City were reserved for issuance and outstanding equity securities of its Subsidiaries; (C) no equity securities of its Subsidiaries are or may become required to be issued (other than to City) by reason of any Right or otherwise; (D) there are no contracts, commitments, understandings or arrangements by which any of City’s Subsidiaries is or may be bound to sell or otherwise transfer any equity securities of such Subsidiaries (other than to City); (E) there are no contracts, commitments, understandings, or arrangements relating to City’s rights to vote or to dispose of such securities; and (F) alloutstanding Rights with respect thereto except for the 325,750 City Common Shares reserved under the City Holding Company 2013 Incentive Plan. All of the outstanding shares of capital stock or any other equity securitiessecurity of the Subsidiaries held by Cityeach Subsidiary are beneficially and of record owned by City, free and clearno Subsidiary of City has outstanding or is bound by any Liens.Rights with respect to it shares of capital stock or any other equity security of such Subsidiary.
(d)(c) Ownership of PoageCitizens Common SharesStock. As of the date of this Agreement, Date, City and its Subsidiaries do not beneficially own any of the outstanding PoageCitizens Common Shares.Stock.
(e)(d) Corporate PowerAuthority. Each of
(i) City and its Subsidiaries has full corporate power and authority to carry on its business as it is now being conductedexecute and to own all its propertiesdeliver this Agreement and, assets. Subjectsubject to the approvalshareholder and other actions described below, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Parent Merger and the Subsidiary Merger have been duly and validly approved by applicable Regulatory Authorities,the Board of Directors of City. The Board of Directors City has determined that the corporate powerParent Merger, on the terms and authority to execute, deliver and perform its obligations underconditions set forth in this Agreement, is in the best interests of City and its shareholders and has adopted a resolution to the Votingforegoing effect. Except for the adoption and approval of the Subsidiary Merger Agreement andby City, as City National Bank sole shareholder, no other corporate proceedings on the part of City are necessary to approve this Agreement or to consummate the transactions contemplated hereby and thereby.
(f)Corporate Authority; Authorized and Effective Agreement.hereby. This Agreement has been duly and the transactions contemplated hereby, including the Merger, have been authorizedvalidly executed and delivered by all necessary corporate action of City and the City Board prior to the Agreement Date. The Agreement to Merge, when executed(assuming due authorization, execution and delivery by City National, shall have been approved by the board of directors of City National and by City as the sole shareholder of City National. This Agreement isCitizens) constitutes a valid and legally binding agreementobligation of City, enforceable against City in accordance with its terms except(except in all cases as enforcementenforceability may be limited by receivership, conservatorshipbankruptcy,
insolvency, moratorium, reorganization). The City Common Shares to be issued in the Merger have been validly authorized and, supervisory powerswhen issued in accordance with this Agreement, will be validly issued, fully paid and nonassessable, and no current or past shareholder of bank regulatory agencies generally, as well as bankruptcy, insolvency, reorganization, moratoriumCity will have any preemptive right or similar rights in respect thereof.
(ii) Neither the execution and delivery of this Agreement by City nor the consummation by City of the transactions contemplated hereby, including the Parent Merger and the Subsidiary Merger, nor compliance by City with any of the terms or provisions hereof, will (A) violate any provision of the City Articles or City Regulations or (B) assuming that the consents and approvals referred to in Section 5.02(e) are duly obtained, (1) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to City or any City Subsidiaries or any of their respective properties or assets or (2) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or payments, rebates, or reimbursements required under, or result in the creation of any Lien upon any of the respective properties or assets of City or any City Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other lawsinstrument or obligation to which City or any City Subsidiary is a party, or by which they or any of general applicability their respective properties or assets may be bound except in the case of clause (2) above for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations, or Liens which would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on City.
(e) Consents and Regulatory Approvals.
(i) No consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by City or any of its Subsidiaries in connection with the execution, delivery or performance by City of this Agreement or the consummation of the transactions contemplated hereby, including the Merger, except for (A) the filings of applications, waivers or notices, as applicable, with Regulatory Authorities to approve the transactions contemplated by the Agreement, (B) the filing the Registration Statement, (C) Requisite Citizens Vote, (D) the filing of the articles of merger with the KSS pursuant to the KBCA and WSS pursuant to the WVBC, and filing the Subsidiary Merger Certificate, (E) any approvals and notices required with respect to the City Common Shares to be issued as part of the Merger Consideration under the rules of NASDAQ and (f) the receipt of the approvals set forth in Section 7.01(b).
(ii) As of the date hereof, City is not aware of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b).
(iii) As of the date hereof, there is no dispute or other proceeding pending between City or City National Bank or any of their Subsidiaries and any community groups
relating to City or affecting creditors’ rights,City National Bank, and, to the Knowledge of City, no such dispute or other proceeding has been threatened, in each case, that could reasonably be expected to materially delay the limiting effectreceipt of, rules of law governing specific performance, equitable relief and other equitable remedies or impair the waiver of rights or remedies.ability to obtain, any regulatory approval required to be obtained by City to consummate the transactions contemplated by this Agreement.
(g)(f) SEC Reports.
(i)City has timely filed all reports, registration statements, proxy statements and other materials, together with any amendments required to be made with respect thereto, that it was required to file with the SEC, and all such reports, registration statements, proxy statements, other materials and amendments have complied in all material respects with all legal requirements relating thereto, and City has paid all fees and assessments due and payable in connection therewith.
(ii)An accurate and complete copy of each final registration statement, prospectus, report, schedule and definitive proxy statement filed with or furnished to the SEC by City pursuant to the Securities Act or the Exchange Act prior to the date of this Agreement (the “City’sCity SEC Reports”) is publicly available. No such SEC Report, at the time filed, furnished or communicated (and, in the case of registration statements and proxy statements, on the dates of
effectiveness and the dates of the relevant meetings, respectively), and considering all amendments to any City’s SEC Report filed prior to the date hereof, contained any untrue statement of a material fact or omitted 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 in which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) shall be deemed to modify information as of an earlier date. As of their respective dates, all City’sCity SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto. As of the date of this Agreement, no executive officer of City has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act. As of the date of this Agreement, there are no outstanding comments from, or unresolved issues raised by, the SEC with respect to any of the City SEC Reports
(h)(g) Financial Statements; Material Adverse Effect; Internal ControlsStatements.
(i)The financial statements of City and its Subsidiaries included (or incorporated by reference) in City’sCity SEC filings (including the related notes, where applicable) (i)(A) have been prepared from, and are in accordance with, the books and records of City and its Subsidiaries, (ii)(B) fairly present in all material respects the consolidated results of operations, cash flows, changes in shareholders’ equity and consolidated financial position of City and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to recurring year-end audit adjustments normal in nature and amount), (iii)(C) complied as to form, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, and (iv)(D) have been prepared in accordance with GAAPgenerally accepted accounting principles, consistently applied during the periods involved, except, in each case, as indicated in such statements or in the notes thereto. As of the date hereof, the
(ii) The books and records of City and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions. As of the date hereof, Ernst & Young,Crowe LLP has not resigned (or informed City that it intends to resign) or been dismissed as independent public accountants of City as a result of or in connection with any disagreements with City on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
(ii)(iii) Neither City nor any of its Subsidiaries has incurred any material liability or obligation of any nature whatsoever, except for (A) those liabilities that are reflected or reserved against on the consolidated balance sheet of City included in its Annual Report on Form 10-K for the fiscal year ended December 31, 20172021 (including any notes thereto), (B) liabilities incurred in the ordinary course of business consistent in nature and amount with past practice since December 31, 2017 or2021, (C) liabilities and obligations in connection with this Agreement and the transactions contemplated hereby.
(iii)Since March 31, 2018 (A) Cityhereby, or (D) liabilities and its Subsidiaries have conducted their respective businessesobligations that either, individually or in the ordinary course consistent with past practice, and (B) no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events isaggregate, would reasonably likelybe expected to have a Material Adverse Effect on City.
(h) Regulatory Matters. Neither City nor any of its Subsidiaries nor any of their respective properties is a party to or is subject to a Regulatory Order from any Regulatory Authority. There is no unresolved violation, criticism, or exception by any Regulatory Authority with respect to any written report or statement relating to any examination of City or any of its Subsidiaries.
(iv)City and each of its Subsidiaries maintains a system of “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) reasonably designed and maintained to ensure that all information (both financial and non-financial) required to be disclosed by Citywhich, either individually or 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 communicatedaggregate, would reasonably be expected to City’s management as appropriate to allow timely decisions regarding required disclosure and to make
the certifications of the Chief Executive Officer and Chief Financial Officer of City required under the Exchange Act with respect to such reports. City has disclosed, based on its most recent evaluation prior to the date of this Agreement, to City’s outside auditors and the audit committee of the City Board (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that would be reasonably likely to adversely affect City’s ability to accurately record, process, summarize and report financial information, and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in City’s internal controls over financial reporting. Since December 31, 2016, neither City, its Subsidiaries nor any director, officer, employee, auditor, accountant or representative ofMaterial Adverse Effect on City or its Subsidiaries has received or otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of City or its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that City or its Subsidiaries has engaged in questionable accounting or auditing practices.
(i)Agreements with Regulatory Authorities. Neither City nor City National is subject to any Regulatory Order that restricts the conduct of its business or that in any manner relates to its capital adequacy, its credit policies, its management or its business, nor has City or City National been advised in writing by anyBank to a Regulatory Authority that it is considering issuingOrder. City has received a CRA rating of “satisfactory” or requesting any Regulatory Order.better as a result of its most recent CRA examination.
(j)(i) Litigation. Except as has not had and would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on City, no litigation, claim or other proceeding before any court or governmental agencyGovernmental Authority is pending against City or City National Bank, and, to City’s Knowledge, no such litigation, claim or other proceeding has been threatened, and there is no judgment, decree, injunction, rule or order of any Governmental Authority outstanding against City.City or any of its Subsidiaries.
(k)(j) Compliance with Laws. Each of City and is Subsidiaries:each of its Subsidiaries (i) isare in compliance in all material respects with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto, and (ii) have all licenses, franchises, permits and authorizations which are necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to applicable law, except, for Subsidiaries other than City National Bank, where the failure to hold such license, franchise, permit or authorization or to pay such fees or assessments has not had and would not reasonably be expected, individually or in all material respects; (ii) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities and Regulatory Authorities that are required in orderthe aggregate, to permit them to own or lease their propertieshave a Material Adverse Effect on City and, to conduct their businesses as presently conducted; (iii) all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, tothe City’s Knowledge, no suspension or cancellation of any of them is threatened;such necessary license, franchise, permit or authorization has been threatened in writing, and (iv)(iii) has not received any notification or communication from any Governmental Authority (A) asserting that City or any City Subsidiaryof its Subsidiaries is not in compliance with any of the statutes, regulations, or ordinances which such Governmental Authority enforces, or (B) threatening to
revoke any license, franchise, permit, or governmental authorization nor(nor do any grounds for any of the foregoing exist.exist). City and each of its Subsidiaries have complied in all material respects with, and are not in default or violation in any material respect of, any applicable law relating to City or any of its Subsidiaries.
(l)(k) No Shareholder ApprovalInformation Security. No voteTo City’s Knowledge, no third party has gained unauthorized access to any information systems or consent of anynetworks controlled by or material to the operation of the holdersbusiness of City capital stock is required by law, agreement, or NASDAQ Global Select Market listing requirements for City to enter into this Agreementand its Subsidiaries, and, to consummateCitizens’ Knowledge, there are no data security or other technological vulnerabilities with respect to its information technology systems or networks or any Third Party System material to the Parent Merger
(m)Deposit Insurance. The deposit accountsoperation of the business of City National are insured by the FDIC to the fullest extent permitted by and in accordance with the FDIA, and City National has timely paid all assessments and filed all reports required by the FDIA. All interest has been properly accrued on the deposit accounts of City National, and City National’s records accurately reflect such accrual of interest. Except as Previously Disclosed, the deposit accounts of City National have been originated and administered in accordance with the terms of the respective governing documents. Neither City nor City
National has received written notice of any loss or potential loss of any material business or customers related to the deposit accounts of City National.
(n)Absence of Undisclosed Liabilities. Neither City nor its Subsidiaries, has any liability, whether accrued, absolute, contingent or otherwisein each case that, either individually or when combined with all liabilities asin the aggregate, would reasonably be expected to similar matters, would have a Material Adverse Effect on City. City maintains an information privacy and security program that maintains reasonable measures designed to protect the privacy, confidentiality and security of all data or information collected or stored by City National on a consolidated basis, except as disclosed inthat constitutes personal data or personal information under applicable law against any (i) loss or misuse of the SEC Reports.data, (ii) unauthorized or unlawful operations performed upon the data, or (iii) other unlawful act or omission that compromises the security or confidentiality of the data.
(o)(l) Regulatory Approvals; No Defaults.
(i)No consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by City or any of its Subsidiaries in connection with the execution, delivery or performance by City of this Agreement or to consummate the Merger except for (A) the filing of applications, notices, this Agreement and the Agreement to Merge, as applicable, with the federal and state banking authorities to approve the transactions contemplated by this Agreement; (B) the filing of the certificate of merger with the WVSS pursuant to the WVBCA; and (C) receipt of the approvals set forth in Section 7.01(b). As of the date hereof, City is not aware of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b).
(ii)As of the date hereof, City is not aware of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b).
(iii)Subject to the approvals set forth in Section 7.01(b) and the expiration of related regulatory waiting periods, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (A) result in a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of City or of any of its Subsidiaries or to which City or any of its Subsidiaries or properties is subject or bound; (B) constitute a breach or violation of, or a default under, the City Articles or City Bylaws; or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.
(p)Brokerage and Finder’s Fees. Except for Keefe, BruyettePiper Sandler & Woods, Inc.Co., neither City nor its Subsidiaries has not engaged or employed any broker, finder, or agent, or agreed to pay or incurred any brokerage fee, finder’s fee, commission or other similar form of compensation (including any break-up or termination fee) in connection with this Agreement or the transactions contemplated hereby.
(q)(m) City Common Shares MattersMaterial Adverse Effect. There areCity and its Subsidiaries have not, on a sufficient numberconsolidated basis, suffered a change in its business, financial condition or results of authorized but unissuedoperations since December 31, 2021, that has had or could reasonably be expected to have a Material Adverse Effect on City.
(n) Tax Treatment of Merger. As of the date of this Agreement, City Common Sharesis not aware of any fact or state of affairs relating to satisfy City’s obligation to issue City Common Shares under this Agreement. The City Common Sharesthat could cause the Merger not to be issued intreated as a “reorganization” under Section 368(a) of the Merger have been duly authorized and, when issued in the Merger, will be (i) validly issued, fully paid and non-assessable, (ii) registered under the Securities Act pursuant to the Registration Statement, and (iii) listed for trading on the NASDAQ Global Select Market.Code.
(r)(o) City Information. The information provided in writing by City relating to City and its Subsidiaries that is to be contained or incorporated by reference in the Registration Statement, the Proxy Statement/Prospectus, any filings or approvals under applicable state securities laws, any filing pursuant to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under the Exchange Act, or in any other document filed with any other Governmental Authorities in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading and will comply in all material respects with the provisions of the Securities Act, the Exchange Act, the rules and regulations thereunder, and any other governing laws or regulations, as applicable.
(s)Books and Records. The books of account, minute books, stock record books, and other financial and corporate records of No representation or warranty by City, and its Subsidiaries are complete and correctno statement by City in all material respects and have been maintainedany certificate, agreement, schedule or other document furnished or to be furnished in accordanceconnection with sound business practices and, in reasonable detail, accurately and fairly reflect the transactions and dispositionscontemplated by this Agreement, was or will be inaccurate, incomplete or incorrect in any material respect as of the assets of City and its Subsidiaries.
(t)Material Adverse Effect. City and its Subsidiaries have not, on a consolidated basis, suffered a change in its business, financial conditiondate furnished or results of operations since March 31, 2018, that has hadcontains or could reasonably be expected to have a Material Adverse Effect on City.
(u)Disclosure. The representations and warranties contained in this Section 5.04 do notwill contain any untrue statement of a material fact or omits or will omit to state any material fact necessary in order to make such representation, warranty or statement not misleading to Citizens.
(p) No Further Representations. Except for the statementsrepresentations and information containedwarranties set forth in this Section 5.045.02, City does not misleading.make, and shall not be deemed to make, any representation or warranty to Citizens, express or implied, with respect to the transactions contemplated by this Agreement, and City hereby disclaims any such representation or warranty not set forth in this Section 5.02.
ARTICLE VI
Covenants
6.01Commercially Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each of Poage, Town Square, City,Citizens and City National shall use its commercially reasonable best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws, so as to permit the consummation of the Merger as promptly as practicable and otherwise to enable consummation of the transactions contemplated hereby. Each partyhereby and shall cooperate fully with the other party hereto to that end.
6.02Shareholder ApprovalsApprovals..Poage
(a) Citizens shall take all action necessary in accordance with applicable law and its organizational documents all actions necessary to convene an appropriate meeting of its shareholders as soonpromptly as practicable after the Registration Statement has beenis declared effective, to duly call, give notice of, convene and hold a meeting of its shareholders (the Citizens Meeting) and, except as otherwise provided herein, use its commercially reasonable best efforts to take such other actions necessary to obtain the relevant shareholder approvals, in each case as promptly as practicable for the purpose of obtaining the Requisite Citizens Vote. Citizens shall keep City informed on a current basis regarding its solicitation efforts and voting results following the dissemination of the Proxy Statement/Prospectus to the shareholders of Citizens. Each member of the Citizens Board shall have executed and delivered to City a Support Agreement concurrently with the execution of this Agreement.
(b) Except in the case of an Acceptance of Superior Proposal permitted by Section 6.06, Citizens shall, solicit, and use its reasonable best efforts to obtain, the Requisite Citizens Vote at the Citizens Meeting. Subject to Section 6.06(d), Citizens shall (i) through the Citizens Board, recommend to its shareholders adoption of this Agreement at the Citizens Meeting (the “Citizens Recommendation”), and (ii) include such recommendation in the Proxy Statement/Prospectus. Citizens hereby acknowledges its obligation to submit this Agreement to its shareholders at the Citizens Meeting as provided in this Section 6.02. If requested by City, Citizens will engage a proxy solicitor, reasonably acceptable to City and at City’s expense, to assist in the solicitation of proxies from shareholders relating to the Requisite Citizens Vote.
6.03 Registration Statement; Proxy Statement/Prospectus.
(a) Upon the execution and delivery of this Agreement, City and Citizens shall promptly cause the Registration Statement to be prepared and City shall cause the Registration Statement to be filed with the SEC. City and Citizens shall use their commercially reasonable best efforts to have the Registration Statement declared effective by the SEC as soon as practicable
after the filing thereof. The parties shall cooperate in responding to and underconsidering any questions or comments from the SEC staff regarding the information contained in the Registration Statement. If at any time after the Registration Statement is filed with the SEC, and prior to the Effective Time, any event relating to Citizens or City is discovered by Citizens or City, as applicable, which should be set forth in an amendment of, or a supplement to, the Registration Statement, the discovering party shall promptly inform the other party with all applicable state securities laws,relevant information relating to consider and vote uponsuch event, whereupon City shall promptly cause an appropriate amendment to the adoption of this Agreement and any other matters requiredRegistration Statement to be approved or adopted byfiled with the Poage shareholders for consummationSEC. Upon the effectiveness of such amendment, each of Citizens and City (if prior to the meeting of the Parent Merger (including any adjournmentCitizens shareholders pursuant to Section 6.02 hereof) will take all necessary action as promptly as practicable to permit an appropriate amendment or postponement, as applicable, the “Poage Meeting”). The Poage Board shall informsupplement to be transmitted to the shareholders of Poage in the Proxy Statement/Prospectus that all Poage directors executed the Voting Agreement, substantially in the form attached to this Agreement as Exhibit A, evidencing their intententitled to vote all Poage Shares which they own of record in favor of approving this Agreement and any other necessary documents or actions. All Poage directors will recommend approval of this Agreement to the other shareholders of Poage, subject only toat such director’s fiduciary obligations, and willmeeting. City shall also use theirreasonable best efforts to obtain all necessary state securities law or “blue sky” permits and approvals required to carry out the necessary approvalstransactions contemplated by the Poage shareholders of this Agreement, and Citizens shall furnish all available information concerning Citizens and the transactions contemplated hereby.
6.03Registration Statement; Proxy Statement/Prospectus.
(a)holders of Citizens Common Stock as may be reasonably requested in connection with any such action. Citizens shall each provide City will preparewith all available information concerning its directors, officers and file promptly after the Agreement Date,shareholders and such other matters as may be reasonably necessary or advisable in connection with the Registration Statement with the SECStatement.
(b) City and Citizens each agrees to register a sufficient number of shares of City Shares which the shareholders of Poage will receive pursuant to Section 3.01 at the Effective Time. City will use its best efforts to cause such Registration Statement to become effective. City and Poage agree that none of the information supplied or to be supplied by each of them for inclusion or incorporation by reference in (i) the Registration Statement, including the proxy statement and prospectus (the “Proxy Statement/Prospectus”) constituting a part thereof, will, at the time the Registration Statement becomes effective under the Securities Act, or (ii) the Proxy Statement/Prospectus and any amendment or supplement thereto will, at the date of mailing to the Poage shareholders and at the times of the Poage Meeting, respectively, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b)City and Poage each agree to use commercially reasonable best efforts and to cooperate with the other party in all reasonable respects to prepare the Proxy Statement/Prospectus for filing with the SEC and, when the Registration Statement is effective, for delivery to the PoageCitizens shareholders.
(c)If either party becomes aware prior to the Effective Time of any information that would cause any of the statements in the Proxy Statement/Prospectus to be false or misleading with respect to any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, that party shall promptly inform the other thereof and take the necessary steps to correct the Proxy Statement/Prospectus.
6.04Press ReleasesPublic Announcements. UponNeither Citizens nor City shall, and neither Citizens nor City shall permit any of their respective Subsidiaries to, issue or cause the Agreement Date, City and Poage shall issue a jointpublication of any press release regardingor other public announcement with respect to, or otherwise make any public statement, or, except as otherwise specifically provided in this Agreement, andany disclosure of nonpublic information to a third party, concerning, the transactions contemplated hereby, which joint press release shall be subject to the prior approval of City and Poage. Neither City nor Poage will,by this Agreement without the prior approvalconsent (which shall not be unreasonably withheld, conditioned or delayed) of City, in the case of a proposed announcement, statement or disclosure by Citizens, or Citizens, in the case of a proposed announcement, statement or disclosure by City; provided that either party may, without the prior consent of the other party (but after prior consultation with the other party to the extent practicable under the circumstances) issue or cause the publication of any other press release or written statement for general circulation relatingother public announcement to the transactions contemplated hereby, except as otherwise may beextent required to be made by applicable law or regulation before such consent can be obtained.by the rules of the SEC.
6.05Access; Information.
(a)Poage shall afford, upon Upon reasonable notice and subject to applicable laws relating to the exchange of information, Citizens shall, and shall cause each of its Subsidiaries to, afford Representatives of City, and its Representatives, suchreasonable access, during normal business hours throughoutduring the period prior
to the Effective Time, to all its properties, books, contracts, commitments and records, and, during such period, Citizens shall, and shall cause its Subsidiaries to, make available to City (i) a copy of each report, schedule, registration statement and other documents filed or received by it during such period pursuant to the books, records (including, without limitation, Tax Returnsrequirements of federal securities laws or federal or state banking or insurance laws, and work papers of independent auditors), properties, personnel and such(ii) all other information concerning its business, properties and personnel as City may reasonably request, and, during such period, Poage (i) shall promptly furnish to City a copyincluding periodic updates of each material report, schedule and other document filed by it or Town Square pursuant to federal or state securities or banking laws, to the extent permitted by applicable law and regulations; and (ii) shall grant access to all other information concerning the business, properties and personnel of Poage and Town Square as City may reasonably request. Poageprovided in Section 5.01(gg). Citizens shall invite two Representativesone Representative of City as selected by City from time to time to attend, solely as observers, all meetings of the PoageCitizens Board (and committees thereof) and the Town SquareCitizens Commerce Bank board of directors (and all committees of such boards) after the satisfactiondate of the condition set forth in Section 7.01(b);this Agreement; provided, however, that in no event shall such City RepresentativesRepresentative be invited to or permitted to attend any executive session of Poage’s or Town Square’s boardsCitizens Board, Citizens Commerce Bank’s board or any meeting or portion of a meeting, at which PoageCitizens reasonably determines that such attendance is inconsistent with the
fiduciary obligations regulatory guidance of the applicable Governmental Authorities or confidentiality requirements of the PoageCitizens Board, or Town SquareCitizens Commerce Bank’s board, as applicable. Upon the reasonable request of Citizens, City shall furnish such reasonable information about it and its business as is relevant to Citizens and its shareholders in connection with the transactions contemplated by this Agreement. Neither Citizens nor City, nor any of their Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would jeopardize the attorney-client privilege of such party or its Subsidiaries or contravene any law, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement. The parties shall make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply.
(b)Neither PoageCitizens nor City will, nor shall either parties’party’s Representatives, use any information obtained pursuant to this Section 6.05 as (as well as any other information obtained prior to the Agreement Datedate hereof in connection with the entering into of this Agreement,Agreement) for any purpose unrelated to the consummation of the transactions contemplated by this Agreement. AllAgreement, and such information will be subject to the confidentiality provisions of Section 6.16.6.16.
(c)In the event that this Agreement is terminated or the transactions contemplated by this Agreement shall otherwise fail to be consummated, each party shall promptly cause all copies of documents or extracts thereof containing information and data as to another party hereto to be returned to the party which furnished the same. No investigation by either party of the business and affairs of the other shall affect or be deemed to modify or waive any representation, warranty, covenant or agreement in this Agreement, or the conditions to either party’s obligation to consummate the transactions contemplated by this Agreement.
(d)During the period from the date of this Agreement Date to the Effective Time, Poage shall deliveras soon as reasonably practicable after they become available, but in no event more than 30 days after the end of each calendar month ending after the date hereof, Citizens will furnish to City the report(i) consolidated financial statements (including balance sheets, statements of conditionoperations and incomestockholders’ equity) of Town Square andCitizens or any of its Subsidiaries (to the extent available) as of and for each quarterlysuch month then ended, (ii) internal management reports showing actual financial performance against plan and previous period, completed priorand (iii) to the Effective Date, promptly asextent permitted by applicable law, any reports provided to the same shall become available.Citizens Board or any committee thereof relating to the financial performance and risk management of Citizens or any of its Subsidiaries.
6.06Acquisition ProposalsProposal. Poage
(a) From the date of this Agreement through the first to occur of the Effective Time or the termination of this Agreement, except as otherwise provided in Section 6.06(b), Citizens shall not, and shall cause Town Squareany of its Subsidiaries and the officers, directors, employees, advisors and other agents of Citizens and its respective Representatives,Subsidiaries not to, directly or indirectly continue or otherwise maintain,(i) solicit, initiate, solicit or encourage, facilitate (including by way of furnishingproviding information) or induce any inquiry, proposal or offer with respect to, or the making or completion of, any Acquisition Proposal, or any inquiry, proposal or offer that is reasonably likely to lead to any Acquisition Proposal, (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any Person or Group any confidential or nonpublic information with respect to or assistance), orin connection with, an Acquisition Proposal, (iii) take any other action to facilitate any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to an Acquisition Proposal, (iv) approve, endorse or recommend, or propose to approve, endorse or recommend any Acquisition Proposal or any agreement related thereto, (v) enter into any agreement contemplating or otherwise relating to any Acquisition Transaction or Acquisition Proposal, (vi) enter into any agreement or agreement in principle requiring, directly or indirectly, Citizens to abandon, terminate or fail to consummate the transactions contemplated hereby or breach its obligations hereunder, or (vii) propose or agree to do any of the foregoing.
(b) Notwithstanding anything to the contrary in Section 6.06(a), if Citizens or any of its Representatives receives an unsolicited bona fide Acquisition Proposal that did not result from or arise in connection with a breach of Section 6.06(a), Citizens and its Representatives may take any action described in Section 6.06(a)(ii), if, and only if, the Citizens Board determines in good faith, after consultation with Citizens’ outside legal and financial advisors, that (i) such Acquisition Proposal constitutes or is reasonably capable of becoming a Superior Proposal, (ii) the failure of the Citizens Board to take such action would cause the Citizens Board to violate its fiduciary duties to the shareholders of Citizens under applicable Law; provided, that Citizens receives from such Person or Group an executed confidentiality agreement containing terms no less favorable to the disclosing party than the confidentiality terms of this Agreement.
(c) As promptly as practicable (but in no event more than 48 hours) following receipt of any Acquisition Proposal or any request for nonpublic information or inquiry that would reasonably be expected to lead to any CompetingAcquisition Proposal, Citizens shall (i) advise City in writing of the receipt of any Acquisition Proposal, request or enter intoinquiry and the terms and conditions of such Acquisition Proposal, request or maintain discussions or negotiate with any Person in furtherance of or relating to such inquiries or to obtain a Competing Proposal, or agree to or endorse any Competing Proposal, or authorize or permit any Representative of Poage or Town Square to take any such action, and Poage shall use its reasonable best efforts to cause the Representatives of Poage not to take any such action, and Poageinquiry, (ii) shall promptly notifyprovide to City if anya written summary of the material terms of such inquiriesAcquisition Proposal, request or proposals are made regarding a Competinginquiry including the identity of the Person or Group making the Acquisition Proposal, and Poage(iii) shall keep City informed,promptly apprised of the status of any related developments, discussions and negotiations (including providing City with a copy of all material documentation and correspondence relating thereto) on a current basis,basis. Citizens agrees that it shall simultaneously provide to City any information concerning Citizens that may be provided (pursuant to Section 6.06(b)) to any other Person or Group in connection with any Acquisition Proposal which has not previously been provided to City.
(d) Notwithstanding anything herein to the contrary, at any time prior to the Citizens Meeting, Citizens may accept or approve a Superior Proposal thereby withdrawing its recommendation of the statusAgreement (“Acceptance of Superior Proposal”), if and terms of anyonly if (x) from
and after the date hereof, Citizens has complied with Sections 6.02 and 6.06, and (y) the Citizens Board has determined in good faith, after consultation with outside legal counsel, that the failure to take such proposals;action would cause it to violate its fiduciary duties under applicable law; provided, however, that prior to Poage Shareholder Adoption, nothing contained in this Sectionthe Citizens Board may not effect a Acceptance of Superior Proposal unless:
(i) Citizens shall prohibit Poage from, in connection with a Superior Competing Transaction, furnishing information to, or entering into discussions or negotiations with, any Person that makeshave received an unsolicited bona fide proposalwritten Acquisition Proposal and the Citizens Board shall have concluded in good faith (after consultation with Citizens’ financial advisors and outside legal counsel) that such Acquisition Proposal is a Superior Proposal, after taking into account any amendment or modification to acquire Poage and/this Agreement agreed to or Town Square pursuantproposed by City;
(ii) Citizens shall have provided prior written notice to City at least five business days in advance (the “Notice Period”) of taking such action, which notice shall advise City that the Citizens Board has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal (including the identity of the Person or Group making the Superior Proposal);
(iii) during the Notice Period, Citizens shall, and shall cause its financial advisors and outside counsel to, negotiate with City in good faith (to the extent City desires to so negotiate) to make such adjustments to the terms and conditions of this Agreement so that such Superior Proposal ceases to constitute a Superior Proposal; and
(iv) the Citizens Board shall have concluded in good faith (after consultation with Citizens’ financial advisors and outside legal counsel) that, after considering the results of such negotiations and giving effect to any proposals, amendments or modifications offered or agreed to by City, if any, that such Acquisition Proposal continues to constitute a Superior Proposal.
If during the Notice Period any revisions are made to the Superior Proposal, Citizens shall deliver a new written notice to City giving rise to a new five business day Notice Period and shall again comply with the requirements of this Section 6.06(d) with respect to such new written notice.
(e) As used in this Agreement:
(i) “Superior Proposal” means any bona fide written Acquisition Proposal on terms which the Citizens Board determines in good faith, after consultation with Citizens’ outside legal counsel and independent financial advisors, and taking into account all the legal, financial, regulatory and other aspects of such Acquisition Proposal, including as to certainty and timing of consummation, would, if consummated, result in a transaction that is more favorable to the holders of Citizens Common Stock from a financial point of view than the terms of this Agreement (in each case, taking into account any revisions to this Agreement made or proposed by City); provided that for purposes of the definition of “Superior Proposal,” the references to “20% or more” in the definition of Acquisition Proposal or Acquisition Transaction shall be deemed to be references to “50% or more.”
(ii) “Acquisition Proposal” means any proposal, offer, inquiry, or indication of interest (whether binding or non-binding, and whether communicated to Citizens or
publicly announced to Citizens’ shareholders) by any Person or Group (in each case other than City or any of its Affiliates) relating to an Acquisition Transaction involving Citizens or any of its present or future consolidated Subsidiaries, or any combination of such Subsidiaries, the purchase assets of which constitute 20% or more of the consolidated assets of Citizens as reflected on Citizens’ consolidated statement of condition prepared in accordance with GAAP.
(iii) “Acquisition Transaction” means any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving (A) any acquisition (whether direct or indirect, including by way of merger, share exchange, consolidation, business combination or other similar transaction, but excluding an acquisition by inheritance upon the death of a shareholder) or purchase from Citizens by any Person or Group, other than City or any of its Affiliates, of 20% or more in interest of the total outstanding voting securities of Citizens or any of its Subsidiaries (measured by voting power), or any tender offer or exchange offer that if consummated would result in any Person or Group, other than City or any of its Affiliates, beneficially owning 20% or more in interest of the total outstanding voting securities of Citizens or any of its Subsidiaries (measured by voting power), or any merger, consolidation, share exchange, business combination or other similar transaction involving Citizens pursuant to which the shareholders of Citizens immediately preceding such transaction would hold less than 50% of the equity interests in the surviving or resulting entity of such transaction (or, if applicable, the ultimate parent thereof) (measured by voting power), (B) any sale or lease or exchange, transfer, license, acquisition or disposition of a business, deposits or assets that constitute 20% or more of the consolidated assets, business, revenues, net income, assets or deposits of Citizens, or (C) any liquidation or dissolution of Citizens or any of its Subsidiaries.
(f) Nothing contained in this Section 6.06 shall prohibit Citizens or any of the Citizens Subsidiaries from taking and onlydisclosing to its shareholders a position required by Rule 14e-2(a) promulgated under the extentExchange Act; provided, however, that (A) the Poage Board, after consultation with independent legal counsel, determines in good faith that such action is reasonably required for the Poage Board to comply with its fiduciary duties to shareholders imposed by MGCL, (B) prior to furnishing such information to, or entering into discussions or negotiationscompliance with such Person, Poage provides written notice to City torules shall not in any way limit or modify the effect that it is furnishing information to, or entering into discussions or negotiations with, such Person, (C) prior to furnishing such informationany action taken pursuant to such Person, Poage receives from such Person an executed confidentiality agreement with terms no less favorable to Poage than those governing confidentiality between City and Poage, and (D) Poage keeps City informed, on a current basis,rules has under any other provision of the status and details of any such discussions or negotiations.this Agreement.
6.07Takeover Laws. No party hereto shall take any action that would cause the transactions contemplated by this Agreement or the Voting AgreementSupport Agreements to be subject to requirements imposed by the Takeover Laws,Law and each of them shall take all necessary steps within its control to exempt (or ensure the continued exemption of) this Agreement, the Voting AgreementSupport Agreements and the transactions contemplated by this
Agreement from or, if necessary, challenge the validity or applicability of, the Takeover Laws,Law, as now or hereafter in effect.
6.08Certain Policies. After satisfaction ofBefore the condition set for in Section 7.01(b), PoageEffective Time, Citizens shall, upon the reasonable request of City, (i) modify and change its loan, investment portfolio, asset liability management and real estate valuation policies and practices (including, but not limited to, loan classifications and levels of reserves) so that such policies and practices may be applied on a basis that is consistent with those of City, and (ii) evaluate the need for any reserves including, but not limited to, reserves relating to any outstanding litigation, any Tax audits or any liabilities to be incurred upon cancellation of any contracts as a result of the Merger; provided, however, that PoageCitizens shall
not be obligated to take any such action pursuant to this Section 6.08 unless and until City acknowledges that all conditions to its obligation to consummate the Merger have been satisfied (including, but not limited to, the receipt of the regulatory approvals required by Section 7.01(b) and the effectiveness of the Registration Statement) and certifies to Citizens that City’s representations and warranties, subject to Section 5.02, are true and correct as of such date and that City is otherwise in material compliance with this Agreement; providedfurther, however, that Citizens shall not be obligated to take any such action pursuant to this Section 6.08if such action would be clearly inconsistent with GAAP. Poage’sGAAP or applicable law. Citizens’ representations, warranties and covenants contained in this Agreement shall not be deemed to be untrue or breached in any respect for any purpose, and the condition set forth in Section 7.03(i) shall not be considered to be unsatisfied, as a consequence of any modifications or changes undertaken solely on account of this Section 6.08.6.08
6.09Regulatory Applications.
(a)City and PoageCitizens and their respective Subsidiaries shall cooperate and use their respective commercially reasonable best efforts to allow within 30 days of this Agreement, City to prepare, submit and file all applications and/orand requests for regulatory approval, to timely effect all filings and to obtain all consents, approvals andand/or authorizations of all the Regulatory Authorities necessary to consummate the transactions contemplated by this Agreement. In exercising the rights under this Section 6.09, each of the parties hereto agrees to act reasonably and as promptly as practicable. City agrees that it will consult with PoageCitizens with respect to the obtaining of all material consents, approvals and authorizations from the Regulatory Authorities necessary to consummate the transactions contemplated by this Agreement and to keep PoageCitizens apprised of the status of and any material matters relating to obtainment of such consents, approvals and/or authorizations from the Regulatory Authorities. PoageCitizens shall have the right to review in advance, subject to applicable laws relating to the exchange of Information,information, all material written information submitted to the Regulatory Authorities in connection with the transactions contemplated by this Agreement. Notwithstanding the foregoingforgoing sentence, neither Poage nor Town SquareCitizens shall not have any right to review and/or inspect any competitively sensitive business or other proprietary information submitted by City to any Regulatory Authority, with a request for confidential treatment, including, but not limited to any business plan and/or financial data or analysis prepared by City in relation to such consents, approvals and/or authorizations from the Regulatory Authorities.
(b)Poage Citizens agrees, upon request, to furnish City with all available information concerning itself, Town Square,Citizens Commerce Bank and each of their respective directors, officers and shareholders employees and such other matters as may be reasonably necessary, advisable and/or required in connection with any filing, notice or application made by or on behalf of City or any of its Subsidiaries to any Regulatory Authority.
6.10Employment Matters; Employee Benefits.Benefits.
(a)General. It is understood and agreed that nothing in this Section 6.10 or elsewhere in this Agreement shall be deemed to be a contract of employment or be construed to give Citizens or any Poage or Town Squareof its Subsidiaries’ employees any rights other than as employees at will under applicable law, and PoageCitizens’ and Town Squareits Subsidiaries’ employees shall not be deemed to be third-party beneficiaries of this Agreement. Employees of PoageCitizens or Town Squareany of its Subsidiaries who become employees of City as
a result of the Merger (the “Continuing Employees”) shall participate in either Poage’s Compensation and Benefit Plans (for so long
as City determines necessary or appropriate) or in the employee benefit plans sponsored by City for City’s employees. Continuing Employees will receiveemployees (with credit for their years of service with PoageCitizens or Town Squareits Subsidiaries for participation and vesting purposes under City’s applicable employee benefit plans, to the extent such plans permit,permit), including credit for years of service and for seniority under vacation and sick pay plans and programs, but subject to the eligibility and other terms of such plans. Continuing Employees will retain credit for unused sick leave (to a maximum of 30 days) and vacation pay for unused vacation days for the 2018 calendar year only without carryover of vacation days for prior years, to the extent such unused sick and vacation time has been accrued as of the Effective Time. In addition, City agrees to the extent Poage or Town Square employees participate inwaive all restrictions and limitations for pre-existing conditions under City’s group health plan instead of continued participation in Poage’s group health plan, City agrees to use commercially reasonable efforts to: (i) cause any pre-existing condition limitations or eligibility waiting periods under such City or City National plan to be waived with respect to such Continuing Employee and his or her covered dependents to the extent such condition was waived under the Poage Compensation and Benefit Plan in which such Continuing Employee participated immediately prior to the Effective Time; (ii) recognize any health, dental, vision or other welfare expenses incurred by such Continuing Employee and his or her covered dependents in the calendar year that includes the Effective Time for purposes of any applicable deductibles, copayments, and annual out-of-pocket expense requirements under any such health, dental, vision or other welfare plan; and (iii) ensure a Continuing Employee will not experience a gap in coverage. Terminated Town Square employees and qualified beneficiaries will have the right to continued coverage under group health plans of City National in accordance with COBRA.insurance policy.
(b)Employee Severance. Subject to any applicable regulatory restrictions:
(i)restrictions, City shall pay to each employee of PoageCitizens or Town Squareits Subsidiaries who (A)(i) is not subject to an existing contract providing for retention, severance and/or a change in control payment, (B)(ii) is an employee of PoageCitizens or Town Squareany of its Subsidiaries immediately before the Effective Time, and (C)(iii) is not offered continued employment by City or any of its Subsidiaries after the Effective Time in Versailles, Frankfort or Lexington, Kentucky or remotely, with pay and responsibilities comparable those the employee had prior to the Effective Time, or is terminated without cause within six12 months immediately following the Effective Time, and (iv) who sign and deliver City’s standard form of termination and release agreement, a severance amount equal to one weeks’week of pay, at their base rate of pay in effect at the time of termination, multiplied by the number of whole years of service of such employee with PoageCitizens or Town Square,any of its Subsidiaries, less applicable local, state and federal tax withholding; provided, however, that the minimum severance payment shall equal ten weeks of base pay, and the maximum severance payment shall not exceed 26 weeks of base pay. Such severance pay shall be paid in a lump sum within thirty14 days following the employee’s termination, of such employee, provided that such employee has not been terminated for cause. AnyFor any employee of PoageCitizens or Town Squareits Subsidiaries participating in Poage, City, City National or Town Square’sCitizens’ group health program at the Effective Time or afterwho is entitled to a severance payment, the Effective Time, as applicableemployee will be able to purchase health insurance coverage at the full premium rate for the entire COBRA period.
(ii)In exchangeperiod; City will pay the cost of COBRA coverage for such employees for a period equal to the severance pay described in Subsection (i), terminated employees will be required to execute a final and binding general release, in form and substance satisfactory to City containing customary terms, in whichnumber of weeks such employee releases and waives any and all claims the employee may have against City and its Affiliates.is entitled to severance.
(c)Poage 401(k) Plan Prior to the Effective Date, but after the receipt of the last to be obtained of either the Requisite Citizens Vote and the regulatory approvals required by . Town SquareSection 7.01(b) of this Agreement, the Citizens Board shall adopt resolutions and amendments toa resolution approving the Town Square Banktermination of its and/or the applicable Subsidiaries’ 401(k) PlanPlan(s) (the “PoageCitizens 401(k) Plan”) providing foreffective as of a date immediately preceding the Effective Date. In addition, the Citizens Board shall approve the adoption of any amendments to the Citizens 401(k) Plan sufficient to terminate the Citizens 401(k) Plan immediately preceding the Effective Date. Following the Effective Date, City, as the successor in interest to Citizens, shall begin the process of requesting from the IRS a determination that the termination of the PoageCitizens 401(k) Plan onis in compliance with Section 401(a) of the day beforeCode (the “Determination Letter”) and distributing benefits under the Effective Date, and file an application with the IRS on a date that is no later than the Effective Date that requests a favorable determination letter on the Poage 401(k) Plan relating to its termination; provided, however, Town Square shall provide City with a reasonable opportunity to review and comment on such resolutions, amendments and application prior to their adoption or filing. All Continuing Employees shall be eligible to participate in the City 401(k) plan as
soon as practicable after the Effective Date. City agrees to take all commercially reasonable steps necessary or appropriate to accept roll-overs of account balances, including plan loans, from the PoageCitizens 401(k) Plan to the City 401(k) plan for Continuing Employees, subject to the provisions of the City 401(k) plan, as it may be amended to reflect this section.
(d)Poage ESOP Plan. Town Square shall adopt resolutions and amendments to the Home Federal Savings and Loan Association Employee Stock Ownership Plan (the “Poage ESOP”), the Poage ESOP trust and/or the Poage ESOP Loan documents (and take any other required action) effective no later than immediately prior to, and contingent upon the closing, to (i) terminate the Poage ESOP on the day before the Effective Date (all shares held by the Poage ESOP shall be converted into the right to receive the Merger Consideration), (ii) direct the Poage ESOP trustee(s) to use a portion of the Merger Consideration paid on the unallocated shares held by the Poage ESOP to be delivered to Poage in order to repay all outstanding Poage ESOP indebtedness, and the balance of the unallocated assets shall be allocated and distributed as earnings to the accounts of Poage ESOP participants who are employed as of the day before the Effective Date based on their account balances under the Poage ESOP as of the day before the Effective Date, (iii) provide for treatment of the shares of Poage Common Stock held in the Poage ESOP trust in accordance with Section 3.01 of this Agreement, (iv) terminate the Poage ESOP in accordance with its terms and the provisions of this Section 6.10(d), effective on the day before the Effective Date, (v) provide that no new participants shall be admitted to the Poage ESOP on the day before the Effective Date, and (vi) the accounts of all participants and beneficiaries in the Poage ESOP on the day before the Effective Date shall become fully vested on the day before the Effective Date; provided, however, Town Square shall provide City with a reasonable opportunity to review and comment on such resolutions and amendments prior to their adoption. Town Square shall file an application with the IRS on a date that is no later than the Effective Date that requests a favorable determination letter on the Poage ESOP relating to its termination; provided, however, Town Square shall provide City with a reasonable opportunity to review and comment on such application prior to its filing.participants. City agrees to take all commercially reasonable steps necessary or appropriate to accept roll-overs of benefits from the Poage ESOPCitizens 401(k) Plan to the City 401(k) plan for Continuing Employees,employees of Citizens and its Subsidiaries who continue as employees of City and its Subsidiaries after the Effective Time, subject to the provisions of the Poage ESOP and the City 401(k) plan.Plan.
(e)Employment Agreement. Concurrently with(d) As soon as practicable after the executiondate of this Agreement, Citizens will request that the ESOP Trustee take all necessary action required by the Citizens ESOP plan documents and applicable law in order to conduct a pass-through vote of the Citizens ESOP participants to direct the ESOP Trustee to vote the shares of Citizens Common Stock owned by the Citizens ESOP and allocated to the plan accounts of Citizens ESOP participants either in favor of or against the
Parent Merger (the “ESOP Vote”). Citizens will further request the ESOP Trustee provide to City shall enter into an employment agreement, which will include, among other things, non-solicitationfor review and non-competition provisions, with Bruce VanHorncomment, reasonably in advance of the ESOP Vote, but in any event within 10 business days of the initial filing of the Registration Statement, all materials (including the information statement and any similar disclosure materials, frequently asked questions, and meeting slides or handouts, as applicable) proposed to be disclosed to the Citizens ESOP participants in connection with the ESOP Vote.
(e) Prior to the Effective Date, the Citizens Board shall adopt a resolution approving the termination of the Citizens ESOP effective atas of a date immediately preceding the Effective Date. In addition, the Citizens Board shall approve the adoption of any amendments to the Citizens ESOP sufficient to terminate the Citizens ESOP immediately preceding the Effective Date and to otherwise give effect to the provisions of this Section. The accounts of all participants in the Citizens ESOP as of the Effective Time (the “VanHorn Employment Agreement”).
(f)Settlement Agreements. Concurrently withshall become fully vested upon termination of the execution of this Agreement, Poage and Town Square shall enter into settlement agreements, in the forms attached in Section 6.10(f) of Poage’s Disclosure Schedule, with each of Bruce VanHorn, Miles Armentrout, Jane Gilkerson, Kaecy Baisden, Cathy Groves, Susan Whisman, James King, and Tommy Cobb to be effective on the day before the Effective Time.
(g)SERP Agreements and Split Dollar Agreements. ESOP. At the Effective Time, any remaining shares of Citizens Common Stock held in the Citizens ESOP shall be converted into the right to receive, without interest, the Merger Consideration. Within sixty (60) days following the Effective Date, City and the ESOP Trustee shall assume those certain Executive Supplemental Retirement Plans, Director Supplemental Retirement Plansarrange to request from the IRS a determination that the termination of the Citizens ESOP is in compliance with Sections (401(a) and Life Insurance Endorsement Method Split Dollar Agreements as listed in Section 5.03(n)409 of Poage’s Disclosure Schedule (collectively, the Code (the “SERP and Split Dollar AgreementsESOP Determination Letter”). City and the ESOP Trustee shall arrange to make distributions of the Merger Consideration credited to the ESOP participants as soon as administratively practicable after receipt by City of the ESOP Determination Letter.
(f) On and after the date hereof, any broad-based employee notices or communication materials (including any website posting) to be provided or communicated by Citizens with respect to employment, compensation or benefits matters addressed in this Agreement or related, directly or indirectly, to the transactions contemplated by this Agreement shall be subject to the prior prompt review and comment of City, and Citizens shall consider in good faith revising such notice or communication to reflect any comments or advice that City timely provides.
(g) Nothing in this Agreement shall confer upon any employee, director or consultant of Citizens or any of the Citizens Subsidiaries or affiliates any right to continue in the employ or service of City, or any City Subsidiary or affiliate thereof, or shall interfere with or restrict in any way the rights of Citizens, City or any Subsidiary or Affiliate thereof to discharge or terminate the services of any employee, director or consultant of Citizens or any of the Citizens Subsidiaries or Affiliates at any time for any reason whatsoever, with or without cause (subject to the provisions of Article IV of this Agreement). Without limiting the generality of Section 9.11, nothing in this Agreement, express or implied, is intended to or shall confer upon any Person, including, without limitation, any current or former employee, director or consultant of Citizens or any of the Citizens Subsidiaries or affiliates, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 6.11Notification of Certain MattersMatters; Disclosure Supplements.
Each party(a) City and Citizens (for purposes of this Section 6.11, the “Notifying Party”) shall give prompt notice toeach promptly advise the other party of any fact,change or event or circumstance known to the disclosing party(i) that (i)has had or is reasonably likely individually or taken together with all other facts, events and circumstances known to it, to result in anyhave a Material Adverse Effect with respecton the Notifying Party or (ii) which the Notifying Party
believes would or would be reasonably likely to the disclosing party or any of its Subsidiaries, (ii) would cause or constitute a
material breach of any of the disclosing party’sNotifying Party’s representations, warranties covenants or agreementscovenants contained herein that reasonably could be expected to give rise, either individually or (iii) is necessaryin the aggregate, to provide material updates or corrections to disclosuresthe failure of a condition set forth in Article VII; provided that any failure to give notice in accordance with the party’sforegoing with respect to any breach shall not be deemed to constitute a violation of this Section 6.11 or the failure of any condition set forth in Article VII to be satisfied, or otherwise constitute a breach of this Agreement by the party failing to give such notice, in each case unless the underlying breach would independently result in a failure of the conditions set forth in Article VII to be satisfied.
(b) City and Citizens shall each promptly supplement, amend and update, upon the occurrence of any change prior to the Effective Time, and as of the Effective Time, the City Disclosure Schedule and the Citizens Disclosure Schedule (as applicable) with respect to any matters or events hereafter arising which, if in existence or having occurred as of the date of this Agreement, would have been required to be set forth or described in the City Disclosure Schedule or to information provided pursuant to a specific requirementthe Citizens Disclosure Schedule (as applicable) or this Agreement and including, without limitation, any fact which, if existing or known as of this Agreement.
6.12No Breaches of Representations and Warranties. Between the Agreement Date and the Effective Time, without the written consent of City, Poage will not do any act or suffer any omission of any nature whatsoever whichdate hereof, would causehave made any of the representations or warranties made in Article V to becomeof City or Citizens (as applicable) contained herein materially incorrect, untrue or incorrectmisleading. No supplement, amendment or update to the City Disclosure Schedule or Citizens Disclosure Schedule (as applicable) shall (i) cure any breach of a representation or warranty existing as of the date of this Agreement or any breach of a covenant in any material respect.this Agreement after the execution of this Agreement; or (ii) affect a party’s rights with respect to termination under Article VIII of this Agreement.
6.12 Data Conversion. From and after the date hereof, the parties shall use their commercially reasonable efforts to facilitate the integration of Citizens with the business of City following consummation of the transactions contemplated hereby, and shall meet on a regular basis to discuss and plan for the conversion of the data processing and related electronic information technology system (the “Data Conversion”) to those used by City. The parties agree to use all commercially reasonable efforts to promptly commence preparations for implementation of the Data Conversion, with the goal of effecting the Data Conversion on or about March 10, 2023. The parties agree to cooperate in preparing for the Data Conversion, including by providing reasonable access to data, information systems, and personnel having expertise with their and their respective Subsidiaries’ information and data systems. 6.13Consents. The parties heretoCitizens shall use theirits reasonable best efforts to obtain any required consents to the transactions contemplated by this Agreement.
6.14Insurance Coverage. PoageCitizens shall use commercially reasonable efforts to cause the policies of insurance listed in Poage’sthe Citizens Disclosure Schedule to remain in effect betweenuntil the Agreement DateEffective Time.
6.15 Dividends. In the calendar quarter in which the Closing occurs, Citizens shall coordinate with City regarding the declaration of any dividend in respect of Citizens Common Stock and the Effective Date.
6.15Correctionrecord dates and payment dates relating thereto, it being the intention of Information. Thethe parties hereto that holders of Citizens Common Stock shall promptly correctnot receive two dividends, or fail to receive one dividend, in any quarter with respect to their shares of Citizens Common Stock and supplement any information furnished byshares of City Common Share any such party under this Agreement so that such information shall be correct and complete at all times, and shall include all facts necessary to make such information correct and complete at all times.holder receives in exchange therefor in the Merger.
6.16Confidentiality. Except for the use of information in connection with the Proxy Statement/Prospectus described in Section 6.03 hereof and any other governmental filings required in order to complete the transactions contemplated by this Agreement, all information (collectively, the “Information”) received by each of PoageCitizens and City pursuant to the terms of this Agreement (i) shall be kept in strictest confidence (ii)and not used for any purpose other than a mutually acceptable transaction contemplated hereby; providedthat, subsequent to the mailing of the Proxy Statement/Prospectus to the shareholders of Citizens, this Section 6.16 shall not apply to Information included in the Proxy Statement/Prospectus. Citizens and City agree that the Information will be disclosedused only for the purpose of completing the transactions contemplated by this Agreement. Citizens and City agree to hold the Information in strictest confidence and shall not use such Information for any purpose other than a mutually acceptable transaction contemplated hereby, and shall not disclose directly or indirectly any of such Information except when, after and to the extent such Information (A)(i) is or becomes generally available to the public other than through the failure of PoageCitizens or City to fulfill its obligations hereunder, (B)(ii) is demonstrated as already known to the party receiving the Information on a nonconfidential basis prior to the disclosure, or (C)(iii) is subsequently disclosed to the party receiving the Information on a nonconfidential basis by a third party having no obligation of confidentiality to the party disclosing the Information, and (iii) not used forInformation; provided nothing herein shall prohibit a party from making any purpose other than a mutually acceptable transaction contemplated hereby; providedthat, subsequent to the mailing of the Proxy Statement/Prospectus to the shareholders of each party, this Section 6.16 shall not apply to Information included in the Proxy Statement/Prospectus to be sent to the shareholders of each party under Section 6.03.disclosure required by law. In the event the transactions contemplated by this Agreement are not consummated, PoageCitizens and City agree to promptly return all copies of the Information (including all copies, summaries, memorandum thereof) provided to the other promptly and promptly destroy all electronic copies of such Information, provided no litigation preservation obligation exists and prevents destruction. In that case, Information shall be preserved until the preservation obligation ceases.Information.
6.17Regulatory Matters. City, PoageCitizens and each of their Subsidiaries shall cooperate and each of them agrees to use its commercially reasonable best efforts to remediate to the satisfaction of such Regulatory Authority (i) any order, decree, formal or informal agreement, memorandum of understanding or similar agreement by PoageCitizens or Town Squareany Subsidiary with, any Regulatory Authority; (ii) anyor a commitment letter, board resolution or similar submission by PoageCitizens or Town Squareany Subsidiary to, any Regulatory Authority; or (iii) any supervisory letter from any Regulatory Authority to PoageCitizens or Town Square.Subsidiary, to the satisfaction of such Regulatory Authority.
6.18Indemnification.
(a)From and For a period of six (6) years after the Effective Time, City and City National Bank shall indemnify and hold harmless each Person who served as a director, officer or employee of the currentCitizens or former directors, officers or employees of Poage and its Subsidiaries (each, an “Indemnified Party”), and any person who becomes an Indemnified Party betweenon or after the date hereofof this Agreement and before the Effective Time, to the fullest extent provided by the Citizens Articles and the Citizens Bylaws and the articles of incorporations or bylaws of the Citizens Subsidiaries, from and against any costs or expenses, (including reasonableincluding attorneys’ fees, and expenses), judgments, fines, losses, claims, damages or liabilities and amounts paid in settlement incurred in connection with any actualthreatened, pending or threatenedcompleted claim, action, suit, proceeding or investigation whether civil, criminal, administrative or investigative, arising outby reason of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, based in whole or in part on, or arising in whole or in part out of, or pertaining to (i) the fact that he or she is orsuch Person was a director, officer or employee of the Poage, any ofCitizens or its Subsidiaries or any of their respective predecessors or was prior to the Effective Time serving at the request of Citizens or any such partyof its Subsidiaries as a director officer, employee, trustee or partnerofficer of another corporation, partnership, trust, joint venture, employee benefit plan or other entity or (ii)Person; provided, however, that any matters arising in connection with the transactions contemplated by this Agreement, to the fullest extent such person would have been indemnified or have the right to advancement of expenses pursuant to Poage’s Articles and Poage’s Bylaws and as permittedindemnification shall not be prohibited by applicable law,state and Cityfederal laws. The obligation to indemnify hereunder shall alsoinclude the obligation to advance expenses as incurred toset forth in Citizens Articles and Citizens Bylaws and the fullest extent permitted under applicable law, providedorganization documents of the Citizens Subsidiaries as in effect on the date of this Agreement (provided that the person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimatelyshall be determined by a court of competent jurisdiction that such person is not entitled to indemnification.be indemnified pursuant to this Section 6.18).
(b)Before the Effective Time,Date, Citizens shall procure, at the expense of City, shall purchase a policy of directors’officers’ and officers’directors’ and company liability insurance (the “for Citizens and its Subsidiaries with respect to actions, omissions, events, matters or circumstances occurring prior to the Effective Time (“D&OTail Policy”) to be effective for a period of sixthree years following the Effective Date,Time, on terms no less advantageous than those contained in Poage’sCitizens’ existing directors’ and officers’ and company’s liability insurance policy; provided, however, that the premium on the D&OTail Policy shall not exceed 150%120% of the annualCitizens’ current premium currently paid by Poage for similar insurance coverage;levels (the “Premium Cap”); providedfurther, furtherhowever, that if a D&Othe Premium Cap is insufficient in amount for Citizens to obtain the Tail Policy upon the terms set forth in this Section 6.18(b), Citizens shall obtain the Tail Policy for a period of six years on terms no less advantageous than those contained in Poage’s existing policy cannot be obtained at a premium not in excess of 150% of Poage’s current annual premium, then City shall purchase a D&O Policy for asuch shorter period of years and/or on such lesser termstime as directed in writingcan be obtained by Poage.paying the Premium Cap.
(c) The provisions of the Section 6.18 shall survive the Effective Time and are intended to be for the benefit of, and shall be enforceable by, each Person entitled to indemnification hereunder and his or her heirs and representatives. If City, or any of its successors or assigns, consolidates with or merges into any other entity and is not the continuing or surviving entity of such consolidation or merger, transfers all or substantially all its assets or deposits to any other entity or engages in any similar transaction, then in each case, proper provision shall be made so the successors and assigns of City assume the obligations set forth in this Section 6.18. 6.19Environmental Assessments. PoageCitizens hereby agrees to permit City to engage, in City’s discretion and at City’sthe expense of City, a qualified consultant, mutually agreeable to PoageCitizens and City, to conduct a Phase I Environmental Site Assessment in accordance with the requirements of ASTM E1527-05 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Practice (“Phase I”) of each parcel of real estate owned by PoageCitizens or Town Square,any Subsidiary, including real estate acquired by Town Square Citizens Commerce Bank upon foreclosure. City agrees to indemnify and hold Citizens harmless from any damage that may result from the conduct of such assessments.
6.20 Litigation and Claims. Each of City and Citizens shall, to the extent permitted under applicable law and regulation, promptly notify the other party in writing of any action, arbitration, audit, hearing, investigation, litigation, suit, subpoena or summons issued, commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator pending or, to the Knowledge of City or Citizens, as applicable, threatened against City, Citizens or any of their respective Subsidiaries that (a) questions or would reasonably be expected to question the validity of this Agreement, the Subsidiary Merger Agreements or the other agreements contemplated hereby or thereby or any actions taken or to be taken by against City, Citizens or their respective Subsidiaries with respect hereto or thereto, or (b) seeks to enjoin or otherwise restrain the transactions contemplated hereby or thereby. Citizens shall give City the opportunity to participate at its own expense in the defense or settlement of any shareholder litigation against Citizens and/or its Subsidiaries upon foreclosure.directors or Affiliates relating to the transactions contemplated by this Agreement, and no such settlement shall be agreed without Citizens’ prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).
6.206.21 NASDAQ Listing. City shall cause the City Common Shares to be issued in the Merger to be approved for listing on Thethe NASDAQ – Global Select Market® as of the Effective Time.
6.216.22 Tax TreatmentAbsence of Control. No party hereto shall take any action inconsistent with It is the treatmentintent of the Merger as a “reorganization” within the meaningparties to this Agreement that City, by reason of Section 368(a)this Agreement, shall not be deemed (until consummation of the Code.
6.22Board Seats. Attransactions contemplated herein) to control, directly or promptly followingindirectly, Citizens or any of its Subsidiaries and shall not exercise or be deemed to exercise, directly or indirectly, a controlling influence over the management or policies of Citizens or any of its Subsidiaries. Prior to the Effective Time, CityCitizens shall take all action necessary to elect Thomas L. Burnette toexercise, consistent with the boardsterms and conditions of Citythis Agreement, complete control and City National.supervision over its and its Subsidiaries’ respective operations.
ARTICLE VII
Conditions to Consummation of the Merger; Closing
7.01Conditions to Each Party’s Obligation to Effect the Merger. The respective obligation of each of City and PoageCitizens to consummate the Merger is subject to the fulfillment or written waiver by City and PoageCitizens prior to the Effective Time of each of the following conditions:
(a)Shareholder Approval. This Agreement and the Merger shall have been duly adopted and approved by the requisite vote of the shareholders of Poage.Citizens.
(b)Regulatory Approvals. All regulatory approvals required to consummate the transactions contemplated hereby shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired and no such approvals shall contain (i) any conditions, restrictions or requirements which the City Board reasonably determines would either before or after the Effective Time have a Material Adverse Effect on City and its Subsidiaries taken as a whole after giving effect to the consummation of the Merger, or (ii) any conditions, restrictions or requirements that are not customary and usual for approvals of such type and which the City Board reasonably determines would either before or after the Effective Time be unduly burdensome. For purposes of this Section 7.01(b), in the event any regulatory approval that does not result in the termination of all outstanding Regulatory Orders applicable to PoageCitizens and/or Town Square,its Subsidiaries, if any, prior to or at the Effective Time, such outstanding Regulatory Order, if any, shall be deemed to have a Material Adverse Effect on City and its Subsidiaries taken as a whole after giving effect to the consummation of the Merger.
(c)No Injunction. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the transactions contemplated by this Agreement.
(d)Listing of City Common Shares. The City Common Shares to be issued in the Merger shall have been authorized for listing on the NASDAQ – Global Select Market®.
(e) Effectiveness of Registration Statement and Proxy Statement/Prospectu.s. The Registration Statement and Proxy Statement/Prospectus shall have been declared effective by the SEC and shall not be subject to any stop order or any threatened stop order by the SEC.
(e)Tax Opinions. City and Poage shall have received written opinions of Dinsmore & Shohl LLP and Luse Gorman, PC, respectively, dated as of the Effective Date, in form and substance customary in transactions of the type contemplated hereby, and reasonably satisfactory to City and Poage, as the case may be, substantially to the effect that on the basis of the facts, representations and assumptions set forth in such opinions, which are consistent with the state of facts existing at the Effective Date, (i) the Merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code and (ii) City and Poage will each be a party to that reorganization within the meaning of Section 368(b) of the Code. Such opinions may be based on, in addition to the review of such matters of fact and law as counsel considers appropriate, representations contained in certificates of officers of City and Poage.
7.02 Conditions to Obligation of PoageCitizens. The obligation of PoageCitizens to consummate the Merger is also subject to the fulfillment or written waiver by PoageCitizens prior to the Effective Time of each of the following conditions:
(a)Representations and Warranties. The representations and warranties of City set forth in this Agreement shall not be in breach,true and correct, subject to Section 5.02, in all material respects as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall not be in
breachtrue and correct as of such date), and PoageCitizens shall have received a certificate, dated the Effective Date, signed on behalf of City, by the chief executive officer of City to such effect.
(b)Performance of Obligations of City. City shall have performed in all material respects all obligations required to be performed by City under this Agreement at or prior to the Effective Time, and PoageCitizens shall have received a certificate, dated as of the Effective Date, signed on behalf of City by the chief executive officerChief Executive Officer of City to such effect.
(c)Listing of City Common Shares. The City Common Shares to be issued in the Merger shall have been authorized for listing on The NASDAQ Global Select Market.
(d)No Material Adverse Effect. From the date of this Agreement, there shall not have occurred any event, circumstance or development that has had or could reasonably be expected to have a Material Adverse Effect on City.
(d) Tax Opinion. Citizens shall have received an opinion of Wyatt, Tarrant & Combs, LLP, legal counsel to Citizens, dated as of the Closing Date and in form and substance reasonably satisfactory to Citizens, to the effect that, on the basis of facts, representations, and assumptions set forth or referred to in such opinion, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. In rendering its opinion, such counsel may require and rely upon representations contained in certificates of officers of Citizens and City, reasonably satisfactory in form and substance to such counsel. 7.03 Conditions to Obligation of City. The obligation of City to consummate the Merger is also subject to the fulfillment or written waiver by City prior to the Effective Time of each of the following conditions:
(a)Representations and Warranties. The representations and warranties of PoageCitizens set forth in this Agreement shall not be in breach,true and correct, subject to Section 5.02,5.01, in all material respects as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall not be in breachtrue and correct as of such date) and City shall have received a certificate, dated the Effective Date, signed on behalf of Poage,Citizens, by the chief executive officerpresident of PoageCitizens to such effect.
(b)Performance of Obligations of PoageCitizens. PoageCitizens shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and City shall have received a certificate, dated as of the Effective Date, signed on behalf of PoageCitizens by the chief executive officerpresident of PoageCitizens to such effect.
(c)Consents. Poage Citizens shall have obtained the consent or approval of each personPerson (other than Governmental Authorities) whose consent or approval shall be required in connection with the transactions contemplated hereby under any loanLoan or credit agreement, note, mortgage, indenture, lease, license or other agreement or instrument, except those for which failure to obtain such consents and approvals would not, individually or in the aggregate, in City City’s
reasonable estimate have a Material Adverse Effect, after the Effective Time, on City, as the Surviving Corporation.
(d)FIRPTA Certification. City shall have received a statement executed on behalf of Poage,Citizens, dated as of the Effective Date, satisfying the requirements of Treasury Regulations Section 1.1445-2(c)(3) and complying with Treasury Regulations Section 1.897-2(h) in(in a form reasonably acceptable to City certifying that the PoageCitizens Common SharesStock do not represent United States real property interests within the meaning of Section 897 of the Code and the Treasury regulations promulgated thereunder.
(e)Dissenting Shares. The holders of not more than 5% of the outstanding Citizens Common Stock shall have perfected their dissenters’ rights in accordance with the KBCA.
(f) Real Estate. There shall have been no condemnation, eminent domain or similar proceedings commenced or threatened in writing by any Government Authority with respect to any real estate owned and used as offices by Poage, Town SquareCitizens or any of its Subsidiaries, including real estate acquired in connection with foreclosure.Subsidiaries. Either (i) the results of each Phase I as reported shall be satisfactory to City, or (ii) any violation or potential violation of the representations and warranties contained in Section 5.03(q)5.01(n)
of this Agreement disclosed in anya Phase I report shall have been remedied by PoageCitizens or Town Squareany of its Subsidiaries to the reasonable satisfaction of City.
(f) Employment Agreement. The VanHorn Employment Agreement shall be in full force and effect at the Effective Time, unless the failure to satisfy this condition results from the death or disability of Mr. VanHorn.
(g)Tail Policy. Citizens shall have procured the Tail Policy in accordance with the terms and subject to the conditions of Section 6.18(b).
(h) Estoppel Certificates. Citizens shall have delivered to City an estoppel certificate, in such form as is acceptable to City, for each lease agreement set forth in Section 5.01(s) of the Citizens Disclosure Schedule from the applicable counterparty.
(i) No Material Adverse Effect. From the date of this Agreement, Date, there shall not have occurred any event, circumstance or development that has had or could reasonably be expected to have a Material Adverse Effect on Poage, Town Square or its Subsidiaries.Citizens.
(h)Voting Agreements. Poage and each member of the Poage Board shall have duly executed and delivered to City the Voting Agreement.
7.04Closing. Subject to the provisions of Article VII, the consummation of the transactions contemplated by this Agreement shall be held at the offices of Dinsmore & Shohl LLP in Cincinnati, Ohio, or such other place as the parties may mutually agree, on the Effective Date.
ARTICLE VIII
Termination
8.01Termination. This Agreement may be terminated, and the Merger may be abandoned:
(a)At any time prior to the Effective Time, by the mutual written consent of City and Poage,Citizens, if the board of directors of each so determines by vote of a majority of the members of its entire board.
(b)At any time prior to the Effective Time, by City or PoageCitizens upon written notice to the other party, if its board of directors so determines by vote of a majority of the members of the entire board, in the event of either (i) a breach by the other party of any representation or warranty contained herein, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of such breach, or (ii) a breach by the other party of
any of the covenants or agreements contained herein, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of such breach; provided that such breach (whether under (i) or (ii)) would be reasonably likely, individually or in the aggregate with other breaches, in the reasonable opinion of the non-breaching party, to result in a Material Adverse Effect.
(c) At any time prior to the Effective Time, by City or Citizens upon written notice to the other party, if its board of directors so determines by vote of a majority of the members of its board, in the event of either (i) a breach by the other party of any representation or warranty contained herein (subject to the standard set forth in Section 5.02), which breach cannot be or has not been cured within 30 calendar days after the giving of written notice to the breaching party of such breach; or (ii) a breach by the other party of any of the covenants or agreements contained herein, which breach cannot be or has not been cured within 30 calendar days after the giving of written notice to the breaching party of such breach; provided, however, that such breach (whether under subsection (i) or (ii)) would be reasonably likely, individually or in the aggregate with all other breaches, in the reasonable opinion of the non-breaching party, to result in a Material Adverse Effect.
(c)At any time prior to the Effective Time, by City or Poage upon written notice to the other party, if its board of directors so determines by vote of a majority of the members of itsentire board, in the event that the Parent Merger is not consummated by February 1, 2019,March 31, 2023 (or such later date as to which the Parties may mutually agree in writing), except to the extent that the failure of the Parent Merger then to be consummated arises out of or results from the knowing action or inaction of the party seeking to terminate pursuant to this Section 8.01(c).
(d)By CityCitizens or PoageCity upon written notice to the other party, if its board of directors so determines by a vote of a majority of the members of its entire board, in the event (i) the approval of any Governmental Authority required for consummation of the Merger and the other transactions contemplated by this Agreement shall have been denied and the denial has become final and nonappealable, (ii) any Governmental Authority whose approval is required for consummation of the Merger and the other transactions contemplated by this Agreement shall have requested, directed or advised City or Citizens to withdraw its application for approval of the Merger, or (iii) any Governmental Authority of competent jurisdiction shall have issued a final nonappealable law or order permanently enjoining or otherwise prohibiting or making illegal the consummation of the Parent Merger or the Subsidiary Merger.
(e) By either Citizens or City if the Requisite Citizens Vote shall not have been obtained at the Citizens Meeting duly convened therefor or at any adjournment or postponement thereof; provided, that no party may terminate this Agreement pursuant to this Section 8.01(e) if the party has breached in any material respect any of its obligations under this Agreement, in each case in a manner that primarily caused the failure to obtain the Requisite Citizens Vote at the Citizens Meeting or at any adjournment or postponement thereof.
(f) By:
(i) Citizens if (A) the Citizens Board (or a duly authorized committee thereof) has authorized an Acceptance of Superior Proposal, and (B) Citizens has complied in all respects with Section 6.06; provided, that the right of Citizens to terminate this Agreement pursuant to this Section 8.01(f) is conditioned on and subject to the prior payment by Citizens to City of the Termination Fee in accordance with Section 8.02(b). Any purported termination pursuant to this Section 8.01(f) shall be void and of no force or effect if Citizens shall not have paid and City shall not have received the Termination Fee; or
(ii) City prior to the Poage shareholders failtime the Requisite Citizens Vote is obtained, if (A) the Citizens Board shall have (1) failed to adoptinclude the Citizens Recommendation in the Proxy Statement/Prospectus, or withdrawn, modified or qualified the Citizens Recommendation in a manner adverse to City, or publicly disclosed that it intends to do so, or failed to recommend against acceptance of a tender offer or exchange offer
constituting an Acquisition Proposal that has been publicly disclosed within five (5) business days after the commencement of the tender or exchange offer, or (2) recommended or endorsed an Acquisition Proposal or publicly disclosed its intention to do so, or failed to issue a press release announcing its unqualified opposition to the Acquisition Proposal within five (5) business days after an Acquisition Proposal is publicly announced, or (B) Citizens or its Board of Directors has breached its obligations under Section 6.02 or Section 6.06 in any material respect, provided, in each case, that City is not in breach of any of its obligations under this Agreement and approveall of the Mergerrepresentations and warranties of City contained in this Agreement remain true and correct (without regard to any supplement or amendment to the City Disclosure Schedules after the date hereof).
(g) By Citizens if, at any time during the Poage Meeting.five (5) business day period commencing on the Determination Date, each of the following conditions in (i) and (ii) is satisfied:
(i) (A) the City Market Value on the Determination Date (the “Final City Market Value”) is less than (B) 82.7% of the Initial City Market Value, and
(e)By either(ii) (A) the quotient obtained by dividing the Final City or Poage (butMarket Value by Poage onlythe Initial City Market Value is less than (B) the quotient obtained by dividing the Index Price on the Determination Date (the “Final Index Price”) by the Index Price on September 22, 2022 (the “Initial Index Price”), minus 0.175 (the “Index Ratio”).
Provided, however, if Poage has compliedCitizens elects to exercise its termination right pursuant to this Section 8.01(g), it shall give prompt written notice thereof to City and, during the five (5) business days period commencing with its receipt of such notice, City shall have the option, exercisable in its sole discretion, to increase the Exchange Ratio so that the value of the City Common Shares into which each share of Citizens Common Stock is to be converted pursuant to Section 6.06) if Poage has given3.01(a) (calculated based on the Final City Market Value) is equal to the lesser of
(x) the product of the Initial City Market Value, 82.7% and the Exchange Ratio (as in effect immediately prior to any increase in the Exchange Ratio pursuant to this Section 8.01(g)), and
(y) the product of the Initial City Market Value, the Exchange Ratio (as in effect immediately prior to any increase in the Exchange Ratio pursuant to this Section 8.01(g) and the Index Ratio.
If City so elects, it shall give, within such three (3) business days, written notice to City (i) that Poage desiresCitizens of such election and the revised Exchange Ratio, whereupon no termination shall be deemed to enter into a Superior Competing Transaction subject
have occurred pursuant to termination ofthis Section 8.01(g) and this Agreement shall remain in full force and effect in accordance with its terms, except as the Exchange Ratio shall have been so modified.
For purposes of this Section 8.1(g), the following terms shall have the following definitions:
“City Market Value” means, as of any specified date, the average of the daily closing sales prices of a share of City Common Shares as reported on NASDAQ for the twenty (20) consecutive trading days immediately preceding such specified date.
“Determination Date” means the latest of the date on which (i) all regulatory approvals and third party consents (and waivers, if applicable) required to consummate the Merger have been received (disregarding any regulatory waiting periods), and (ii) the approval of this Agreement by the shareholders of Citizens by the Requisite Citizens Vote is obtained.
“Index” means the SPDR® S&P® Regional Banking ETF (KRE).
“Index Price” means, as of any specified date, the average of the daily closing value of the Index for the twenty (20) consecutive trading days immediately preceding such specified date.
“Initial City Market Value” means $87.04.
If City or (ii) that the Poage Board has failed to recommendany company belonging to the Poage shareholders inIndex declares or effects a stock split, stock dividend, recapitalization, reclassification, or similar transaction with respect to the Proxy Statement/Prospectus thatoutstanding common stock, and the Poage shareholders approve and adoptrecord date therefor shall be after the date of this Agreement and prior to the transactions contemplated hereby, or (iii) thatDetermination Date, the Poage Board determined to change its recommendation in favorprices for the common stock of such company shall be proportionately and appropriately adjusted for the transactions contemplated hereby; provided, however,that such termination underpurpose of applying this Section 8.01(e) shall not be effective unless and until Poage shall have complied with breakup fee provisions of Section 9.05.
8.02Effect of Termination and Abandonment; Enforcement of Agreement.
(a) In the event of termination of this Agreement and the abandonment of the Merger pursuant to this Article VIII,Section 8.01, no party to this Agreement shall have any liability or further obligation to any other party hereunder except that (i) as set forth in Section 6.06, 9.01,6.16, this Section 8.02, and 9.05Article IX shall survive any termination of this Agreement; and (ii) that termination will not relieve a breaching partynotwithstanding anything to the contrary contained in this Agreement, neither City nor Citizens shall be relieved or released from liability for any liabilities or damages arising out of its fraud or willful and material breach of any provision of this Agreement giving riseoccurring prior to such termination.
(b) In the event that:
(i)(A) after the date of this Agreement and prior to the termination of this Agreement, a bona fide Acquisition Proposal shall have been made known to senior management or the Citizens Board or has been made directly to the Citizens shareholders generally or any Person shall have publicly announced (and, in each case, not unconditionally withdrawn, and thereafter this Agreement is terminated by City pursuant to Section 8.01(b) as a result of a willful breach by Citizens; and (B) prior to the date that is twelve (12) months after the date of the termination of this Agreement, Citizens enters into a definitive agreement or consummates a transaction with respect to an Acquisition Proposal (whether or not the same Acquisition Proposal as that referred to above), then Citizens shall, on the earlier of the date it enters into the definitive agreement and the date of consummation of the transaction, pay City, by wire transfer of same day funds (to an
account designated in writing by City), a fee equal to $2,000,000 (the “Termination Fee”); and
(ii) this Agreement is terminated by Citizens or City pursuant to Section 8.01(f), then Citizens shall pay City, by wire transfer of same day funds (to an account designated in writing by City), the Termination Fee no later than two (2) business days after the termination of this Agreement.
(c) Notwithstanding anything contained herein to the contrary herein, but without limiting the parties hereto agree that irreparable damage will occurright of any party to recover liabilities or damages arising out of the other party’s fraud, in the event that a party breachesthis Agreement is terminated as provided in Section 8.01 under circumstances where the Termination Fee is payable to City and paid in full by Citizens pursuant to this Section 8.02, the payment of such Termination Fee shall be the sole and exclusive remedy available to City and the maximum aggregate liability of Citizens with respect to this Agreement and the transactions contemplated by this Agreement, and Citizens shall have no further liability with respect to this Agreement or the transactions contemplated hereby to City or any of its obligations, duties, covenants andAffiliates or Representatives.
(d) Citizens acknowledges that the agreements contained herein. Itin Section 8.02 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, City would not enter into this Agreement. If Citizens fails promptly to pay Termination Fee after demand and City commences a suit to obtain payment then (i) if the suit results in a judgment against Citizens for payment of the Termination Fee, Citizens shall pay the costs and expenses of City (including reasonable attorneys’ fees and expenses) in connection with the suit and (ii) if the suit results in a judgment that Citizens is accordingly agreednot liable for such payment, City shall pay the costs and expenses of Citizens (including reasonable attorneys’ fees and expenses) in connection with the suit.
In addition, if Citizens fails to pay the Termination Fee, then Citizens shall pay interest on the overdue amounts (for the period commencing as of the date that the partiesoverdue amount was originally required to be paid and ending on the date that the overdue amount is actually paid in full) at a rate per annum equal to the “prime rate” (as published in the Wall Street Journal) in effect on the date on which the payment was required to be made for the period commencing as of the date that the overdue amount was originally required to be paid. The Termination Fee constitutes liquidated damages and not a penalty, and, except in the case of fraud, shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches(together with the amounts specified in this Section 8.02(d)) the sole monetary remedy of City in the event of a termination of this Agreement specified in the section under circumstances where the Termination Fee is payable and to specifically enforce the terms and provisions of this Agreementis paid in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which the non-breaching party is entitled by law or in equity.full.
ARTICLE IX
Miscellaneous
9.01No Survival. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, except forother than those covenants and agreements contained herein and therein which by their terms apply in whole or in part after the Effective Time.
9.02Waiver; Amendment. PriorSubject to the Effective Time, any provision ofcompliance with applicable law, this Agreement may be (i) waivedamended by the party benefited by the provision or (ii) amended or modifiedparties hereto at any time by an agreement in writing betweenbefore or after the parties hereto executed inreceipt of the same manner as this Agreement;Requisite Citizens Vote; provided, however, that after the Poage Meeting,receipt of the Requisite Citizens Vote, there may not be, without further approval of such shareholders of Citizens, any amendment of this Agreement that requires such further approval under applicable law. This Agreement may not be amended, if it would voidmodified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing signed on behalf of each of the parties.
9.03 Extension; Waiver. At any time prior to the Effective Time, the parties hereto may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other party pursuant hereto, and (c) waive compliance with any of the agreements or satisfaction of any conditions for its benefit contained herein; provided, however, that after the receipt of the Requisite Citizens Vote, there may not be, without further approval of such shareholders of Citizens, as applicable, any extension or waiver of this Agreement or any portion thereof that requires such further approval under applicable law. Any agreement on the MGCL.part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, 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 or other failure.
9.039.04 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall constitute an original, butin counterparts (including by electronic means), all of which together shall constitute butbe considered one instrument. Signatures transmitted by facsimile or electronic transmission (such as an email of a .pdf or scanned signature) shall haveand the same effectagreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
9.05 Confidential Supervisory Information. Notwithstanding any other provision of this Agreement, no disclosure, representation, or warranty shall be made (or other action taken) pursuant to this Agreement that would involve the disclosure of confidential supervisory information (including “confidential supervisory information” as original signatures.defined in any regulation or rule adopted or promulgated by a Regulatory Authority) by any party to this Agreement to the extent prohibited by applicable law. To the extent legally permissible, appropriate substitute disclosures or actions shall be made or taken under circumstances in which the limitations of the preceding sentence apply.
9.049.06 Governing LawLaw; Jurisdiction. This Agreement shall be governed by and interpretedconstrued in accordance with the laws of the State of West Virginia, without regard to any applicable conflicts of law principles. Each party agrees that it will bring any action or proceeding in respect of any claim arising out of or related to contracts made and to be performed entirely withinthis Agreement or the Statetransactions contemplated hereby exclusively in the state courts located in Kanawha County, West Virginia or federal U.S. District Court – Southern District of West Virginia.Virginia (the “Chosen Courts”), and, solely in connection with claims arising under this Agreement or the transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party and
9.05(iv) agrees that service of process upon such party in any such action or proceeding will be effective if notice is given in accordance with Expenses; Breakup FeeSection 9.06.
9.07 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY LAW AT THE TIME OF INSTITUTION OF THE APPLICABLE LITIGATION, ANY RIGHT THE PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.07.
9.08 Expenses. Each party hereto will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated hereby. In the event that this Agreement is terminated pursuant to Section 8.01(e), Poage shall pay City a breakup fee of $4,000,000, in cash by wire transfer in immediately available funds, as agreed upon liquidated damages and not as a penalty.
9.069.09 Notices. All notices requests and other communications hereunder to a party shall be in writing and shall be deemed duly given (i) on the date of delivery if delivered personally, or if by email, upon confirmation of receipt, (ii) on the first (1st) business day following the date of dispatch if delivered telecopied (with confirmation)utilizing a next-day service by a recognized next-day courier or mailed(iii) on the date of confirmed receipt if delivered by registered or certified mail, (returnreturn receipt requested)requested, postage prepaid. All notices hereunder shall be delivered to such party at its addressthe addresses set forth below, or pursuant to such other addressinstructions as may be designated in writing by the party to receive such party may specify by notice to the parties hereto.notice:
| | | | | |
| If to Citizens, to: | Citizens Commerce Bancshares, Inc.
534 Marsailles Road
Versailles, Kentucky 40383
Attention: Michelle Oxley
Email: moxley@citizenscommerce.com |
| |
| With a copy to: | Wyatt, Tarrant & Combs, LLP
400 W. Market Street, Suite 2000
Louisville, Kentucky 40202
Attention: Cynthia W. Young, Esq.
Email: cyoung@wyattfirm.com |
| |
If to Poage, to: | Poage Bankshares, Inc.
1500 Carter Avenue
Ashland, KY 41101
Attn: Bruce VanHorn, President & CEO
|
With a copy to: | Luse Gorman, PC
5335 Wisconsin Avenue, NW, Suite 780
Washington, DC 20015
Attn: Kip Weissman, Esq.
|
If to City, to: | City Holding Company
25 Gatewater Road
Charleston, WV 25313
Attention: Charles R. Hageboeck, President and CEO
Email: Skip.Hageboeck@bankatcity.com |
| |
| With a copy to: | Dinsmore & Shohl LLP 1 255 E. Fifth Street, Suite 1900 Cincinnati, Ohio 45202 Attention: Michael G. Dailey, Esq. Email: michael.dailey@dinsmore.com |
9.079.10 Entire Understanding; No Third Party Beneficiaries.Understanding. This Agreement, the Voting Agreement, the Agreement to Merge,Support Agreements and any separate agreement entered into by the parties in connection with this Agreement and on even date herewith represent the entire understanding of the parties hereto with reference to the transactions contemplated hereby and thereby and this Agreement supersedes any and all other oral or written agreements heretofore made (other than such Voting AgreementSupport Agreements or any such separate agreement). Nothing in
9.11 Assignment; Third-Party Beneficiaries. Neither this Agreement whether expressnor any of the rights, interests or implied,obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party. Any purported assignment in contravention hereof shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. This Agreement (including the documents and instruments referred to herein) is not intended to, and does not, confer upon any Person other than the parties hereto any right, remedy, or their respective permitted successorsclaim hereunder, including the right to rely upon the representations and assigns, anywarranties set forth herein; except that the terms and provisions of Section 6.18 shall inure to the benefit of the persons entitled to indemnification thereunder, and except that the rights remedies, obligationsof holders of Citizens Common Stock to receive the Merger Consideration as provided in Article III, and the rights of holders of Citizens Options under Section 3.02(c) this Agreement shall inure to the benefit of such holders thereunder. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties. Persons other than the parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or liabilities under or by reasoncircumstances as of the date of this Agreement.Agreement or as of any other date.
9.08Interpretation; Effect9.12 . Interpretation.
The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to aan Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and areshall not partaffect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”
The word “or” shall not be exclusive. References to “the date hereof” shall mean the date of this Agreement. 9.099.13 WaiverSpecific Performance. The parties hereto agree that irreparable damage would occur if any provision of Jury Trial.this Agreement were not performed in accordance with its specific terms or were otherwise breached. Accordingly, the parties shall be entitled to specific performance of the terms of this Agreement, including an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties’ obligation to consummate the Merger), in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto hereby irrevocablyfurther waives (i) any and all right to trial by jurydefense in any action for specific performance that a remedy at law would be adequate and (ii) any requirement under any law to post security or a bond as a prerequisite to obtaining equitable relief.
9.14 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction such that the invalid, illegal or unenforceable provision or portion thereof shall be interpreted to be only so broad as is enforceable.
9.15 Delivery by Electronic Transmission. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered by e‑mail delivery of a “.pdf” format data file, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal proceeding arising outeffect as if it were the original signed version thereof delivered in person. No party hereto or to any such agreement or instrument shall raise the use of or relatede‑mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the transactions contemplated hereby.
9.10Successors and Assigns; Assignment. This Agreement shall be binding upon and inurefact that any signature or agreement or instrument was transmitted or communicated through e‑mail delivery of a “.pdf” format data file as a defense to the benefitformation of the parties heretoa contract and their respective successors and assigns; provided, however, that this Agreement may not be assigned by eithereach party hereto without the prior written consent of the other party.forever waives any such defense.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[Remainder of Page Intentionally Left Blank]
AGREEMENT AND PLAN OF MERGER
Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Merger to be executed in counterparts by their duly authorized officers, all as of the day and year first above written.
| | | | | |
| CITY HOLDING COMPANY |
| |
| |
| |
| By | /s/ Charles R. Hageboeck |
| Charles R. Hageboeck, President & CEO |
| |
| |
| CITIZENS COMMERCE BANCSHARES, INC. |
| |
| |
| By | /s/ Michelle Oxley |
| Michelle Oxley, Treasurer |
A-70
City HOLDING COMPANY
By: /s/ Charles R. Hageboeck
Charles R. Hageboeck, President and CEO
POAGE BANKSHARES, INC.
By: /s/ Bruce VanHorn
Bruce VanHorn, President and CEO
EXHIBIT A
FORM OF VOTINGSUPPORT AGREEMENT
THIS VOTINGSUPPORT AGREEMENT (this “Agreement”), is entered into as of July 11, 2018,________, 2022, by and among City Holding Company, a financial holding company incorporated under West Virginia law (“City”), Poage Bankshares,Citizens Commerce Bancshares, Inc., a savings and loanbank holding company incorporated under MarylandKentucky law (“PoageCitizens”), and the undersigned shareholders of Poage (collectively, the “___________ (“ShareholdersShareholder”).
WHEREAS, each ofconcurrently with the Shareholders is a member of the board of directors of Poage;
WHEREAS, the Shareholders collectively own 359,916 shares of common stock, $0.01 par value, of Poage (such common shares, together with all shares of Poage stock which may hereafter be acquired by the Shareholders prior to the terminationexecution and delivery of this Agreement, shall be referred to herein as the “Shares”);
WHEREAS,City and Poage propose to enterCitizens are entering into an Agreement and Plan of Merger, dated as of the date hereof (theof this Agreement (as amended or supplemented from time to time, the “Merger Agreement”), pursuant to which, provides, among other things, that Poage will mergeCitizens shall be merged with and into City, pursuantupon the terms and subject to the Parent Merger (this and other capitalized terms used and not defined herein shall have the meanings given to such termsconditions set forth in the Merger Agreement);Agreement. Capitalized terms not otherwise defined in this Agreement shall have meanings provided in the Merger Agreement.
WHEREAS,City as of the date of this Agreement, Shareholder is the record and Poage have made it abeneficial owner and has the power to vote the number of shares of Citizens Common Stock set forth, and in the manner reflected, on Attachment A to this Agreement (the shares listed on Attachment A, together with all shares of Citizens Common Stock subsequently acquired by the Shareholder during the term of this Agreement, are referred to in this Agreement as the “Owned Shares”).
WHEREAS, as an inducement and condition to their entering into the Merger Agreement, City has required that the ShareholdersShareholder agree, and Shareholder has agreed, to vote the Shares in favor of the adoption of the Merger Agreement; and
WHEREAS, City and Poage have made it a condition to their enteringenter into the Merger Agreement that the Shareholders agree to certain non-competition and non-solicitation covenants.this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereby agree as follows:follow:
ARTICLE 1I
Voting of Shares
1.1Voting Agreement. The Shareholders, individually and not jointly, hereby agree that, during the time this Agreement is in effect, at any meeting of the shareholders of Poage, however called, and in any action by consent of the shareholders of Poage, they shall vote their Shares (i) in favor of the adoption of the Merger Agreement (as amended from time to time) and (ii) against any proposal for any recapitalization, merger, sale of assets or other business combination between Poage or Town Square and any person or entity other than City or any of its Subsidiaries, or any other action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of Poage under the Merger Agreement or that would result in any of the conditions to the obligations of Poage under the Merger Agreement not being fulfilled. The parties hereto acknowledge and agree that nothing contained herein is intended to restrict any Shareholder from voting or otherwise acting in the Shareholder’s capacity as a director of Poage or Town Square with respect to any matter.
ARTICLE 2
Representations and Warranties
Each of the Shareholders, individually and not jointly, hereby represents and warrants to City as follows:
2.1Authority Relative to this Agreement. Such Shareholder has all necessary power and authority or capacity, as the case may be, to execute and deliver this Agreement, to perform his, her or its obligations hereunder and to consummate the transaction contemplated by the Merger Agreement. This Agreement has been duly and validly executed and delivered by such Shareholder and constitutes a legal, valid and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms.
2.2No Conflict.
(a)The execution and delivery of this Agreement by such Shareholder does not, and the performance of this Agreement by him, her or it will not, (i) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to him, her or it or by which the Shares are bound or (ii) result in any breach of or constitute a default (or 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 or encumbrance on any of the Shares held by him, her or it pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which such Shareholder is a party or by which such Shareholder or any Shares held by him, her or it are bound, except for any such conflicts, violations, breaches, defaults or other occurrences which would not prevent or delay the performance by such Shareholder of his, her or its obligations under this Agreement.
(b)The execution and delivery of this Agreement by such Shareholder does not, and the performance of this Agreement by him, her or it will not, require any consent, approval, authorization or permit of, or filing with or notification to, any federal, state, local or foreign regulatory body.
2.3Title to the Shares. Each of the Shareholder is the owner of the number and class of Shares as specified on Annex I hereto, free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on voting rights, charges and other encumbrances of any nature whatsoever except as otherwise specified on Annex I. No Shareholder has appointed or granted any proxy, which appointment or grant is still effective, with respect to the Shares. Each Shareholder has sole voting power with respect to his, her or its Shares except as otherwise specified on Annex I.
ARTICLE 3
Additional Covenants
3.1Transfer of the Shares. Each of the Shareholders hereby covenants and agrees that, during the term of this Agreement, the Shareholder will not, without the prior written consent of City, sell, pledge, transfer, or otherwise voluntarily dispose of any of the Shares which are owned by the Shareholder or take any other voluntary action which would have the effect of removing the Shareholder’s power to vote his, her or its Shares or which would otherwise be inconsistent with this Agreement; provided, each Shareholder may (i) transfer his, her or its Shares pursuant to any currently existing pledge agreement or for estate planning, tax planning or philanthropic purposes, (ii) bequeath his, her or its Shares by will or operation of law, in which case this Agreement shall bind the transferee, (iii) surrender his, her or its Shares to Poage in connection with the vesting, settlement or exercise of Poage equity awards to satisfy any withholding for the payment of taxes incurred in connection with such vesting, settlement or exercise, or, in respect of the Poage equity awards, the exercise price thereon, or (iv) transfer his, her or its Shares as otherwise permitted by City in its sole discretion.
ARTICLE 4
Non-Competition
4.1Non-Competition. For a period of two years following the Effective Date, the Shareholders shall not, directly or indirectly within Town Square’s Territory, (a) manage, operate, control or be employed by, or be a director of, any financial institution, including without limitation a bank or savings and loan association, or any holding company of any such financial institution, or (b) join with any other persons or entities to apply to any state or federal regulatory authority of the issuance of a charter for the operation of a financial institution. The prohibitions in this Section 4.1 shall not apply to (i) any activity or investment of any Shareholder that existed at the time of the execution of this Agreement and which was disclosed to City, (ii) making loans to small business individuals or entities by any Shareholder or entity controlled by any Shareholder in the normal course of its business, or (iii) investing in debt or equity securities of any financial institution so long as such investment does not exceed 5% of the voting power of such financial institution.
ARTICLE 5
Non-Solicitation
5.1Non-Solicitation. For a period of two years following the Effective Date, the Shareholders shall not, directly or indirectly, on his or her own behalf or on behalf of any other person, institution, company or other entity, without the consent of City: (i) in any manner whatsoever induce, or assist others to induce, any employee, agent, representative or other person associated with City or its Affiliates or Subsidiaries, to terminate his or her association with any such entity, or in any manner interfere with the relationship between City or its Affiliates or Subsidiaries and any such person; or (ii) in any manner whatsoever induce, or assist others to induce, any supplier or customer of City or its Affiliates or Subsidiaries to terminate its association with City or its Affiliates or Subsidiaries, or do anything, directly or indirectly, to interfere with the business relationship between City or its Affiliates or Subsidiaries and any of its customers or suppliers or otherwise solicit for business any customer of City or its Affiliates or Subsidiaries; provided, however, the prohibitions in this Section 5.1 shall not prohibit or restrict any Shareholder from modifying, reducing or ceasing his or her personal banking relationship, or the banking relationship of any person, institution, company or entity controlled by such Shareholder, with City or its Affiliates or Subsidiaries.
ARTICLE 6
Miscellaneous
6.1Termination. This Agreement shall terminate on the earlier to occur of (i) the date of consummation of the Merger or (ii) the date of termination of the Merger Agreement for any reason; provided, however, Article 4 and Article 5 of this Agreement shall survive termination of this Agreement pursuant to item (i).
6.2Specific Performance. The Shareholders agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that City shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity.
6.3Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings with respect to the subject matter hereof.
6.4Amendment. This Agreement may not be amended except by an instrument in writing signed by all the parties hereto.
6.5Severability. 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 materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
6.6Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of West Virginia.
6.7Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.
6.8Assignment. This Agreement shall not be assigned by operation of law or otherwise.
6.9Parties in Interest. This Agreement 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.
6.10 Transfers, Successors and Assigns.
(a)The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(b) Each transferee or assignee of the Shares subject to this Agreement shall continue to be subject to the terms hereof and, as a condition to the recognition of such transfer, each transferee or assignee shall agree in writing to be subject to each of the terms of this Agreement by executing and delivering an Adoption Agreement substantially in the form attached hereto as Exhibit A. Upon the execution and delivery of an Adoption Agreement by any transferee, such transferee shall be deemed to be a party hereto as if such transferee’s signature appeared on the signature page of this Agreement. By execution of this Agreement or any Adoption Agreement, each of the parties appoints Poage as its attorney in fact for the purpose of executing any Adoption Agreement that may be required to be delivered under the terms of this Agreement. Poage shall not permit the transfer of Shares subject to this Agreement on its books or issue a new certificate representing any such Shares unless and until such transferee shall have complied with the terms of this Section 6.10. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective executors, administrators, heirs, successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
[Remainder of Page Intentionally Left Blank]
VOTING AGREEMENT
Section 1.1 Agreement to Vote. Shareholder hereby agrees that, during the time this Agreement is in effect, at the Citizens Meeting, and at any other meeting of the shareholders of Citizens, however called, or any adjournment or postponement thereof, Shareholder shall:
(a) appear at each meeting or otherwise cause the Owned Shares to be counted as present at each meeting for purposes of calculating a quorum; and
(b) vote (or cause to be voted), in person or by proxy, all of the Owned Shares (i) in favor of (A) the adoption and approval of the Parent Merger, the Merger Agreement and the transactions contemplated thereby, (B) any other matter that is required to facilitate the transactions contemplated by the Merger Agreement and (C) any proposal to adjourn or postpone
the meeting to a later date if there are not sufficient votes to approve the Parent Merger, the Merger Agreement and the transactions contemplated thereby; (ii) against any action or agreement that could reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of Citizens contained in the Merger Agreement or of Shareholder contained in this Agreement; and (iii) against any Acquisition Proposal or any other action, agreement or transaction that is intended, or could reasonably be expected, to materially impede, interfere or be inconsistent with, delay, postpone, discourage or materially and adversely affect consummation of the Parent Merger or the transactions contemplated by the Merger Agreement or the performance by Shareholder of Shareholder’s obligations under this Agreement.
Section 1.2 Shareholder Capacity. Notwithstanding anything to the contrary contained in this Agreement, Shareholder makes no agreement or understanding in this Agreement in Shareholder’s capacity as a director or officer, as applicable, of Citizens or the Citizens Subsidiaries, and nothing in this Agreement: (a) will limit or affect any actions or omissions taken by Shareholder in Shareholder’s capacity as such a director or officer, as applicable, of Citizens or the Citizens Subsidiaries, including in exercising rights under the Merger Agreement, and no such actions or omissions shall be deemed a breach of this Agreement; or (b) will be construed to prohibit, limit or restrict Shareholder from exercising Shareholder’s fiduciary duties as a director or officer, as applicable, to Citizens, the Citizens Subsidiaries or their respective shareholders.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Shareholder represents and warrants to City as follows:
Section 2.1 Authority; Authorization.
(a) Shareholder has all requisite power, right, authority and capacity to execute and deliver this Agreement, to perform Shareholder’s obligations under this Agreement, and to consummate the transactions contemplated by this Agreement.
(b) This Agreement has been duly and validly executed and delivered by Shareholder, and the execution, delivery and performance of this Agreement by Shareholder and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary action on the part of Shareholder, and no other actions or proceedings on the part of Shareholder are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement.
(c) Assuming the authorization, execution and delivery of this Agreement by City, this Agreement constitutes a legal, valid and binding obligation of Shareholder, enforceable against Shareholder in accordance with its terms.
(d) If Shareholder is married and the Owned Shares set forth by the name of Shareholder on the signature page to this Agreement constitute property owned jointly with
Shareholder’s spouse, this Agreement has been executed by Shareholder’s spouse and constitutes the valid and binding agreement of Shareholder’s spouse. If this Agreement is being executed in a representative or fiduciary capacity, the person signing this Agreement has full power and authority to enter into and perform this Agreement.
Section 2.2 Non-Contravention. The execution and delivery of this Agreement by Shareholder does not, and the consummation of the transactions contemplated by this Agreement and the compliance with the provisions of this Agreement will not (a) to the knowledge of Shareholder, require Shareholder to obtain the consent or approval of, or make any filing with or notification to, any governmental or regulatory authority, domestic or foreign, (b) require the consent or approval of any other person pursuant to any agreement, obligation or instrument binding on Shareholder, (c) conflict with or violate any organizational document or law, rule, regulation, order, judgment or decree applicable to Shareholder, or (d) violate any other agreement to which Shareholder is a party including, without limitation, any voting agreement, shareholder agreement, irrevocable proxy or voting trust. The Owned Shares are not, with respect to the voting or transfer of the Owned Shares, subject to any other agreement, including any voting agreement, shareholder agreement, irrevocable proxy or voting trust.
Section 2.3 Ownership of Securities. On the date of this Agreement, the Owned Shares set forth on Attachment A to this Agreement are owned of record or beneficially by Shareholder in the manner reflected on Attachment A, include all of the shares of Citizens Common Stock owned of record or beneficially by Shareholder, and are free and clear of any proxy or voting restriction, claims, liens, encumbrances and security interests (other than as created by this Agreement). As of the date of this Agreement Shareholder has, and at the Citizens Meeting or any other shareholder meeting of Citizens in connection with the Parent Merger, the Merger Agreement and the transactions contemplated by the Merger Agreement (except respecting Owned Shares that Shareholder is permitted to Transfer (as defined in Section 3.2(a) below) pursuant to this Agreement), Shareholder will have, sole voting power and sole dispositive power with respect to all of the Owned Shares. For purposes of this Agreement, the term “beneficial ownership” shall be interpreted in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
Section 2.4 Absence of Litigation. There is no suit, action, investigation or proceeding pending or, to the knowledge of Shareholder, threatened against or affecting Shareholder or any of its affiliates before or by any governmental authority that could reasonably be expected to impair the ability of Shareholder to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement on a timely basis.
Section 2.5 Reliance by City. Shareholder understands and acknowledges that City is entering into the Merger Agreement in reliance upon Shareholder’s execution, delivery and performance of this Agreement.
ARTICLE III
COVENANTS
Section 3.1 No Solicitation; Notice of Acquisitions; Proposals Regarding Prohibited Transactions.
(a) Shareholder agrees, that during the term of this Agreement, Shareholder shall not, and shall not permit any investment banker, financial advisor, attorney, accountant or other representative retained by Shareholder, directly or indirectly, to (i) take any of the actions specified in Section 6.06 of the Merger Agreement, except as permitted by such Section 6.06 of the Merger Agreement, (ii) participate in, directly or indirectly, a “solicitation” of “proxies” (as those terms are used in the rules of the SEC) or powers of attorney or similar rights to vote, or seek to advise or influence any person with respect to the voting of, any shares of Citizens Common Stock in connection with any vote or other action on any matter of a type described in Section 1.1(b) of this Agreement, other than to recommend that shareholders of Citizens vote in favor of the adoption and approval of the Merger Agreement and the Parent Merger and as otherwise expressly permitted by this Agreement or the Merger Agreement. Except as permitted by the Merger Agreement, Shareholder agrees immediately to cease and cause to be terminated any activities, discussions or negotiations conducted before the date of this Agreement with any persons other than City with respect to any possible Acquisition Proposal and will take all necessary steps to inform any investment banker, financial advisor, attorney, accountant or other representative retained by him, her or it of the obligations undertaken by Shareholder pursuant to this Section 3.1.
(b) Shareholder hereby agrees to notify City promptly (and, in any event, within 24 hours) in writing of the number of any additional shares of Citizens Common Stock of which Shareholder acquires beneficial or record ownership on or after the date hereof.
Section 3.2 Restrictions on Transfer and Proxies; Non-Interference.
(a) Shareholder agrees that it will not, prior to the earlier of the receipt of the Requisite Citizens Vote or the termination of this Agreement, Transfer or agree to Transfer any Owned Shares other than with City’s prior written consent. For purposes of this Agreement, “Transfer” shall mean to, other than in connection with the Parent Merger or the other transactions contemplated by the Merger Agreement, offer, sell, contract to sell, pledge, assign, distribute by gift or donation, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition of (whether by actual disposition or effective economic disposition due to cash settlement or otherwise)), directly or indirectly, any shares of capital stock of Citizens or any securities convertible into, or exercisable or exchangeable for such capital stock, or publicly announce an intention to effect any such transaction. Notwithstanding the foregoing, Shareholder may make gifts of Owned Shares during the term of this Agreement if the donee enters into an agreement containing covenants governing the voting and transfer of the transferred Owned Shares equivalent to those set forth in this Agreement.
(b) Shareholder hereby covenants and agrees that, except for this Agreement, it (i) has not entered into, and shall not enter into at any time while this Agreement remains in effect, any voting agreement or voting trust with respect to the Owned Shares, (ii) has not granted, and except for proxies granted as contemplated by Section 1.1(b), shall not grant at any time while this
Agreement remains in effect, a proxy, consent or power of attorney with respect to the Owned Shares, (iii) has not taken any action, and shall not take any action at any time while this Agreement remains in effect, that would or is reasonably likely to (A) make any representation or warranty contained in this Agreement untrue or incorrect in any material respect or (B) have the effect of preventing Shareholder from performing its obligations under this Agreement.
Section 3.3 Dissenters’ Rights. Shareholder agrees not to exercise any right to dissent (including, without limitation, under any rights set forth in Sections 271B.13-010 through 271B.13-310 of the KBCA) as to any Owned Shares which may arise with respect to the Parent Merger or the transactions contemplated by the Merger Agreement.
Section 3.4 Stop Transfer. Shareholder agrees that it shall not request that Citizens register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any Owned Shares prior to the receipt of the Requisite Citizens Vote, unless the transfer is made in compliance with this Agreement.
Section 3.5 Further Assurances; Cooperation.
(a) Shareholder, without further consideration, will (i) use all reasonable efforts to cooperate with City and Citizens in furtherance of the transactions contemplated by the Merger Agreement, (ii) promptly execute and deliver all additional documents that may be reasonably necessary in furtherance of the transactions contemplated by the Merger Agreement, and take all reasonable actions as are necessary or appropriate to consummate the transactions contemplated by the Merger Agreement, and (iii) promptly provide any information, and make all filings, reasonably requested by City for any regulatory application or filing made or approval sought in connection with the transactions contemplated by the Merger Agreement (including filings with any Regulatory Authorities).
(b) Shareholder consents to the publication and disclosure in the Proxy Statement (and, as and to the extent otherwise required by law or any Regulatory Authority or Governmental Authority, in any other documents or communications provided by City or Citizens to any Regulatory Authority or Governmental Authority or to security holders of City or Citizens) of Shareholder’s identity and beneficial and record ownership of the Owned Shares, the nature of Shareholder’s commitments, arrangements and understandings under and relating to this Agreement and the Merger Agreement and any additional requisite information regarding the relationship of Shareholder with City and the City Subsidiaries and/or Citizens, and the Citizens Subsidiaries.
ARTICLE IV
TERMINATION
Section 4.1 Termination. This Agreement shall terminate upon the earlier to occur of (i) the termination of the Merger Agreement in accordance with its terms and (ii) the Effective Time.
Section 4.2 Effect of Termination. In the event of termination of this Agreement pursuant to Section 4.1, this Agreement shall become void and of no effect with no liability on the part of any party hereto; provided, however, no termination of this Agreement prior to the Effective Time shall relieve any party to this Agreement from any liability for any breach of this Agreement occurring prior to the termination of this Agreement.
ARTICLE V
MISCELLANEOUS
Section 5.1 Amendment; Waivers. Any provision of this Agreement may be amended or waived if, and only if, the amendment or waiver is in writing and signed (a) in the case of an amendment, by the parties hereto, and (b) in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege under this Agreement shall operate as a waiver the applicable right, power or privilege, nor shall any single or partial exercise any right, power or privilege preclude any other or further exercise of the applicable right, power or privilege or the exercise of any other right, power or privilege.
Section 5.2 Expenses. Subject to Section 5.8, all costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring the expenses.
Section 5.3 Notices. All notices, requests, instructions or other communications or documents to be given or made hereunder by one party to the other party shall be in writing and (a) served by personal delivery upon the party for whom it is intended, (b) sent by an internationally recognized overnight courier service upon the party for whom it is intended, or (c) sent by email, provided that the transmission of the e-mail is promptly confirmed:
| | | | | |
| If to Shareholder: | The address provided on Attachment A hereto. |
| |
If to Citizens, to:
| Citizens Commerce Bancshares, Inc. 534 Marsailles Road Versailles, Kentucky 4038 Attention: Michelle Oxley Email: moxley@citizenscommerce.com |
| |
If to City, to:
| City Holding Company 25 Gatewater Road Charleston, WV 25313 Attention: Charles R. Hageboeck, President and CEO Email: Skip.Hageboeck@bankatcity.com |
| |
With a copy to:
| Dinsmore & Shohl LLP 255 E. Fifth Street, Suite 1900 Cincinnati, Ohio 45202 Attention: Michael G. Dailey, Esq. Email: michael.dailey@dinsmore.com |
Section 5.4 Entire Agreement; Assignment. This Agreement constitutes the entire agreement among the parties with respect to the subject matter of this Agreement and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. Neither this Agreement, nor any of the rights and obligations under this Agreement, shall be transferred by Shareholder without the prior written consent of City.
Section 5.5 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party to this Agreement and their respective successors, heirs, and permitted assigns. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.
Section 5.6 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, the invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in the applicable jurisdiction, and this Agreement shall be reformed, construed and enforced in the applicable jurisdiction so that the invalid, illegal or unenforceable provision or portion thereof shall be interpreted to be only so broad as is enforceable.
Section 5.7 Specific Performance; Remedies. Each of the parties to this Agreement agrees that this Agreement is intended to be legally binding and specifically enforceable pursuant to its terms and that City would be irreparably harmed if any of the provisions of this Agreement are not performed in accordance with their specific terms and that monetary damages would not provide adequate remedy in such event. Accordingly, in the event of any breach or threatened breach by Shareholder of any covenant or obligation contained in this Agreement, in addition to any other remedy to which City may be entitled (including monetary damages), City shall be entitled to seek injunctive relief to prevent breaches of this Agreement and to specifically enforce the terms and provisions of this Agreement. Shareholder further agrees that neither City nor any other person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 5.7, and Shareholder irrevocably waives any right it may have to require the obtaining, furnishing or posting of any bond or similar instrument. All rights, powers and remedies provided under this Agreement or otherwise available in respect of this Agreement at law or in equity shall be cumulative and not alternative, and the exercise of any right, power or remedy thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.
Section 5.8 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of West Virginia, without regard to any applicable conflicts of law principles. Each party agrees that it will bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby exclusively in any federal or state court located in Charleston, Kanawha County, West Virginia (the “Chosen Courts”), and, solely in connection with claims arising under this Agreement or the transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party and (iv) agrees that service of process upon such party in any such action or proceeding will be effective if notice is given in accordance with Section 5.8. Notwithstanding any other provision in this Agreement, in the event of any action arising out of or resulting from this Agreement, the prevailing party shall be entitled to recover its costs and expenses (including reasonable attorneys' fees and expenses) incurred in connection with the action.
Section 5.9 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY LAW AT THE TIME OF INSTITUTION OF THE APPLICABLE LITIGATION, ANY RIGHT THE PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.9.
Section 5.10 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.
Section 5.11 Counterparts. This Agreement may be executed in two or more counterparts (including by facsimile, email of a PDF copy, or other electronic means) 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 parties, it being understood that all parties need not sign the same counterpart.
Section 5.12 Delivery by Facsimile or Electronic Transmission. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by email delivery of a “.pdf” format data file, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto or to any agreement or instrument entered into in connection with this Agreement shall raise the use of a facsimile machine or email delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or email delivery of a “.pdf” format data file as a defense to the formation of a contract and each party hereto forever waives any defense based on the foregoing.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
SUPPORT AGREEMENT
Signature Page
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day first written above.
|
| | | | | | | | | | | | | |
SHAREHOLDERSSHAREHOLDER | | | CITY HOLDING COMPANY |
| | | | |
| | | | |
| | | | |
| | | By: | |
Bruce VanHorn[Name] | | | | Charles R. Hageboeck, President and CEO |
| | | | |
| | | | |
Stephen BurchettSHAREHOLDER’S SPOUSE | POAGE BANKSHARES, | | | |
| | | CITIZENS COMMERCE BANCSHARES, INC. |
| | | | |
| | | | |
| | | | |
| [Name] | | | By: |
Thomas L. Burnette | Bruce VanHorn, President and CEO |
| |
| |
Everett B. Gevedon | |
| |
| |
Daniel King III | |
| |
| |
Stuart N. Moore | |
| |
| |
Charles W. Robinson | |
| |
| |
John C. Stewart, Jr. | |
A-80
ANNEX I
|
| | | | | | | |
| Shareholder | Address and Email | Number ofOwned Shares |
A-81
EXHIBIT AB
ADOPTION AGREEMENT AND PLAN OF MERGER
This Adoptionis an Agreement (“Adoption Agreement”) is executed by the undersigned (the “Transferee”) pursuant to the termsand Plan of that certain Voting AgreementBank Merger (this “Agreement”) dated as of July 11, 2018 (the “_________, 2022, between City National Bank of West Virginia, a national banking association, being located in Charleston, Kanawha County, West Virginia (“AgreementCity National”) by, and amongCitizens Commerce Bank, Inc. a Kentucky banking corporation, being located in Versailles, Woodford County, Kentucky (“Citizens Commerce”).
RECITALS
A. City Holding Company, Poage Bankshares,a West Virginia corporation (“City”), owning all of the outstanding shares of City National, and Citizens Commerce Bancshares, Inc., and certaina Kentucky corporation (“Citizens”), owning all of Poage Bankshares, Inc. shareholders. Capitalized terms used but not defined in this Adoption Agreement shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Adoption Agreement, the Transferee agrees as follows:
1.1Acknowledgement. Transferee acknowledges that Transferee is acquiring certainoutstanding shares of the capital stock of Poage (the “Shares”) subject to the terms and conditions of the Agreement.
1.2Agreement. Transferee (i) agrees that the Shares acquired by Transferee shall be bound by and subject to the terms of the Agreement, (ii) hereby adopts the Agreement with the same force and effect as if Transferee was originally a party thereto, and (iii) agrees that Transferee shall be deemed a “Shareholder” under the Agreement.
1.3Notice. Any notice required or permitted by the Agreement shall be given to Transferee at the address listed beside Transferee’s signature below.
EXECUTED AND DATED this ___ day of __________, 20__.
Transferee
By:
Name:
Title:
Address:
Fax:
ANNEX B
Sandler O’Neill Financial Opinion
July 10, 2018
Board of Directors
Poage Bankshares, Inc.
1500 Carter Avenue
Ashland, KY 41101
Gentlemen:
Poage Bankshares, Inc. (the “Company”) and City Holding Company (“City”) are proposing to enterCitizens Commerce, entered into an Agreement and Plan of Merger (the “Agreement”“Merger Agreement”), dated October 18, 2022, pursuant to which the CompanyCitizens will merge with and into City, with City being the surviving corporation (“Parent Merger”).
B. The Merger Agreement contemplates that immediately following the consummation of the Parent Merger, Citizens Commerce is to be merged with and into City National (the “Merger”“Subsidiary Merger”). Pursuant
C. In consideration of the recitals and the mutual agreements, covenants and undertakings contained herein and for the purpose of setting forth the terms and conditions of the Subsidiary Merger, the parties, intending to be legally bound, agree as follows:
AGREEMENTS
1. The Parties.
A. City National. City National is a national banking association organized under the laws of the United States of America with its principal office in Charleston, West Virginia. As of the date hereof, the authorized capital stock of City National consists of 131,250 shares of common stock, $5.00 par value (“City National Common Stock”), of which 123,701 are issued and outstanding, fully paid and nonassessable and held by City. As of September 30, 2022, City National had paid-in-capital of $392,521,000 divided into 123,701 shares of common stock, each of $5.00 par value, surplus of $391,903,000, and undivided profits, including capital reserves, of $256,073,000.
B. Citizens Commerce. Citizens Commerce is a Kentucky banking corporation with its principal office in Versailles, Kentucky. The authorized capital stock of Citizens Commerce consists of 600,000 shares of common stock, $12.00 par value (“Citizens Commerce Common Stock”), of which 239,564 shares are issued and outstanding, fully paid and nonassessable and currently held by Citizens. As of September 30, 2022, Citizens Commerce had paid-in-capital of $2,874,768, divided into 239,564 shares of common stock, each of $12.00 par value, surplus of $24,300,978, and undivided profits, including capital reserves, of $8,176,220.
C. Banking Offices. Attached as Exhibit A is a listing of all of the banking offices of City National and Citizens Commerce as of the date of this Plan. City’s main office and branches are currently located in West Virginia, Kentucky, Virginia and Ohio, and Citizens Commerce’s main office and branches are all currently located in Kentucky. All of the existing banking offices will be retained in the Subsidiary Merger.
2. Subsidiary Merger. At the Effective Time (as hereinafter defined) and upon the terms and conditions set forth in this Agreement, Citizens Commerce shall be merged with and into City National under the charter of the latter. City National will be the receiving association in the Subsidiary Merger, and City National shall continue in existence as the surviving bank of the merger (the “Surviving Bank”).
3. Authorization. The Board of Directors of City National and its sole shareholder, City, have unanimously approved this Plan, authorized its execution, and authorized the performance by City National hereunder and the consummation of the transactions contemplated hereby. The Board of Directors of Citizens Commerce and its sole shareholder, Citizens, have unanimously approved this Plan, authorized its execution, and authorized the performance by Citizens Commerce hereunder and the consummation of the transactions contemplated hereby.
4. Statutory Merger. The Subsidiary Merger shall be effected in accordance with the provisions of 12 USC 215a, and, in the case of Citizens Commerce, of Section 286.3-173 of the Kentucky Revised Statutes. Subject to consummation of the Parent Merger and the other provisions of this Agreement, immediately after the Parent Merger, City National and Citizens Commerce shall cause such certificates or articles of merger and such other documents and certificates as are necessary to be executed and delivered for filing to the termsOffice of the Agreement,Comptroller of the Currency, the West Virginia Secretary of State and the Kentucky Secretary of State (“Merger Certificates”).
5. Effective Time. The Bank Merger shall become effective as specified in the approval to be issued by the Comptroller of the Currency (the “Effective Time”). In any event, the Effective Time shall not occur until after the effective time of the Parent Merger.
4. Articles of Association and Regulations. The Articles of Association of City National, as in effect at the Effective Time, shall be the Articles of Association of the Surviving Bank, until they shall be thereafter altered, amended, or repealed in accordance with law. Until amended or repealed as therein provided, the Bylaws of City National in effect at the Effective Time shall be the Bylaws of the Surviving Bank.
5. Directors and Officers. The directors and officers of City National shall be the directors and officers of the Surviving Bank until the next annual meeting of shareholders and directors of Surviving Bank, unless their tenure as officers or directors is sooner terminated.
6. Names and Offices. The name of the Surviving Bank shall be “City National Bank of West Virginia.” The main office of the Surviving Bank shall be the main office of City National immediately prior to the Effective Time. All branch offices of City National and offices of Citizens Commerce which were in lawful operation immediately prior to the Effective Time shall be the branch
offices of the Surviving Bank upon consummation of the Subsidiary Merger, subject to the opening or closing of any offices which may be authorized by City National or Citizens Commerce and applicable regulatory authorities after the date hereof.
7. Conversion of Citizens Commerce Shares. At the Effective Time, each issued and outstanding share of commonCitizens Commerce capital stock par value $0.01 per share,shall automatically by virtue of the Company (“Company Common Stock”)Subsidiary Merger be canceled without payment.
8. City National Capital Stock. The shares of City National capital stock issued and outstanding immediately prior to the Effective DateTime shall remain outstanding and shall not be affected by the Subsidiary Merger.
9. Certain Effects of Merger. At the Effective Time, in addition to the effects otherwise provided by the laws of the United States and Kentucky, City National and Citizens Commerce shall become a single corporation and the separate existence of Citizens Commerce shall cease. Surviving Bank shall possess all the rights, privileges, powers and franchises of both a public and private nature of Citizens Commerce subject to all of its restrictions, disabilities and duties, and shall also possess all of the property (real, personal and mixed) and all debts due to Citizens Commerce. All other things or belonging to Citizens Commerce shall be vested in the Surviving Bank; and all property, rights, privileges, powers and franchises and all and every other interest shall thereafter be the property of the Surviving Bank, and the title to any real estate vested by deed or otherwise in Citizens Commerce shall not revert or be in any way impaired by reason of the Subsidiary Merger. All rights of creditors and all liens of Citizens Commerce shall be preserved unimpaired, and all debts, liabilities and duties of Citizens Commerce shall at the Effective Time become obligations of the Surviving Bank and may be enforced against it to the same extent as if such debts, liabilities and duties had been incurred or contracted by it.
10. Termination. This Agreement shall be terminated upon the agreement of the parties hereto. In addition, this Agreement shall terminate automatically upon termination of the Merger Agreement prior to the consummation of the Parent Merger.
11. Conditions. The respective obligations of each party hereto to effect the Subsidiary Merger shall be subject to: (a) the consummation of the Parent Merger; and (b) the receipt of all approvals and consents of regulatory authorities required by law to effect the Subsidiary Merger.
12. Amendment. On or before the Effective Time, the parties may amend, modify or supplement this Plan of Merger in the manner as may be agreed upon between the parties in writing.
13. Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts (including by facsimile or other electronic means), each of which shall be deemed to be an original but all of which together shall constitute one agreement.
14. Governing Law. This Agreement shall be governed in all respects by the laws of the United States and the laws of the Commonwealth of Kentucky, with the laws of the United States governing in case of any conflict or inconsistency.
15. Waiver. Any of the terms or conditions of this Agreement may be waived at any time by the party that is entitled to the benefit thereof.
16. Assignment. This Agreement may not be assigned by any party hereto without the prior written consent of the other party.
[Signature Page Follows]
WITNESS, the signatures and seals of the merging banks this ___ day of _______, 2022, each set by its president and attested to by its cashier or secretary, pursuant to a resolution of its board of directors, acting by a majority.
| | | | | | | | | | | | | | |
CITY NATIONAL BANK OF WEST VIRGINIA | | CITIZENS COMMERCE BANK, INC. |
| | | | |
| | | | |
| By: | | | By: | |
| Charles R. Hageboeck, President & CEO | | | Michelle Oxley, President |
| | | | |
| | | | |
| By: | | | By: | |
| Victoria A. Faw, Secretary & Senior Vice President | | | Eli Barber, Secretary |
STATE OF WEST VIRGINIA)
) ss:
COUNTY OF ___________)
On this ____ day of __________, 202__, before me, a notary public for this state and county, personally came Charles R. Hageboeck, as president, and Victoria A. Faw, as secretary, of City National Bank, and each in his/her capacity acknowledged this instrument to be the act and deed of the association.
WITNESS my official seal and signature this day and year.
| | | | | | | | |
| | |
| (Seal of Notary) | Notary Public, Kanawha County |
| | |
| My commission expires | |
COMMONWEALTH OF KENTUCKY )
) ss:
COUNTY OF _________ )
On this ____ day of _____________, 202__, before me, a notary public for this state and county, personally came Michelle Oxley, as president, and Eli Barber, as secretary, of Citizens Commerce Bank, Inc. and each in his/her capacity acknowledged this instrument to be the act and deed of the corporation.
WITNESS my official seal and signature this day and year.
| | | | | | | | |
| | |
| (Seal of Notary) | Notary Public, Woodford County |
| | |
| My commission expires | |
Exhibit A
Citizens Commerce Banking Offices:
| | | | | |
| Fayette County, Kentucky: | 4097 Nichols Park Drive |
| Lexington, KY 40503 |
| |
| Franklin County, Kentucky: | 108 Sea Hero Road |
| Frankfort, KY 40601 |
| |
| Jessamine County, Kentucky: | 714 South Main Street |
| Nicholasville, KY 40356 |
| |
| Woodford County, Kentucky: | 231 South Main Street |
| Versailles, KY 40383 |
| |
| 534 Marsailles Road |
| Versailles, KY 40383 |
| |
| 534 Marsailles Road1 |
| Versailles, KY 40383 |
City National Banking Offices:
1 Limited service – Messenger Office
| | |
Office/Branch Number
Address |
Beaver - #86 212 Airport Road Beaver, WV 25813
|
Cross Roads - #62 5517 Robert C Byrd Dr Mt Hope WV 25880
|
Eisenhower - #52 902 N. Eisenhower Dr. Beckley, WV 25801
|
Harper Road - #63 1723 Harper Road Beckley, WV 25801
|
Hinton - #83 515 Stokes Dr. Hinton, WV 25951
|
Main & Kanawha - #66 101 So. Kanawha St. Beckley, WV 25801 |
Park Avenue - #61 One Park Avenue Beckley, WV 25801 |
Princeton - #88 191 Greasy Ridge Road Princeton, WV 24739
|
Sophia Wal-Mart - #17 One Park Avenue Beckley, WV 25801
|
Alderson - #57 2213 Alta Drive Alderson, WV 24910 |
Fairlea, Krogers - #58 176 Red Oak Shopping Center Ronceverte, WV 24970
|
Lewisburg - #59 809 Jefferson St., S Lewisburg, WV 24901
|
Marlinton - #81 300 8th Street P.O. Box 58 Marlinton, WV 24954 |
North Lewisburg - #60 130 Piercy Drive P.O. Box 387 |
| | |
| Lewisburg, WV 24901 |
Rainelle - #49 732 Main Street Rainelle, WV 25962-1245
|
Rupert - #56 709 Nicholas St. Rupert, WV 25984
|
Berkeley Springs - #75 149 N. Washington St Berkeley Springs, WV 25411
|
Charles Town - #74 1034 S. George Street Charles Town, WV 25414 |
Edwin Miller Blvd - #73 255 Administrative Drive Martinsburg, WV 25404
|
Inwood - #76 142 Sader Drive P.O. Box 1579 Inwood, WV 25428 |
King Street - #71 1700 West King Street Martinsburg, WV 25401 |
Potomac Marketplace - #84 75 West Virginia Way Potomac Marketplace Ranson, WV 25438 |
Spring Mills - #87 88 Cordial Court Falling Waters, WV 25419
|
Flatwoods - #80 3859 Sutton Lane Sutton, WV 26601
|
Gassaway - #79 324 Elk Street Gassaway, WV 26624
|
Sutton - #78 101 Second St. Sutton, WV 26601
|
Downtown Charleston - #10 10 Hale Street, Suite 100 Charleston, WV 25301 |
Kanawha City - #1 3601 MacCorkle Ave., SE Charleston, WV 25304
|
| | |
South Charleston - #2 4110 MacCorkle Avenue, SW South Charleston, WV 25309
|
South Hills - #4 1004 Bridge Road Charleston, WV 25314
|
Southridge Wal-Mart - #16 2700 Mountaineer Blvd. South Charleston, WV 25309
|
West Side - #3 120 Kanawha Blvd. W. Charleston, WV 25302
|
|
Worthington - #121 923 North High St Worthington, OH 43085
|
Cross Lanes - #5 308 Goff Mountain Road Cross Lanes, WV 25313
|
Eleanor - #7 946 Roosevelt Blvd. P.O. Box 513 Eleanor, WV 25070 |
Hurricane - #47 39 Raymond Peak Way Hurricane, WV 25526 |
Teays Valley - #11 100 Poplar Fork Rd. P.O. Box 250 Scott Depot, WV 25560 |
Winfield - #8 74 Wall Street Winfield, WV 25213-9662
|
Dunbar - #13 304 10th Street Dunbar, WV 25064
|
Gauley Bridge - #32 1 Main Street Gauley Bridge, WV 25085
|
Glasgow - #31 102 Melrose Drive Glasgow, WV 25086
|
Marmet - #9 9005 MacCorkle Ave., SE Marmet, WV 25315 |
| | |
Montgomery #30 320 4th Avenue P.O. Box 1109 Montgomery, WV 25136 |
St. Albans - #6 560 4th Street St. Albans, WV 25177
|
Ashland Main - #125 1500 Carter Avenue Ashland, KY 41101
|
Ashland Wal-Mart - #18 351 River Hill Drive Ashland, KY 41101
|
Cannonsburg - #127 9431 U.S. 60 Ashland, KY 41102
|
Flatwoods, KY - #128 1608 Argillite Rd P.O. Box 1042 Flatwoods, KY 41139 |
Grayson - #19 575 N. Carol Malone Blvd Grayson, KY 41142
|
Greenup - #28 1414 Ashland Road Greenup, KY 41144
|
King's Daughters - #101 617 23rd Street, Suite 104 Ashland, KY 41101
|
Louisa - #130 119 North Main Cross Street Louisa, KY 41230
|
Painstville Mayo - #29 440 N. Mayo Trail Paintsville, KY 41240
|
Paintsville Suburban - #33 603 South Mayo Trail Paintsville, KY 41240
|
Russell - #25 1500 Diederich Blvd Russell, KY 41169
|
South Shore - #131 33 McKell Lane South Shore, KY 41175
|
Carlisle - #117 386 West Main St Carlisle, KY 40311 |
| | |
|
Cynthiana Southside - #116 698 US Hwy 27 S Cynthiana, KY 41031
|
Lexington Main - #110 318 East Main Street Lexington, KY 40507
|
Mt. Sterling - #114 101 Commonwealth Drive Mt. Sterling, KY 40353
|
Nicholasville - #113 150 South Main St Nicholasville, KY 40356
|
Palomar - #111 3750 Palomar Centre Drive Lexington, KY 40513
|
Tates Creek - #112 3616 Walden Drive Lexington, KY 40517
|
Front Royal - #201 600 Commerce Ave. Front Royal, VA 22630
|
Stephens City - #205 100 Elizabeth Drive Stephens City, VA 22655
|
Strasburg - #202 33230 Old Valley Pike P.O. Box 88 Strasburg VA 22657 |
Jubal Early - #203 1830 Valley Avenue Winchester, VA 22601
|
Woodstock - #204 1001 South Main Street Woodstock, VA 22664
|
Mason - #22 1711 Second St Mason, WV 25260
|
New Haven - #21 413 5th St. P.O. Box 188 New Haven, WV 25265 |
Pt. Pleasant - #20 2212 Jackson Ave. P.O. Box 518 Pt. Pleasant, WV 25550 |
| Ripley - #26 |
| | |
108 Church St., North Ripley WV 25271
|
Ripley(Remote location) 110 Church St., South |
Ripley, WV 25271
|
Ripley Wal-Mart - #37 200 Academy Drive Ripley, WV 25271
|
Buena Vista - #225 128 West 21st St. Buena Vista, VA 24416
|
Lexington - #227 102 Walker Street Lexington, VA 24450
|
|
Raphine - #229 2134 Raphine Road P.O. Box 132 Raphine, VA 24472 |
Richmond Road - #230 101 Community Way Staunton, VA 24401
|
Staunton Downtown - #228 38 North Central Avenue Staunton, VA 24401
|
Stuarts Draft - #231 2658 Stuarts Draft Highway Stuarts Draft, VA 24477
|
Verona - #232 21 Dick Huff Lane Verona, VA 24482
|
Waynesboro - #233 2934 West Main Street Waynesboro, VA 22980
|
Chesapeake - #39 3871 State Route 7 Chesapeake, OH 45619
|
Ironton - #98 506 Park Avenue Ironton, OH 45638
|
Proctorville - #97 201 State Street Proctorville, OH 45669
|
Twentieth Street - #34 1900 3rd Ave. Huntington, WV 25703
|
| | |
University - #35 1751 5th Ave. Huntington, WV 25703
|
Wayne - #38 10366 Route 152 Wayne, WV 25570
|
Hamlin - #44 8028 Lynn Ave. Hamlin, WV 25523
|
Milton - #41 1041 Church St. Milton, WV 25541
|
Pea Ridge - #40 5263 US Rt. 60 East Huntington, WV 25705
|
West Hamlin - #42 6888 McClellan St. West Hamlin, WV 25571
|
Bridgeport - #46 1216 Johnson Ave. Bridgeport, WV 26330
|
Clarksburg - #45 115 West Main St. Clarksburg, WV 26301
|
Morgantown -#48 1182 Pineview Drive Morgantown, WV 26505
|
ANNEX B
Dissenters’ Rights Under Chapter 271B. Subtitle 13 of the Kentucky Business Corporation Act
Subtitle 13 of the Kentucky Business Corporation Act, Dissenters’ Rights
Right to Dissent and Obtain Payment for Shares
271B.13-010. Definitions for subtitle.
As used in this subtitle:
(1) “Corporation” means the issuer of the shares held by a dissenter, except that in the case of a merger where the issuing corporation is not the surviving corporation, then, after consummation of the merger, “corporation” shall mean the surviving corporation.
(2) “Dissenter” means a shareholder who is entitled to dissent from corporate action under KRS 271B.13-020 and who exercises that right when and in the manner required by KRS 271B.13-200 to 271B.13-280.
(3) “Fair value,” with respect to a dissenter’s shares, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable. In any transaction subject to the requirements of KRS 271B.12-210 or exempted by KRS 271B.12-220(2), “fair value” shall be at least an amount required to be paid under KRS 271B.12-220(2) in order to be exempt from the requirements of KRS 271B.12-210.
(4) “Interest” means interest from the effective date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under all the circumstances.
(5) “Record shareholder” means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation.
(6) “Beneficial shareholder” means the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder.
(7) “Shareholder” means the record shareholder or the beneficial shareholder.
271B.13-020. Right to dissent.
(1) A shareholder shall be entitled to dissent from, and obtain payment of the fair value of his shares in the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If shareholder approval is required for the merger by KRS 271B.11-030 or the articles of incorporation and the shareholder is entitled to vote on the merger; or
2. If the corporation is a subsidiary that is merged with its parent under KRS 271B.11-040;
(b) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be convertedacquired, if the shareholder is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all, of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, but not including a sale pursuant to court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one (1) year after the date of sale;
(d) Consummation of a plan of conversion of the corporation into a limited liability company or statutory trust;
(e) An amendment of the articles of incorporation that materially and adversely affects rights in respect of a dissenter’s shares because it:
1. Alters or abolishes a preferential right of the shares to a distribution or in dissolution;
2. Creates, alters, or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase, of the shares;
3. Excludes or limits the right of the shares to receive 0.335 (the “Exchange Ratio”)vote on any matter other than a limitation by dilution through issuance of shares or other securities with similar voting rights;
4. Reduces the number of shares owned by the shareholder to a fraction of a share, if the fractional share so created is to be acquired for cash under KRS 271B.6-040; or
5. In a public benefit corporation, changes the public benefit provisions;
(f) Any transaction subject to the requirements of common stock, par value $2.50 per share,KRS 271B.12-210 or exempted by KRS 271B.12-220(2);
(g) Any election by a corporation to become a public benefit corporation or pursuant to the merger of City (“City Common Stock”). Capitalized terms used herein without definition havea corporation with and into a public benefit corporation; or
(h) Any corporate action taken pursuant to a shareholder vote to the meanings assignedextent the articles of incorporation, bylaws, or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to themdissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for his shares under this chapter shall not challenge the corporate action creating his entitlement except by an application for injunctive relief prior to the consummation of the corporate action.
271B.13-030. Dissent by nominees and beneficial owners.
(1) A record shareholder may assert dissenters’ rights as to fewer than all the shares registered in his name only if he shall dissent with respect to all shares beneficially owned by any one (1) person and notify the corporation in writing of the name and address of each person on whose behalf he asserts dissenters’ rights. The rights of a partial dissenter under this subsection shall be determined as if the shares as to which he dissents and his other shares were registered in the Agreement. The termsnames of different shareholders.
(2) A beneficial shareholder may assert dissenters’ rights as to shares held on his behalf only if:
(a) He submits to the corporation the record shareholder’s written consent to the dissent not later than the time the beneficial shareholder asserts dissenters’ rights; and conditions
(b) He does so with respect to all shares of which he is the beneficial shareholder or over which he has power to direct the vote.
Procedure for Exercise of Dissenters’ Rights
271B.13-200. Notice of dissenters’ rights.
(1) If proposed corporate action creating dissenters’ rights under KRS 271B.13-020 is submitted to a vote at a shareholders’ meeting, the meeting notice must state that shareholders are or may be entitled to assert dissenters’ rights under this subtitle and the corporation shall undertake to provide a copy of this subtitle to any shareholder entitled to vote at the shareholders’ meeting upon request of that shareholder.
(2) If corporate action creating dissenters’ rights under KRS 271B.13-020 is taken without a vote of shareholders, the corporation shall notify in writing all shareholders entitled to assert dissenters’ rights that the action was taken and send them the dissenters’ notice described in KRS 271B.13-220.
271B.13-210. Notice of intent to demand payment.
(1) If proposed corporate action creating dissenters’ rights under KRS 271B.13-020 is submitted to a vote at a shareholders’ meeting, a shareholder who wishes to assert dissenters’ rights:
(a) Shall deliver to the corporation before the vote is taken written notice of his intent to demand payment for his shares if the proposed action is effectuated; and
(b) Shall not vote his shares in favor of the Merger areproposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1) of this section shall not be entitled to payment for his shares under this chapter.
271B.13-220. Dissenters’ notice.
(1) If proposed corporate action creating dissenters’ rights under KRS 271B.13-020 is authorized at a shareholders’ meeting, the corporation shall deliver a written dissenters’ notice to all shareholders who satisfied the requirements of KRS 271B.13-210.
(2) The dissenters’ notice shall be sent no later than ten (10) days after the date the proposed corporate action was authorized by the shareholders, or, if no shareholder authorization was obtained, by the board of directors, and shall:
(a) State where the payment demand must be sent and where and when certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action and requires that the person asserting dissenters’ rights certify whether or not he acquired beneficial ownership of the shares before that date;
(d) Set a date by which the corporation must receive the payment demand, which date may not be fewer than thirty (30), nor more fullythan sixty (60) days after the date the notice provided in subsection (1) of this section is delivered; and
(e) Be accompanied by a copy of this subtitle.
271B.13-230. Duty to demand payment.
(1) A shareholder who is sent a dissenters’ notice described in KRS 271B.13-220 shall demand payment, certify whether he acquired beneficial ownership of the shares before the date required to be set forth in the Agreement. dissenters’ notice pursuant to subsection (2)(c) of KRS 271B.13-220, and deposit his certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits his share certificates under subsection (1) of this section shall retain all other rights of a shareholder until these rights are canceled or modified by the taking of the proposed corporate action.
(3) A shareholder who does not demand payment or deposit his share certificates where required, each by the date set in the dissenters’ notice, shall not be entitled to payment for his shares under this subtitle.
271B.13-240. Share restrictions.
(1) The corporation may restrict the transfer of uncertificated shares from the date the demand for their payment is received until the proposed corporate action is taken or the restrictions released under KRS 271B.13-260.
(2) The person for whom dissenters’ rights are asserted as to uncertificated shares shall retain all other rights of a shareholder until these rights are canceled or modified by the taking of the proposed corporate action.
271B.13-250. Payment.
(1) Except as provided in KRS 271B.13-270, as soon as the proposed corporate action is taken, or upon receipt of a payment demand, the corporation shall pay each dissenter who complied with KRS 271B.13-230 the amount the corporation estimates to be the fair value of his shares, plus accrued interest.
(2) The payment shall be accompanied by:
(a) The corporation’s balance sheet as of the end of a fiscal year ending not more than sixteen (16) months before the date of payment, an income statement for that year, a statement of changes in shareholders’ equity for that year, and the latest available interim financial statements, if any;
(b) A statement of the corporation’s estimate of the fair value of the shares;
(c) An explanation of how the interest was calculated; and
(d) A statement of the dissenter’s right to demand payment under KRS 271B.13-280.
271B.13-260. Failure to take action.
(1) If the corporation does not take the proposed action within sixty (60) days after the date set for demanding payment and depositing share certificates, the corporation shall return the deposited certificates and release the transfer restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer restrictions, the corporation takes the proposed action, it shall send a new dissenters’ notice under KRS 271B.13-220 and repeat the payment demand procedure.
271B.13-270. After-acquired shares.
(1) A corporation may elect to withhold payment required by KRS 271B.13-250 from a dissenter unless he was the beneficial owner of the shares before the date set forth in the dissenters’ notice as the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action.
(2) To the extent the corporation elects to withhold payment under subsection (1) of this section, after taking the proposed corporate action, it shall estimate the fair value of the shares, plus accrued interest, and shall pay this amount to each dissenter who agrees to accept it in full satisfaction of his demand. The corporation shall send with its offer a statement of its estimate of the fair value of the shares, an explanation of how the interest was calculated, and a statement of the dissenter’s right to demand payment under KRS 271B.13-280.
271B.13-280. Procedure if shareholder dissatisfied with payment or offer.
(1) A dissenter may notify the corporation in writing of his own estimate of the fair value of his shares and amount of interest due, and demand payment of his estimate (less any payment under KRS 271B.13-250), or reject the corporation’s offer under KRS 271B.13-270 and demand payment of the fair value of his shares and interest due, if:
(a) The dissenter believes that the amount paid under KRS 271B.13-250 or offered under KRS 271B.13-270 is less than the fair value of his shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under KRS 271B.13-250 within sixty (60) days after the date set for demanding payment; or
(c) The corporation, having failed to take the proposed action, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within sixty (60) days after the date set for demanding payment.
(2) A dissenter waives his right to demand payment under this section unless he shall notify the corporation of his demand in writing under subsection (1) of this section within thirty (30) days after the corporation made or offered payment for his shares.
Judicial Appraisal of Shares
271B.13-300. Court action.
(1) If a demand for payment under KRS 271B.13-280 remains unsettled, the corporation shall commence a proceeding within sixty (60) days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the sixty (60) day period, it shall pay each dissenter whose demand remains unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the Circuit Court of the county where a corporation’s principal office (or, if none in this state, its registered office) is located. If the corporation is a foreign corporation without a registered office in this state, it shall commence the proceeding in the county in this state where the registered office of the domestic corporation merged with or whose shares were acquired by the foreign corporation was located.
(3) The corporation shall make all dissenters (whether or not residents of this state) whose demands remain unsettled parties to the proceeding as in an action against their shares and all parties shall be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced under subsection (2) of this section shall be plenary and exclusive. The court may appoint one (1) or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. The appraisers have the powers described in the order appointing them, or in any amendment to it. The dissenters shall be entitled to the same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding shall be entitled to judgment:
(a) For the amount, if any, by which the court finds the fair value of his shares, plus interest, exceeds the amount paid by the corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired shares for which the corporation elected to withhold payment under KRS 271B.13-270.
271B.13-310. Court costs and counsel fees.
(1) The court in an appraisal proceeding commenced under KRS 271B.13-300 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under KRS 271B.13-280.
(2) The court may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters, if the court finds the corporation did not substantially comply with the requirements of KRS 271B.13-200 to 271B.13-280; or
(b) Against either the corporation or a dissenter, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this subtitle.
(3) If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to these counsel reasonable fees to be paid out of the amounts awarded the dissenters who were benefited.
ANNEX C
October 18, 2022
Board of Directors
Citizens Commerce Bancshares, Inc.
534 Marsailles Road
Versailles, KY 40383
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of view, of the Exchange RatioMerger Consideration to the holders of Citizens Commerce Bancshares, Inc. (“CCB”) common stock pursuant to the Agreement and Plan of Merger dated October 18, 2022 (the "Agreement") by and between City Holding Company Common Stock.(“CHCO”), Charleston, West Virginia, and CCB.
The Agreement provides for CCB to merge with and into CHCO, with CHCO as the surviving entity (the “Merger”), and immediately thereafter Citizens Commerce Bank, Inc., the wholly-owned subsidiary of CCB, will merge into City National Bank of West Virginia, the wholly-owned subsidiary of CHCO, with City National Bank of West Virginia as the surviving entity (the “Bank Merger”). Following the Bank Merger, the banking offices of Citizens Commerce Bank, Inc. shall be operated as banking offices of City National Bank of West Virginia. Capitalized terms used herein without definition shall have the meanings given to such terms in the Agreement.
Sandler O’Neill & Partners, L.P.The Agreement provides for each of the 3,821,101 shares of CCB common stock to be converted into the right to receive 0.1666 shares of CHCO common stock (the “Exchange Ratio”). The Merger Consideration is defined in the Agreement as the shares of CHCO common stock that will be issued to CCB shareholders in the Merger. No fractional shares of CHCO will be issued in connection with the Merger, and in lieu thereof, fractional shares will be paid in cash based on the average closing price of CHCO common stock on the NASDAQ Stock Market as reported in the Wall Street Journal for the five (5) consecutive full trading days ending on the trading day immediately preceding the Closing Date, and as more fully described in the Agreement.
There are also outstanding options to acquire 243,690 shares of CCB common stock at a weighted exercise price of $6.23 per share. The Agreement provides for each outstanding option to acquire shares of CCB common stock to fully vest, and for each option holder to receive a cash payment equal to the excess of $14.50 per share (the “Per Share Merger Consideration”) over the exercise price per share of the CCB common stock subject to the option (the “Option Cash-Out Amount”). The Option Cash-Out Amount shall be paid by CCB to the applicable former option holder on the Closing Date. In the event the exercise price of a CCB option is equal to or greater than $14.50 per share, such CCB option shall be cancelled without consideration.
The Agreement also contains a termination right for CCB in the event both: (i) the CHCO Market Value is $71.98 per share (which is 82.7 percent of $87.04 per share) or lower on the Determination Date; and (ii) the quotient obtained by dividing the CHCO Market Value on the Determination Date by $87.04 is less than the quotient obtained by dividing the Index Price on the Determination Date by $61.26 per share, minus 17.5 percent. The Index Price on September 22, 2022, was $61.26 per share. The Index is the SPDR S&P Regional Banking ETF (symbol “KRE”). The Determination Date is the latest of the date on which all required regulatory and shareholder approvals is obtained. The CHCO Market Value and Index Price calculations are based on the average of the daily closing prices for the 20 consecutive trading days immediately preceding such specified date. In the event CCB elects to exercise its termination right pursuant to this paragraph, CHCO shall have the option, but not the obligation, to increase the Exchange Ratio in accordance with procedures outlined in the Agreement to avoid termination. This paragraph summarizes the substance of CCB’s termination right based on a possible decline in CHCO’s market price following execution of the Agreement. Please refer to the Agreement for complete details and definitions.
Board of Directors
Citizens Commerce Bancshares, Inc.
October 18, 2022
Page 2 of 3
Hovde Group, LLC (“Sandler O’Neill”, “we” or “our”Hovde”), as part of its investment banking business,practice, is regularlycustomarily engaged in the valuation ofadvising and valuing financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions. In connection with thisrendering our opinion set forth herein, we have reviewed andand/or considered among other things: things, the following:
(i) a draft of the Agreement dated July 9, 2018; October 18, 2022;
(ii)certain publicly available financial statements and other historical financial information of the CompanyCCB and CHCO that we deemed relevant;
(iii)certain publicly availablenon-public internal financial statements and other historical financial informationoperating data of CityCCB and CHCO that we deemed relevant; were prepared and provided to us by the respective management of CCB and CHCO;
(iv) certaininternal financial projections for the CompanyCCB for the years ending December 31, 2018 through December 31, 2020, as provided2022, 2023 and 2024, prepared by, the seniorand reviewed with, management of the Company, and estimated long-term annual earnings growth rate, dividend and other assumptions for the Company, as directed by the senior management of the Company; CCB;
(v) publicly available median analyst estimates for City for the years ending December 31, 2018 and December 31, 2019, a publicly available median analyst estimated long-term annual earnings growth rate for City and an estimated annual asset growth rate for City, as provided by the senior management of City; (vi) the pro forma financial impact of the Merger on CityCHCO, based on certain assumptions relating to purchasetransaction expenses, acquisition accounting adjustments, and cost savings and transaction expenses, as provided by the senior managementdiscussed with representatives of City, as well as certain financial projections for the Company for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of City; (vii) the CHCO;
(vi)publicly reported historical stock price and trading activity for Company Common Stock and City Common Stock,CHCO’s common stock, including a comparison of certain stock market information for Company Common Stock and City Common Stock and certain stock indices as well as publicly available information for certain other similar companies, the securities of which are publicly traded; (viii) a comparisonan analysis of certain financial and stock information for the Company and City with similar institutions for which information isof certain other publicly available; (ix) traded companies deemed comparable to CHCO;
(vii)the financial terms of certain recent business combinations in the bank and thriftcommercial banking industry, (on a regional and nationwide basis), to the extent publicly available; (x) available, deemed comparable to the Merger;
(viii)the current market environment generally and the banking
environment in particular; and, (xi)
(ix)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 the CompanyCCB the business, financial condition, results of operations and prospects of the CompanyCCB, including certain operating, regulatory and other financial matters. We held similar discussions with certain members of the senior management of CityCHCO regarding the business, financial condition, results of operations and prospects of City.
In performing our review, we haveCHCO. Hovde’s opinion was given in reliance on information and representations made or given by CCB and CHCO, and their respective officers, directors, auditors, counsel, and other agents, and on filings, releases and other information issued by CCB and CHCO, including, without limitation, financial statements, financial projections, and stock price data as well as certain other information from recognized independent sources. Hovde assumed and relied upon the accuracy and completeness of all of the financialsuch information and other information that was available todata and reviewed by us from public sources, that was provided to us by the Company or City or their respective representatives or that was otherwise reviewed by us, and we have assumed such accuracy and completeness for purposes of rendering this opinion without any independent verification or investigation. We have relied on the assurances of the respective managements of the Company and City that they aredid not aware of any facts or circumstances that would makeindependently verify any of such information inaccurate or misleading. We have not been asked to undertake, and have not undertaken, an independent verificationdata for purposes of any of such information and we doits opinion. Hovde does not assume any responsibility or liability for the accuracy or completeness thereof. We did not make anof such information or data provided by CCB, CHCO, or third-party independent evaluation or perform an appraisalsource.
As part of the specificdue diligence process, we made no independent verification as to the status and value of CCB’s or CHCO’s assets, including the collateral securing assets or the liabilities (contingent or otherwise) of the Company or City or anyvalue of their respective subsidiaries, norloan portfolios and allowances for loan and lease losses, and have we been furnished with any such evaluations or appraisals. We render no opinion or evaluation oninstead relied upon representations and information concerning the collectabilityvalue of any assets or the future performance of any loans of the Company or City. We did not make an independent evaluation ofand the adequacy of the allowance for loan losses of the Company or City, or of the combined entity after the Merger, and we have not reviewed any individual credit files relating to the Company or City. We have assumed, with your consent, that the respective allowances for loan losses for both the Company and City are adequate to cover such losses and will be adequate on a pro forma basis for the combined entity.
In preparing its analyses, Sandler O’Neill used certain financial projections for the Company for the years ending December 31, 2018 through December 31, 2020, as provided by the senior management of the Company, and estimated long-term annual earnings growth rate, dividend and other assumptions for the Company, as directed by the senior management of the Company, as well as publicly available median analyst estimates for City for the years ending December 31, 2018 and December 31, 2019, a publicly available median analyst estimated long-term annual earnings growth rate for City and an estimated annual asset growth rate for City, as provided by the senior management of City. Sandler O’Neill also received and used in its pro forma analyses certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses, as provided by the senior management of City, as well as certain financial projections for the Company for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of City. With respect to the foregoing information, the respective senior managements of the Company and City confirmed to us that such information reflected (or,reserves in the case of the publicly available median analyst estimates and publicly available median analyst estimated long-term annual earnings growth rate referred to above, were consistent with) the best currently available estimates and judgments of those respective senior managements as to the future financial performance of the Company and City, respectively, and the other matters covered thereby We express no opinion as to such information, or the assumptions on which such information is based. We have alsoaggregate. In addition, Hovde assumed that there has been no material change in the respective assets, financial condition, results of operations, business or prospects of the Company or City since the date of the most recent financial statements made available to us. We have assumed in all respects material to our analysis that the Company and City will remain as going concerns for all periods relevant to our analysis.
We have also assumed, with your consent, that (i) each of the parties to the Agreement will comply in all material respects with all material terms and conditions of the Agreement and all related agreements, that all of the representations and warranties contained in such agreements are true and correct in all material respects, that each of the parties to such agreements will perform in all material respects all of the covenants and other obligations required to be performed by such party under such agreements and that the conditions precedent in such agreements are not and will not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals consents and releases with respect tofor the Merger,transaction, no delay, limitation, restriction or condition will be imposed that wouldwill have ana material adverse effect on the Company, City or the Merger or any related transaction, (iii) the Merger and any related transactions will be consummated in accordance with the termscontemplated benefits of the Agreement without any waiver, modification or amendment of any material term, condition or agreement thereoftransaction to CCB and in compliance with all applicable lawsits shareholders.
This opinion is based on economic and market conditions and other requirements, and (iv) the Merger will qualify as a tax-free reorganization for federal income tax purposes. Finally, with your consent, we have relied upon the advice that the Company has received 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. We express no opinion as to any such matters.
Our opinion is necessarily based on financial, economic, market and other conditions as in effectcircumstances existing 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 express no opinion as to the trading values of Company Common Stock or City Common Stock at any time or what the value of City Common Stock will be once it is actually received by the holders of Company Common Stock.
We have acted as the Company’s financial advisor in connection with the Merger and will receive a fee for our services which fee is contingent upon consummation of the Merger. We will also receive a fee for rendering this opinion, which opinion fee will be credited in full towards the transaction fee becoming payable to us upon closing of the Merger. The Company has also agreed to indemnify us against certain claims and liabilities arising out of our engagement and to reimburse us for certain of our out-of-pocket expenses incurred in connection with our engagement. We have not provided any other investment banking services to the Company in the two years preceding the date of this opinion. In the two years preceding the date of this opinion, we have provided certain investment banking services to City and received fees for such services. In 2017, we were engaged as City’s financial advisor in connection with a potential acquisition, which was not consummated by City. In the ordinary course of our business as a broker-dealer, we may purchase securities from and sell securities to City and its affiliates. We may also actively trade the equity and debt securities of the Company, City and their respective affiliates for our own account and for the accounts of our customers.
OurThis opinion is directed to the Board of Directors of the Company in connection with its consideration of the Agreement and the Merger and does not constitute a recommendation to any shareholder of the Company as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the approval of the Agreement and the Merger. Our opinion is directed onlylimited to the fairness, from a financial point of view, of the Exchange RatioMerger Consideration to the holders of Company Common Stock and does not address the underlying business decisionbe received by CCB shareholders. As part of the Companyengagement, Hovde reserves the right to engagereview any public disclosures describing this fairness opinion or the firm.
Hovde will receive a fee for our services. In addition, CCB has agreed to indemnify Hovde from and against certain liabilities. Other than in connection with this present engagement, in the past two years, Hovde has not provided investment banking or financial advisory services to CCB for which it received a fee. During the past two years preceding the date of this opinion Hovde has not provided any investment banking or financial advisory services to CHCO for which it received a fee. We or our affiliates may presently or in the future seek or receive compensation
Board of Directors
Citizens Commerce Bancshares, Inc.
October 18, 2022
Page 3 of 3
from CHCO in connection with future transactions, or in connection with potential advisory services and corporate transactions, although to our knowledge none are expected at this time. In the ordinary course of our business as a broker/dealer, we may from time to time purchase securities from, and sell securities to, CCB or CHCO or their affiliates. Hovde currently makes a market in the common stock of CHCO and publishes research reports on the common stock of CHCO produced by our equity research group. Except for the foregoing, during the past two years there have not been, and there currently are no mutual understandings contemplating in the future, any material relationships between Hovde and CCB or CHCO.
Hovde expresses no view or opinion as to any other terms or aspects of the Merger or any term or aspect of any related transaction, including without limitation, the form or structure of the Merger, or any other transactions contemplated in the Agreement, the relative meritsconsequences of the Merger as compared to CCB, its stockholders, creditors, or otherwise, or any other alternative transactionsterms, aspects, merits or business strategies that might exist for the Company or the effectimplications of any employment, retention, consulting, voting, support, cooperation, stockholder, or other transactionagreements, arrangements or understandings contemplated or entered into in whichconnection with the Company might engage. We also doMerger. Hovde’s opinion does not express any opinion as toaddress the fairness of the amount or nature of theany compensation to any of CCB’s officers, directors or employees or any class of such persons, if any, to be received in the Merger by any officer, director or employee of the Company or City, or any class of such
persons, if any, relative to the compensation to be received in the Merger by any other shareholder. We express no opinion as to any matters related to the Employee Stock Ownership Plan in which employees of the Company participate.Merger. This opinion has been approved by Sandler O’Neill’sHovde’s fairness opinion committee.
This opinion shall not be reproduced without Sandler O’Neill’s prior written consent; provided, however, Sandler O’Neill will provide its consent for the opinion tomay be included in regulatory filings to be completedits entirety in any filing made by CHCO with the Securities and Exchange Commission in connection with the Merger.
We also hereby consent to the inclusion of our written description or summary of this opinion in a proxy statement or other proxy soliciting materials to be sent to shareholders of CCB, and to the references to our firm name therein.
Based upon our analysis and subject to the foregoing, it is our opinionqualifications described herein, we believe that as of the date hereof,of this letter, the Exchange RatioMerger Consideration is fair, to the holders of Company Common Stock from a financial point of view.view, to the holders of CCB common stock.
Sincerely,
| | |
| /s/Hovde Group, LLC |
| Hovde Group, LLC |
Very truly yours,C-3
/s/ Sandler O'Neill & Partners, L.P.
Part II
Information Not Required In Prospectus
| |
Item 20. | Indemnification of Directors and Officers. |
Item 20.Indemnification of Directors and Officers.
(a)West Virginia Business Corporation Act
West Virginia law permits a West Virginia corporation, such as the Registrant, to indemnify its directors and officers in certain circumstances. Section 31D-8-850-931D-8-850–9 of the West Virginia Business Corporation Act provides in relevant part:
Section 31D-8-851. Permissible Indemnification.
(a)Except as otherwise provided in this section, a corporation may indemnify an individual who is a party to a proceeding because he or she is a director against liability incurred in the proceeding if:
(1)(A) He or she conducted himself or herself in good faith; and
(B)He or she reasonably believed: (i) In the case of conduct in his or her official capacity, that his or her conduct was in the best interests of the corporation; and (ii) in all other cases, that his or her conduct was at least not opposed to the best interests of the corporation; and
(C)In the case of any criminal proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful; or
(2)He or she engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation as authorized by subdivision (5), subsection (b), section two hundred two, article two of this chapter.
. . .
(c)The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, is not determinative that the director did not meet the relevant standard of conduct described in this section.
(d)Unless ordered by a court under subdivision (3), subsection (a), section eight hundred fifty-four of this article, a corporation may not indemnify a director:
(1)In connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under subsection (a) of this section; or
(2)In connection with any proceeding with respect to conduct for which he or she was adjudged liable on the basis that he or she received a financial benefit to which he or she was not entitled, whether or not involving action in his or her official capacity.
Section 31D-8-852. Mandatory Indemnification.
A corporation must indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because he or she was a director of the corporation against reasonable expenses incurred by him or her in connection with the proceeding.
Section 31D-8-853. Advance for Expenses.
(a)A corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding because he or she is a director if he or she delivers to the corporation:
(1)A written affirmation of his or her good faith belief that he or she has met the relevant standard of conduct described in section eight hundred fifty-one of this article or that the proceeding involves conduct for which
liability has been eliminated under a provision of the articles of incorporation as authorized by subdivision (4), subsection (b), section two hundred two, article two of this chapter; and
(2)(2) His or her written undertaking to repay any funds advanced if he or she is not entitled to mandatory indemnification under section eight hundred fifty-two of this article and it is ultimately determined under section eight hundred fifty-four or eight hundred fifty-five of this article that he or she has not met the relevant standard of conduct described in section eight hundred fifty-one of this article.
(b)The undertaking required by subdivision (2), subsection (a) of this section must be an unlimited general obligation
of the director but need not be secured and may be accepted without reference to the financial ability of the director to make repayment.
(c)Authorizations under this section are to be made:
(1)By the board of directors:
(A)If there are two or more disinterested directors, by a majority vote of all the disinterested directors, a majority of whom constitute a quorum for this purpose, or by a majority of the members of a committee of two or more disinterested directors appointed by a vote; or
(B)If there are fewer than two disinterested directors, by the vote necessary for action by the board in accordance with subsection (c), section eight hundred twenty-four of this article in which authorization directors who do not qualify as disinterested directors may participate; or
(2)By the shareholders, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the authorization; or
(3)By special legal counsel selected in a manner in accordance with subdivision (2), subsection (b), section eight hundred fifty-five of this article.
Section 31D-8-854. Circuit Court-Ordered Indemnification and Advance for Expenses.
(a)A director who is a party to a proceeding because he or she is a director may apply for indemnification or an advance for expenses to the circuit court conducting the proceeding or to another circuit court of competent jurisdiction. After receipt of an application and after giving any notice it considers necessary, the circuit court shall:
(1)Order indemnification if the circuit court determines that the director is entitled to mandatory indemnification under section eight hundred fifty-two of this article;
(2)Order indemnification or advance for expenses if the circuit court determines that the director is entitled to indemnification or advance for expenses pursuant to a provision authorized by subsection (a), section eight hundred fifty-eight of this article; or
(3)Order indemnification or advance for expenses if the circuit court determines, in view of all the relevant circumstances, that it is fair and reasonable:
(A)To indemnify the director; or
(B)To advance expenses to the director, even if he or she has not met the relevant standard of conduct set forth in subsection (a), section eight hundred fifty-one of this article, failed to comply with section eight hundred fifty-three of this article or was adjudged liable in a proceeding referred to in subdivision (1) or (2), subsection (d), section eight hundred fifty-one of this article, but if he or she was adjudged so liable his or her indemnification is to be limited to reasonable expenses incurred in connection with the proceeding.
(b)If the circuit court determines that the director is entitled to indemnification under subdivision (1), subsection (a) of this section or to indemnification or advance for expenses under subdivision (2) of said subdivision, it shall also order the corporation to pay the director’s reasonable expenses incurred in
connection with obtaining circuit court-ordered indemnification or advance for expenses. If the circuit court determines that the director is entitled to indemnification or advance for expenses under subdivision (3) of said subsection, it may also order the corporation to pay the director’s reasonable expenses to obtain circuit court-ordered indemnification or advance for expenses.
Section 31D-8-855. Determination and Authorization of Indemnification.
(a)A corporation may not indemnify a director under section eight hundred fifty-one of this article unless authorized for a specific proceeding after a determination has been made that indemnification of the director is permissible because he or she has met the relevant standard of conduct set forth in section eight hundred fifty-one of this article.
(b)The determination is to be made:
(1) If there are two or more disinterested directors, by the board of directors by a majority vote of all the disinterested directors, a majority of whom constitute a quorum for this purpose, or by a majority of the members of a committee of two or more disinterested directors appointed by a vote;
(2)By special legal counsel:
(A)Selected in the manner prescribed in subdivision (1) of this subsection; or
(B)If there are fewer than two disinterested directors, selected by the board of directors in which selection directors who do not qualify as disinterested directors may participate; or
(3)By the shareholders, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the determination.
(c)Authorization of indemnification is to be made in the same manner as the determination that indemnification is permissible, except that if there are fewer than two disinterested directors or if the determination is made by special legal counsel, authorization of indemnification is to be made by those entitled under paragraph (B), subdivision (2), subsection (b) of this section to select special legal counsel.
Section 31D-8-856. Indemnification of Officers.
(a)A corporation may indemnify and advance expenses under this part to an officer of the corporation who is a party to a proceeding because he or she is an officer of the corporation:
(1)To the same extent as a director; and
(2)If he or she is an officer but not a director, to a further extent as may be provided by the articles of incorporation, the bylaws, a resolution of the board of directors or contract except for:
(A)Liability in connection with a proceeding by or in the right of the corporation other than for reasonable expenses incurred in connection with the proceeding; or
(B)Liability arising out of conduct that constitutes:
(i)Receipt by him or her of a financial benefit to which he or she is not entitled;
(ii)An intentional infliction of harm on the corporation or the shareholders; or
(iii)An intentional violation of criminal law.
(b)The provisions of subdivision (2), subsection (a) of this section apply to an officer who is also a director if the basis on which he or she is made a party to the proceeding is an act or omission solely as an officer.
(c)An officer of a corporation who is not a director is entitled to mandatory indemnification under section eight hundred fifty-two of this article and may apply to a court under section eight hundred fifty-four of this
article for indemnification or an advance for expenses in each case to the same extent to which a director may be entitled to indemnification or advance for expenses under those provisions.
(b)City Holding Company Articles of Incorporation
The City Holding Company Articles of Incorporation provide that City shall indemnify any current or former officer or director of City or a person serving as an officer or director of another corporation at City’s request against costs and expenses incurred by him in connection with a claim or proceeding against him by reason of his being or having been an officer or director, unless the claim or proceeding relates to matters as to which the officer or director has been adjudged to be liable for gross negligence or willful misconduct in the performance of his duty to City or its subsidiaries. To the extent that the board of directors of City determines that a settlement is in City’s best interests, City shall reimburse the officer or director for any amounts paid in effecting the settlement and for reasonable expenses associated therewith.
(c)Insurance
City has purchased insurance coverage under policies that insure directors and officers against certain liabilities that might be incurred by them in their capacities as directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
| |
Item 21. | Exhibits and Financial Statement Schedules |
Item 21.Exhibits and Financial Statement Schedules
(a)Exhibits
See Index to Exhibits below.
| |
(b) | Financial Statement Schedules |
(b)Financial Statement Schedules
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under related instructions or are inapplicable and, therefore, have been omitted.
Item 22.Undertakings
INDEX TO EXHIBITS
|
| | |
Exhibit Number | Description | Exhibit Location |
| | |
| Agreement and Plan of Merger, dated November 14, 2011, by and among Virginia Savings Bancorp, Inc., Virginia Savings Bank, F.S.B., City Holding Company and City National Bank of West Virginia | Incorporated herein by reference from City’s Form 8-K dated November 14, 2011, filed on November 14, 2011 |
| Agreement and Plan of Merger, dated August 2, 2012, by and among Community Financial Corporation, Community Bank, City Holding Company and City National Bank of West Virginia | Incorporated herein by reference from City’s Form 8-K dated August 2, 2012, filed on August 7, 2012 |
| Agreement and Plan of Merger, dated July 11, 2018, by and among Farmers Deposit Bancorp, Inc., Farmers Deposit Bank and City Holding Company | Incorporated herein by reference from City’s Form 8-K dated July 11, 2018, filed on July 12, 2018 |
2(d) | Agreement and Plan of Merger, dated July 11, 2018, by and among Poage Bankshares, Inc. and City Holding Company | Included as Annex A to the proxy statement/prospectus which forms a part of this Registration Statement of Form S-4 |
3(a) | Articles of Incorporation of City Holding Company | Incorporated herein by reference from Amendment No. 1 to City’s Registration Statement on Form S-4, Registration No. 2-86250, filed on November 4, 1983 |
3(b) | Articles of Amendment to the Articles of Incorporation of City Holding Company dated March 6, 1984 | Incorporated herein by reference from City’s Form 8-K dated March 7, 1984, filed on March 22, 1984 |
3(c) | Articles of Amendment to the Articles of Incorporation of City Holding Company dated March 4, 1986 | Incorporated herein by reference from City’s Form 10-K Annual Report for the year ended December 31, 1986, filed on March 31, 1987 |
3(d) | Articles of Amendment to the Articles of Incorporation of City Holding Company dated September 29, 1987 | Incorporated herein by reference from City’s Registration Statement on Form S-4, Registration No. 33-23295, filed on August 3, 1988 |
3(e) | Articles of Amendment to the Articles of Incorporation of City Holding Company dated May 6, 1991 | Incorporated herein by reference from City’s Form 10-K Annual Report for the year ended December 31, 1991, filed on March 17, 1992 |
3(f) | Articles of Amendment to the Articles of Incorporation of City Holding Company dated May 7, 1991 | Incorporated herein by reference from City’s Form 10-K Annual Report for the year ended December 31, 1991, filed on March 17, 1992 |
3(g) | Articles of Amendment to the Articles of Incorporation of City Holding Company dated August 1, 1994 | Incorporated herein by reference from City’s Form 10-Q Quarterly Report for the quarter ended September 30, 1994, filed on November 14, 1994 |
| Articles of Amendment to the Articles of Incorporation of City Holding Company dated December 9, 1998 | Incorporated herein by reference from City’s Form 10-K Annual Report for the year ended December 31, 1998, filed on March 31, 1999 |
| Articles of Amendment to the Articles of Incorporation of City Holding Company dated June 13, 2001 | Incorporated herein by reference from City’s Registration Statement on Form 8-A filed on June 22, 2001 |
| Articles of Amendment to the Articles of Incorporation of City Holding Company dated May 10, 2006 | Incorporated herein by reference from City’s Form 10-Q Quarterly Report for the quarter ended June 30, 2006, filed on August 9, 2006 |
| Amended and Restated Bylaws of City, revised February 24, 2010 | Incorporated herein by reference from City’s Form 8-K filed on March 1, 2010 |
| Rights Agreement dated June 22, 2001 | Incorporated herein by reference from City’s Form 8-A filed on June 22, 2001 |
| Amendment No. 1 to the Rights Agreement dated November 30, 2005 | Incorporated herein by reference from Amendment No. 1 on Form 8-A filed on December 21, 2005 |
| Opinion of Dinsmore & Shohl LLP regarding the legality of the securities being registered | Filed herewith |
8(a) | Opinion of Dinsmore & Shohl LLP regarding certain tax matters | To be filed by amendment |
8(b) | Opinion of Luse Gorman, PC regarding certain tax matters | To be filed by amendment |
|
| | |
| Directors’ Deferred Compensation Plan for the Directors of the Bank of Raleigh, dated January 1987 | Incorporated herein by reference from City’s Form 10-K Annual Report for the year ended December 31, 2004, filed on March 2, 2005 |
| Form of Deferred Compensation Agreement for the Directors of the National Bank of Summers, dated January 15, 1987 | Incorporated herein by reference from City’s Form 10-K Annual Report for the year ended December 31, 2004, filed on March 2, 2005 |
| City Holding Company’s 2003 Incentive Plan | Incorporated herein by reference from City’s Definitive Proxy Statement filed on March 21, 2003 |
| City Holding Company’s 2013 Incentive Plan | Incorporated herein by reference from City’s Definitive Proxy Statement filed on March 22, 2013 |
| Form of Employment Agreement, dated July 25, 2007, by and between City Holding Company and Charles R. Hageboeck, Ph.D. | Incorporated herein by reference from City’s Form 8-K filed on July 31, 2007 |
| Form of Employment Agreement, dated July 25, 2007, by and between City Holding Company and Craig G. Stilwell | Incorporated herein by reference from City’s Form 8-K filed on July 31, 2007 |
| Form of Change in Control Agreement, dated February 1, 2005, by and between City Holding Company and David L. Bumgarner | Incorporated herein by reference from City’s Form 10-K Annual Report for the year ended December 31, 2004, filed on March 2, 2005 |
| Form of Change in Control and Termination Agreement, dated June 28, 2004, by and between City Holding Company and John A. DeRito | Incorporated herein by reference from City’s Form 10-K Annual Report for the year ended December 31, 2005, filed on March 7, 2006 |
| Amended and Restated Declaration of Trust City Holding Capital Trust III, dated March 27, 2008 | Incorporated herein by reference from City’s Form 10-Q Quarterly Report for the quarter ended March 31, 2008, filed on May 12, 2008 |
| Junior Subordinated Indenture, dated March 27, 2008, between City Holding Company and Wells Fargo, National Association, as Trustee | Incorporated herein by reference from City’s Form 10-Q Quarterly Report for the quarter ended March 31, 2008, filed on May 12, 2008 |
| City Holding Company Guarantee Agreement, dated March 27, 2008 | Incorporated herein by reference from City’s Form 10-Q Quartely Report for the quarter ended March 31, 2008, filed on May 12, 2008 |
| Amendment to Employment Agreement, dated December 19, 2011, by and among City Holding Company, City National Bank of West Virginia and Charles R. Hageboeck | Incorporated herein by reference from City’s Form 8-K filed on December 21, 2011 |
| Amendment to Employment Agreement, dated December 19, 2011, by and among City Holding Company, City National Bank of West Virginia and Craig G. Stilwell | Incorporated herein by reference from City’s Form 8-K filed on December 21, 2011 |
| Form of Change in Control Agreement, dated February 6, 2006, by and between City Holding Company and Jeffrey D. Legge | Incorporated herein by reference from City’s Form 10-K Annual Report for the year ended December 31, 2013, filed on March 7, 2014 |
| Subsidiaries of City Holding Company | Filed herewith |
| Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm | Filed herewith |
23(b) | Consent of Dinsmore & Shohl LLP relating to legality opinion | Included as part of its opinion filed as Exhibit 5 and incorporated herein by reference |
23(c) | Consent of Dinsmore & Shohl LLP relating to tax matters opinion | To be filed by amendment |
| Consent of Crowe LLP, Independent Registered Public Accounting Firm | Filed herewith |
23(e) | Consent of Luse Gorman, PC | To be filed by amendment |
| Powers of Attorney for Directors and Executive Officers of City Holding Company | Filed herewith |
| Consent of Sandler O’Neill & Partners, L.P. | Filed herewith |
99(b) | Form of Proxy Card for Special Meeting of Shareholders of Poage Bankshares, Inc. | To be filed by amendment |
(a)The undersigned Registrant hereby undertakes:
| |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; |
| |
(i) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
| |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
| |
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof. |
| |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| |
(4) | That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| |
(5) | That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
| |
(6) | That every prospectus (i) that is filed pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof. |
| |
(7) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such |
(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement;
(i)To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2)That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof.
(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b)That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c)That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
(d)That every prospectus (i) that is filed pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof.
(e)Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
| |
(8) | (f)The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the proxy statement/prospectus which forms a part of the registration statement pursuant to Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (g)The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
INDEX TO EXHIBITS | | | | | | | | | | | | | | | | Exhibit Number | | Description | | Exhibit Location | | | 2(a) | | Agreement and Plan of Merger, dated as of October 18, 2022, as amended, by and between City Holding Company and Citizens Commerce Bancshares, Inc. | | |
| | | | | (9)3(a) | The undersigned Registrant hereby undertakes | Amended and Restated Articles of Incorporation of City Holding Company. | | | | | | | | | 3(b) | | Amended and Restated Bylaws of a post-effective amendment all information concerning a transaction,City Holding Company (revised December 18, 2019). | | | | | | | | | 4(a) | | Rights Agreement, dated as of June 13, 2001. | | | | | | | | | 4(b) | | Amendment No. 1 to the companyRights Agreement dated as of November 30, 2005. | | | | | | | | | 4(c) | | Description of City Holding Company’s Securities. | | | | | | | | | 5(a) | | | | Filed herewith. | | | | | | | 8(a) | | | | Filed herewith. | | | | | | | 10(a)* | | Directors’ Deferred Compensation Plan for the subjectDirectors of the Bank of Raleigh, dated January 1987. | | | | | | | | | 10(b)* | | City Holding Company’s 2003 Incentive Plan. | | | | | | | | | 10(c)* | | City Holding Company’s 2013 Incentive Plan. | | | | | | | | | 10(d)* | | Form of Employment Agreement, dated as of July 25, 2007, by and between City Holding Company and Charles R. Hageboeck, Ph. D. | | | | | | | | | 10(e)* | | Change in Control Agreement, dated May 4, 2022, by and between City Holding Company and David L. Bumgarner. | | | | | | | | | 10(f)* | | Form of Change of Control and Termination Agreement, dated June 28, 2004, by and between City Holding Company and John A. DeRito. | | | | | | | | | 10(g)* | | Amendment to Employment Agreement, dated December 19, 2011, by and among City Holding Company, City National Bank of West Virginia and Charles R. Hageboeck. | | | | | | | |
| | | | | | | | | | | | | | | | 10(h)* | | Change in Control Agreement, dated May 4, 2022, by and between City Holding Company and Jeffrey D. Legge. | | | | | | | | | 10(i) | | Indenture, dated as of December 22, 2006, between Town Square Financial Corporation and Wilmington Trust Company, as Trustee. | | | | | | | | | 10(j) | | Second Supplemental Indenture, dated as of December 7, 2018, by and between City Holding Company, Poage Bankshares, Inc. and Wilmington Trust Company, as Trustee. | | | | | | | | | 10(k)* | | Change in Control Agreement, dated May 4, 2022, by and between City Holding Company and Michael T. Quinlan, Jr. | | | | | | | | | 21(a) | | Subsidiaries of City. | | | | | | | | | 23(a) | | | | Filed herewith. | | | | | | | 23(b) | | Consent of Dinsmore & Shohl LLP. | | | | | | | | | 23(c) | | Consent of Dinsmore & Shohl LLP. | | | | | | | | | | | | | | 24(a) | | | | Filed herewith. | | | | | | | 99(a) | | | | Filed herewith. | | | | | | | 99(b) | | Form of Proxy Card for Special Meeting of Shareholders of Citizens. | | To be filed by amendment. | | 107(a) | | | | Filed herewith. |
__________________ *Management Compensation Plan or Agreement
SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Charleston,Cross Lanes, State of West Virginia, on August 16, 2018.
| | | | | | | City Holding Company | CITY HOLDING COMPANY | | | | | | By: | /s/ Charles R. Hageboeck | | | | Charles R. Hageboeck President and& Chief Executive Officer | | | | | | |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
| | | | | | | | | | | | | | | | Name | | Date | | Capacity | | | | | /s/ Charles R. Hageboeck | | August 16, 2018 | President, Chief Executive Officer and Director | Charles R. Hageboeck | | | | | | | /s/ David L. Bumgarner | | August 16, 2018 | Chief Financial Officer (Principal Financial and | David L. Bumgarner | | Accounting Officer) | | | | | /s/ John R. Elliot* | | August 16, 2018 | Director | John R. Elliot | | | | | | | /s/ Charles W. Fairchilds* | | August 16, 2018 | Director | Charles W. Fairchilds | | | | | | | /s/ Robert D. Fisher* | | August 16, 2018 | Director | Robert D. Fisher | | | | | | | /s/ Jay C. Goldman* | | August 16, 2018 | Director | Jay C. Goldman | | | | | | | /s/ Patrick C. Graney III* | | August 16, 2018 | Director | Patrick C. Graney III | | | | | | | /s/ Tracy W. Hylton II* | | August 16, 2018 | Director | Tracy W. Hylton II | | | | | | | /s/ J. Thomas Jones* | | August 16, 2018 | Director | J. Thomas Jones | | | | | | | | /s/ C. Dallas Kayser* | | August 16, 2018Novebmer 22, 2022 | | Chairman of the Board and Director | | C. Dallas Kayser | | | | | | | | | /s/ Thomas L. Burnette* | | Novebmer 22, 2022 | | Director | | Thomas L. Burnette | | | | | | | | | /s/ Gregory A. Burton* | | Novebmer 22, 2022 | | Director | | Gregory A. Burton | | | | | | | | | /s/ Charles W. Fairchilds* | | Novebmer 22, 2022 | | Director | | Charles W. Fairchilds | | | | | | | | | /s/ William H. File III* | | Novebmer 22, 2022 | | Director | | William H. File III | | | | | | | | | /s/ Charles R. Hageoboeck | | Novebmer 22, 2022 | | President, Chief Executive Officer and Director | | Charles R. Hageoboeck | | | | | | | | | /s/ Tracy W. Hylton II* | | Novebmer 22, 2022 | | Director | | Tracy W. Hylton II | | | | | | | | | /s/ J. Thomas Jones* | | Novebmer 22, 2022 | | Director | | J. Thomas Jones | | | | | | | | | /s/ James L. Rossi* | | August 16, 2018Novebmer 22, 2022 | | Director | | James L. Rossi | | | | | | | | | /s/ Sharon Horton Rowe* | August 16, 2018 | Novebmer 22, 2022 | | Director | | Sharon Horton Rowe | | | | | | | | | /s/ Diane W. Strong-Treister* | August 16, 2018 | Novebmer 22, 2022 | | Director | | Diane W. Strong-Treister | | | | | | | | | /s/ Robert Fisher* | | Novebmer 22, 2022 | | Director | | Robert Fisher | | | | | | | | | /s/ Javier Reyes* | | Novebmer 22, 2022 | | Director | | Javier Reyes | | | | | | | | | /s/ David L. Bumgarner | | Novebmer 22, 2022 | | Chief Financial Officer (Principal Financial and Accounting Officer | | David L. Bumgarner | | |
__________________
*The above-named directors of the Registrant sign this Registration Statement on Form S-4 by Charles R. Hageboeck, their attorney-in-fact, pursuant to Powers of Attorney signed by the above-named directors, which Powers of Attorney are filed with this Registration Statement on Form S-4 as exhibits. | | | | | | | By: | /s/ Charles R. Hageboeck | | | | Charles R. Hageboeck | | | | President and& Chief Executive Officer Attorney-in-Fact | |
|
