If you have returned a properly executed proxy card, you may revoke it at any time before a vote is taken at the special
meeting:by filing a written notice of revocation with the Secretary of Comunibanc, at 122 E. Washington Street, Napoleon, Ohio 43545;
by executing and returning another proxy card with a later date; or
by attending the special meeting, by:giving notice of revocation in person to the corporate Secretary, or voting by ballot at the special meeting.
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| • | filing a written notice of revocation with the Secretary of First Citizens, at 100 East Water Street, P.O. Box 5016, Sandusky, Ohio 44870; |
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| • | executing and returning a late-dated proxy card or submitting a later-dated vote through the Internet or by telephone; or |
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| • | attending the special meeting and giving notice of revocation in person. |
Your attendance at the special meeting will not, by itself, revoke your proxy.
If you hold your First CitizensComunibanc common shares in “street name” through a broker, bank or other nominee, you must provide your broker, bank or nominee (the record holder of your common shares) with instructions on
how to vote your common shares. Your broker, bank or other nominee will provide you with a proxy card and voting instructions. If you have instructed your broker, bank or other nominee to vote your common shares, you must follow the directions received from your broker, bank or other nominee to change or revoke your vote.
First CitizensCost of Solicitation
Comunibanc will bear its own cost of solicitation of proxies on behalf of the First Citizens BoardComunibanc board of Directors, except that Futura and First Citizens have agreed to share equally the costs incurred in connection with printing and mailing this prospectus/proxy statement.directors. Proxies will be solicited by mail, and may be further solicited by additional mailings, personal contact, telephone, facsimile or electronic mail, by directors, officers and employees of First Citizens,Comunibanc, none of whom will receive additional compensation for their solicitation activities. First CitizensComunibanc will also pay the standard charges and expenses of brokerage houses, voting trustees, banks, associations and other custodians, nominees and fiduciaries, who are record holders of First CitizensComunibanc common shares not beneficially owned by them, for forwarding this prospectus/proxy statementstatement/prospectus and other proxy solicitation materials to, and obtaining proxies from, the beneficial owners of First CitizensComunibanc common shares entitled to vote at the special meeting.
Participants in the ESOP
If you participate in the ESOP, you will receive a vote authorization form for the plan that reflects all shares that you may direct the Trustee to vote on your behalf under the ESOP. Please be aware that the Trustee of the plan may establish a deadline for submitting your voting instructions that is before the time of the Comunibanc special meeting.
Under the terms of the ESOP, each ESOP participant may direct the Trustee how to vote the common shares allocated to his or her account. As all ESOP shares held by the ESOP are allocated to the accounts of participants, the Trustee will vote all the allocated shares held in the ESOP as instructed by the participants to whom they have been allocated, and vote all allocated shares for which timely and complete voting instructions are not received in the same proportion as the shares for which instructions are received.
PROPOSALS SUBMITTED TO COMUNIBANC SHAREHOLDERS
Comunibanc Merger Proposal
As discussed throughout this proxy statement/prospectus, Comunibanc is asking its shareholders to adopt and approve the Merger Agreement. Comunibanc shareholders should carefully read this document in its entirety for more detailed information regarding the Merger Agreement and the Merger. In particular, shareholders are directed to the copy of the Merger Agreement attached as Annex A to this proxy statement/prospectus.
The Special Meetingboard of Shareholdersdirectors of FuturaComunibanc recommends a vote “FOR” the approval and adoption of the Merger Agreement.
Comunibanc Adjournment Proposal
The Comunibanc special meeting may be adjourned to another time or place, if necessary or appropriate, to permit, among other things, the solicitation of additional proxies if there are insufficient votes at the time of the Comunibanc special meeting to approve and adopt the Merger Agreement. If, at the time of the Comunibanc special meeting, the number of common shares of Comunibanc present or represented and voting in favor of the Merger Agreement proposal is insufficient to approve and adopt the Merger Agreement, Comunibanc intends to move to adjourn the Comunibanc special meeting in order to enable the Comunibanc board of directors to solicit additional proxies for approval of the proposal.
In the Comunibanc adjournment proposal, Comunibanc is asking its shareholders to authorize the holder of any proxy solicited by the Comunibanc board of directors to vote in favor of granting discretionary authority to
Purpose,the proxy holders to adjourn the Comunibanc special meeting to another time and place for the purpose of soliciting additional proxies. If the Comunibanc shareholders approve the adjournment proposal, Comunibanc could adjourn the Comunibanc special meeting and any adjourned session of the Comunibanc special meeting
This prospectus/proxy statement is being provided and use the additional time to Futura shareholders in connection withsolicit additional proxies, including the solicitation of proxies by the Futura Board of Directors for use at the special meeting of shareholders to be held on , 2007 at .m., local time, at Urbana Country Club, 4761 East US Hwy 36, Urbana, Ohio 43078, including any adjournments of the special meeting. At the special meeting, the shareholders of Futura will be asked to consider and vote upon the following matters:
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| • | a proposal to adopt the merger agreement and to approve the transactions contemplated thereby, including the merger of Futura with and into First Citizens; |
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| • | a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event there are not sufficient votes at the time of the special meeting to adopt the Agreement and Plan of Merger; and |
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| • | any other business which properly comes before the special meeting or any adjournment or postponement of the special meeting. The Board of Directors of Futura is unaware of any other business to be transacted at the special meeting. |
The Board of Directors of Futura believes that the merger with First Citizens is in the best interests of Futura shareholders and recommends that Futura shareholders vote (1) “FOR”the adoption of the merger agreement and the approval of the transactions contemplated thereby, including the merger of Futura with and into First Citizens, and (2) “FOR”the proposal to adjourn the special meeting of Futura shareholders, if necessary, to solicit additional proxies.
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Record date; Futura common shares outstanding and entitled to voteThe Board of Directors of Futura has fixed the close of business on , 2007, as the record date for determining the Futurafrom Comunibanc shareholders who
are entitled to noticehave previously voted.The Comunibanc board of and to vote at the Futura special meeting of shareholders. Only holders of Futura common shares at the close of business on the record date will be entitled to notice of and to vote at the Futura special meeting.
As of the close of business on , 2007, there were 2,617,314 Futura common shares outstanding and entitled to vote at the special meeting. The Futura common shares were held of record by approximately shareholders. Each Futura common share entitles the holder to one vote on all matters properly presented at the special meeting.
Under Ohio law and Futura’s Amended and Restated Articles of Incorporation, the adoption of the merger agreement and the approval of the transactions contemplated thereby requires the affirmative vote of the holders of a majority of the Futura common shares outstanding and entitled to vote at the Futura special meeting. Approval of an adjournment of the special meeting requires the affirmative vote of the holders of a majority of the Futura common shares represented, in person or by proxy, at the special meeting.
As of , 2007, directors and executive officers of Futura and their respective affiliates beneficially owned an aggregate of 515,561 Futura common shares, excluding outstanding stock options, amounting to approximately 19.7% of the outstanding Futura common shares as of the record date. All of the directors and certain executive officers of Futura, who collectively had the power to vote approximately 20.1% of the outstanding Futura common shares as of , 2007, entered into a voting agreement with First Citizens pursuant to which they agreed, subject to certain terms and conditions, to vote all of their shares in favor of the adoption of the merger agreement. As of the date of this prospectus/proxy statement, neither First Citizens nor any of its directors, executive officers or affiliates beneficially owned any Futura common shares.
A quorum, consisting of the holders of a majority of the outstanding Futura common shares, must be present in person or by proxy at the Futura special meeting before any action, other than the adjournment of the special meeting, can be taken. A properly executed proxy card marked“ABSTAIN”will be counted for purposes of determining whether a quorum is present. Brokers who hold Futura common shares in “street name” for the beneficial owners cannot vote these Futura common shares on the adoption of the merger agreement and the approval of the transactions contemplated thereby without specific instructions from the beneficial owners. An abstention or, if your Futura common shares are held in “street name,” your failure to instruct your broker how to vote, will have the same effect as a vote“AGAINST”the adoption of the merger agreement and the approval of the transactions contemplated thereby.
The Futura Board of Directors does not expect any matter other than the adoption of the merger agreement and, if necessary, the approval of the adjournment of the special meeting to solicit additional proxies, to be brought before the Futura special meeting. If any other matters are properly brought before the special meeting for consideration, Futura common shares represented by properly executed proxy cards will be voted, to the extent permitted by applicable law, in the discretion of the persons named in the proxy card in accordance with their best judgment.
Solicitation and revocation of proxiesA proxy card accompanies each copy of this prospectus/proxy statement mailed to Futura shareholders. Your proxy is being solicited by the Board of Directors of Futura. Whether or not you attend the special meeting, the Futura Board of Directors urges you to return your properly executed proxy card as soon as possible. If you return your properly executed proxy card prior to the special meeting and do not revoke it prior to its use, the Futura common shares represented by that proxy card will be voted at the special meeting or, if appropriate, at any adjournment of the special meeting. The Futura common shares will be voted as specified on the proxy card or, in the absence of specific instructions to the contrary, will be voted“FOR”the
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adoption of the merger agreement and the approval of the transactions contemplated thereby and, if necessary,“FOR”the approval of the adjournment of the special meeting to solicit additional proxies.
If you have returned a properly executed proxy card, you may revoke it at any time beforerecommends a vote is taken at“FOR” the special meeting by:
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| • | filing a written notice of revocation with the Secretary of Futura, at 601 Scioto Street, Urbana, Ohio 43078; |
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| • | executing and returning another proxy card with a later date; or |
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| • | attending the special meeting and giving notice of revocation in person. |
Comunibanc adjournment proposal.Your attendance at the special meeting will not, by itself, revoke your proxy.
If you hold your Futura common shares in “street name” through a broker, bank or other nominee, you must provide your broker, bank or nominee (the record holder of your common shares) with instructions on how to vote your common shares. Your broker, bank or other nominee will provide you with a proxy card and voting instructions. If you have instructed your broker, bank or other nominee to vote your common shares, you must follow the directions received from your broker, bank or other nominee to change or revoke your vote.
Futura will bear its own cost of solicitation of proxies on behalf of the Futura Board of Directors, except that Futura and First Citizens have agreed to share equally the costs incurred in connection with printing and mailing this prospectus/proxy statement. Proxies will be solicited by mail and may be further solicited by additional mailings, personal contact, telephone, facsimile or electronic mail, by directors, officers and employees of Futura, none of whom will receive additional compensation for their solicitation activities. Futura will also pay the standard charges and expenses of brokerage houses, voting trustees, banks, associations and other custodians, nominees and fiduciaries, who are record holders of Futura common shares not beneficially owned by them, for forwarding this prospectus/proxy statement and other proxy solicitation materials to, and obtaining proxies from, the beneficial owners of Futura common shares entitled to vote at the special meeting.
Dissenters’ RightsDISSENTERS’ RIGHTSRights of dissenting First Citizens shareholders
First Citizens shareholders areDissenting Comunibanc ShareholdersShareholders of Comunibanc entitled to certain dissenters’ rights pursuant to Sections 1701.78, 1701.84(B)1701.84(A) and 1701.85 of the Ohio Revised Code.OGCL. Section 1701.85 generally provides that shareholders of First CitizensComunibanc will not be entitled to such rights without strict compliance with the procedures set forth in Section 1701.85, and failure to take any one of the required steps may result in the termination or waiver of such rights. Specifically, any First CitizensComunibanc shareholder who is a record holder of First CitizensComunibanc common shares on the , 2007,2022, the record date for the First CitizensComunibanc special meeting, and whose shares are not voted in favor of the adoption of the merger agreementMerger Agreement may be entitled to be paid the “fair cash value” of such First CitizensComunibanc common shares after the effective time of the merger. Merger.
To be entitled to such payment, a shareholder shareholder:
must deliver to Comunibanc a written demand for payment to First Citizens on orof the fair cash value of the shares held by such shareholder before the tenth day followingvote on the First Citizens special meetingadoption and approval of the Merger Agreement proposal is taken;
must not vote in favor of adoption and approval of the Merger Agreement; and
must otherwise comply with Section 1701.85.
A Comunibanc shareholder’s failure to vote against the adoption and approval of the Merger Agreement will not constitute a waiver of such shareholder’s dissenters’ rights. Any written demand must specify the shareholder’s name and address, the number and class of shares held by him, her or herit on the First CitizensComunibanc record date, and the amount claimed as the “fair cash value” of such First CitizensComunibanc common shares.
See the text of Section 1701.85 of the Ohio Revised CodeOGCL attached as Annex B to this prospectus/proxy statementstatement/prospectus for specific information on the procedures to be followed in exercising dissenters’ rights.
Comunibanc is notifying each of the holders of record of its common shares as of , 2022 that dissenters’ rights are available and intends that this proxy statement/prospectus constitutes such notice.If First CitizensComunibanc so requests, dissenting shareholders must submit their share certificates to First CitizensComunibanc within fifteen15 days of such request, for endorsement on such certificates by First CitizensComunibanc that a demand for appraisal has been made. Failure to comply with such a request will terminate the dissenting shareholders’shareholder’s dissenters’ rights. SuchAny such certificates will be promptly returned to the dissenting shareholders by First Citizens.Comunibanc. If First CitizensComunibanc and any dissenting shareholder cannot agree upon the “fair cash value” of the First CitizensComunibanc common
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shares, either may, within three months after service of demand by the shareholder, file a petition in the Common Pleas Court of Common Pleas of ErieHenry County, Ohio, for a determination of the “fair cash value” of such dissenting shareholder’s First CitizensComunibanc common shares. The fair cash value of a First CitizensComunibanc common share to which a dissenting shareholder is entitled to under Section 1701.85 will be determined as of the day prior to the special meeting. The court may appoint one or more appraisers to determine the “fair cash value” and, if the court approves the appraisers’ report, judgment will be entered for the “fair cash value,” and the costs of the proceedings, including reasonable compensation of the appraisers, will be assessed or apportioned as the court considers equitable.
If a First CitizensComunibanc shareholder exercises his or her dissenters’ rights under Section 1701.85, all other rights with respect to such shareholder’s First CitizensComunibanc common shares will be suspended until First CitizensComunibanc purchases the shares, or the right to receive the fair cash value is otherwise terminated. Such rights will be reinstated should the right to receive the fair cash value be terminated other than by the purchase of the shares.
The foregoing description of the procedures to be followed in exercising dissenters’ rights available to holders of Comunibanc common shares pursuant to Section 1701.85 of the Ohio Revised CodeOGCL may not be complete and is qualified in its entirety by reference to the full text of Section 1701.85 attached as Annex B to this prospectus/proxy statement.
Rightsstatement/prospectus. Ensuring perfection of dissenting Futura shareholdersShareholders of Futura are entitled to certain dissenters’ rights
pursuantcan be complicated. The procedural rules are specific and must be followed precisely. A Comunibanc shareholder’s failure to
Sections 1701.78, 1701.84(A) and 1701.85comply with these procedural rules may result in his or her becoming ineligible to pursue dissenters’ rights.U.S. shareholders should note that dissenting shareholders will recognize gain or loss for federal income tax purposes on cash paid to them in satisfaction of the Ohio Revised Code. Section 1701.85 generally provides that shareholdersfair value of Futura will not be entitled to such rights without strict compliance with the procedures set forth in Section 1701.85,their shares, and failure to take any oneshould consult their tax advisors accordingly. See “THE MERGER—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 46 of this proxy statement/prospectus.
Failure by any shareholder to follow the complex steps required stepsby the OGCL for properly asserting dissenters’ rights may result in the terminationloss of those rights. If you are considering dissenting from the approval of the Merger Agreement and asserting your dissenters’ rights under the OGCL, you should consult your legal advisor.
THE MERGER
The Proposed Merger
The Merger Agreement provides for the merger of Comunibanc with and into Civista, with Civista as the surviving entity. Thereafter, at a later time specified by Civista Bank in its certificate of merger filed with the Ohio Secretary of State, Henry County Bank will be merged with and into Civista Bank, with Civista Bank surviving the Civista Bank Merger.
The Merger Agreement is attached to this proxy statement/prospectus as Annex A and is incorporated in this proxy statement/prospectus by reference. You are encouraged to read the Merger Agreement carefully, as it is the legal document that governs the Merger.
Background of the Merger
Comunibanc and Henry County Bank have been considering their strategic alternatives over the past few years. Comunibanc had retained ProBank Austin in 2016 to help develop a strategic plan. Late in 2020, Comunibanc determined it was appropriate to update that strategic plan. Comunibanc retained ProBank Austin in January 2021, to assist Comunibanc in developing that updated strategic plan. At that time the board of directors considered its alternatives and very much favored remaining independent. However, Comunibanc realized that remaining independent would be contingent upon its ability to grow into new markets, significantly increase the size of its loan portfolio, find and retain new lenders and senior management, and create liquidity for its shareholders. A number of meetings were held between Comunibanc management and ProBank Austin over the ensuing months and analysis was conducted in that regard.
As the board was continuing to explore its strategic alternatives, on July 12, 2021, Comunibanc’s board received an unsolicited offer from a larger community bank. The proposal from the other community bank (“Buyer 1”) proposed that Henry County Bank would be run as an affiliate of Buyer 1 with current management remaining in place. The proposed price, while a premium to the then current market price for Comunibanc’s shares, was below the range that ProBank Austin had suggested could be obtained in a sale transaction. The
board of directors of Comunibanc met as part of a regular board meeting on July 23, 2021, to consider the unsolicited offer. Richard F. Maroney, Jr. of ProBank Austin and Thomas C. Blank of Shumaker, Loop & Kendrick, LLP, special counsel to Comunibanc, were present to review the terms of the letter from Buyer 1 and the other alternatives. Mr. Maroney delivered an analysis of the proposed offer and discussed the pricing and structure relative to other recently completed or waiverannounced transactions and anticipated value in a sale transaction. He also reviewed other potential buyer candidates and recent transactions to gauge pricing expectations for the Comunibanc board. Mr. Blank reviewed with the board the letter and consideration of such rights. Specifically, any Futura shareholder who isputting in place change of control agreements to keep top management tied to Comunibanc. The board again expressed its desire to remain independent, but agreed that the return to shareholders was of paramount importance, and it was difficult to accomplish this as an independent institution in Henry County Bank’s current markets and with its current operations.
At the request of the board of directors, Mr. Maroney worked with Anthony Grieser, Comunibanc’s Chief Financial Officer, to explore modifications to the projections set forth in the Comunibanc’s previously prepared strategic plan from April 2021, to determine if remaining independent and returning a record holderhigher level of Futura common sharesprofitability to shareholders was feasible.
At a board meeting held on August 2, 2021, the updated information was reviewed by the board of directors. Again, the board expressed its desire to remain independent if consistent with what was in the best interest of its shareholders and other constituents. The board reviewed the difficulties of remaining independent including retention of qualified employees, particularly lenders. They acknowledged the difficulty of attracting qualified talent to Napoleon and the other communities served by Henry County Bank. There also was a review of operational concerns with significant upgrades being required to technology and systems in the near future. Further, the board acknowledged the anticipated retirement of a number of senior officers in the near term. Finally, the board agreed that successfully expanding into new markets could prove difficult.
At the conclusion of the meeting, the board agreed to have further discussions with only Buyer 1 to proceed with the desired independent structure, but with a request for higher pricing. The board agreed to retain ProBank Austin pursuant to its engagement letter dated August 2, 2021. The Board also authorized Mr. Blank to finalize and Mr. Wendt to execute a mutual confidentiality agreement to allow Buyer 1 to perform due diligence on Comunibanc and Henry County Bank and for continued discussions between ProBank Austin, on behalf of the Comunibanc, and Buyer 1 and its investment banking firm representative.
There were ongoing discussions between Buyer 1 and Mr. Maroney that resulted in Buyer 1 submitting a revised offer with a more traditional merger structure. On September 27, 2021 Comunibanc had an additional board meeting with all board members present. Mr. Maroney and Mr. Blank also attended this meeting. With the assistance of Mr. Maroney and Mr. Blank, the Board members reviewed the revised offer, and Mr. Maroney presented a review of the revised offer and compared it to the original offer. He also presented additional information about Buyer 1 and other potential candidates. He was asked to have additional discussions with representatives of Buyer 1 to encourage a revised offer with higher pricing for the transaction.
On October 13, 2021 Buyer 1 submitted a revised expression of interest letter that retained the more standardized merger structure, but had pricing consistent with its initial proposal, a lower amount than the second proposal. The board of directors met on October 18, 2021 to consider the revised offer. Mr. Maroney and Mr. Blank were again present for the meeting. The board reviewed materials from Mr. Maroney on the , 2007, record dateproposed transaction comparing the now three offers that had been submitted by Buyer 1. There was also discussion about other alternatives with potential other acquirors.
The board members considered the revised offer and the alternative of remaining independent, neither of which seemed a strong option for shareholders of Comunibanc at this point. The board discussed alternatives and determined that Comunibanc needed to consider other potential acquirors. The board authorized Mr. Maroney to contact three additional institutions that it was believed would be interested in acquiring Comunibanc, which
could accomplish the transaction, and who had liquid stock. The board also authorized Mr. Blank to prepare change in control agreements for Messrs. Grieser and Yarnell and Ms. Mack with restrictive covenants, that it was believed would cause them to remain with Comunibanc, at least through the closing of a transaction.
The board met again on November 12, 2021 to review offers presented by two additional potential suitors, one of which was Civista, and a confirming and final offer from Buyer 1. One of the institutions that had been contacted by Mr. Maroney decided not to submit an offer. Mr. Maroney and Mr. Blank were again present for the Futura specialmeeting. Civista expressed a strong desire for a merger transaction with Comunibanc. Both pricing and cultural philosophies aligned well with what the board thought appropriate. At that meeting, the board approved negotiating exclusively with Civista, but asked Mr. Maroney to push for pricing in excess of $60 per share in order for Civista to be granted exclusivity in negotiation, which Civista had requested. This proposal to negotiate exclusively with Civista and whose shares are not votedseek an affiliation transaction was unanimously approved at the meeting. The board also reviewed drafts of a form of change in favorcontrol agreement for three executives as prepared by Mr. Blank and asked that he meet with each of the adoptionthree executives to discuss a proposed agreement for them. Later that day, Mr. Wendt executed a letter of intent on behalf of Comunibanc, which provided for an increased price of $60.25 per share and provided that Comunibanc would deal exclusively with Civista for a 60-day period. Subsequent to the execution of the mergerletter of intent, Mr. Wendt, upon advice from Mr. Blank, signed an exclusivity agreement maywith Civista.
From November 12, 2021 until January 7, 2022, Mr. Maroney and Mr. Blank worked with Comunibanc and counsel and financial advisors to Civista to facilitate a due diligence investigation of Comunibanc and Henry County Bank by Civista and a limited reverse due diligence of Civista by Mr. Maroney and representatives of Comunibanc. At the same time, Comunibanc’s executive management, Mr. Blank and Mr. Maroney continued to negotiate the Merger Agreement which Comunibanc’s shareholders are being asked to approve pursuant to this proxy statement/prospectus.
The board of directors of Comunibanc met again on January 7, 2022, to consider the Agreement. All of the Board members were present for the meeting. Mr. Maroney reviewed the process Comunibanc had used to consider the Merger with Civista. This included review of the strategic plan that had been created earlier in 2021, the multiple offers from Buyer 1, consideration of final offers from Buyer 1, Civista and one other interested party, and the negotiations with Civista. Mr. Maroney delivered his oral opinion that the pricing for the transaction set forth in the Merger Agreement was fair, from a financial point of view, to Comunibanc and its shareholders. The oral opinion was followed by a written letter confirming this opinion. After Mr. Maroney delivered his oral fairness opinion, Mr. Blank then reviewed in detail the Merger Agreement with the directors discussing all salient points. He also reviewed the support agreement that all of the directors would be entitledasked to sign in connection with the transaction. Finally, Mr. Blank reviewed the final change in control agreements with each of the executives. Upon a motion duly made and seconded, the directors unanimously approved the Agreement and the Merger and authorized Mr. Wendt and other officers of the Comunibanc to execute and deliver the Agreement and take additional actions necessary to effect the transaction. Mr. Wendt also was authorized by the unanimous approval of the Board to execute each of the change in control agreements on behalf of Comunibanc, which were signed that day.
Mr. Wendt signed the Agreement on the following Monday, January 10, 2022.
Comunibanc’s Reasons for the Merger
Comunibanc’s board of directors unanimously determined that the proposed Merger is in the best interests of Comunibanc and its shareholders. In making its determination, the board of directors considered a number of factors affecting the business, operations, financial condition, earnings, and prospects of Comunibanc. The material factors considered by the board included:
the purchase price per share to be paid by Civista and resulting valuation multiples;
the “fair cash value”liquidity of the stock of Civista relative to that of Comunibanc;
the business strategy and strategic plan of Comunibanc, its prospects for the future, and its projected financial results;
a review of the risks and prospects of Comunibanc remaining independent, including the challenges of the current financial, operating, and regulatory environment;
Comunibanc’s stand-alone financial prospects;
the anticipated costs and necessary investments associated with continuing to develop and enhance Comunibanc’s business capabilities;
the employment prospects for Comunibanc’s employees within the larger combined company;
the favorable results of Comunibanc’s due diligence investigation of Civista;
Comunibanc’s and Civista’ shared corporate values and commitment to serve their customers and communities;
the resulting geographic footprint of Civista’s and Comunibanc’s combined market areas;
Civista’ historically strong financial condition and results of operations;
the ability of Civista to complete the Merger from a business, financial, and regulatory perspective;
the scale, scope, strength, and diversity of operations, product lines, and delivery systems that could be achieved by the combined company;
the likelihood of successful integration and operation of the combined company;
the likelihood of obtaining the shareholder and regulatory approvals needed to complete the Merger;
the results of the solicitation process conducted by Comunibanc, with the advice and assistance of its advisors;
certain structural protections included in the Merger Agreement, including:
that it does not preclude a third party from making an unsolicited acquisition proposal to Comunibanc;
Comunibanc’s ability to terminate the Merger Agreement to enter into a definitive agreement for a superior proposal if certain requirements are met, in each case subject to the payment of a termination fee by Comunibanc of $2,008,000, an amount that was negotiated at arm’s-length and was determined by Comunibanc to be reasonable; and
the financial analyses and the oral opinion on January 7, 2022 (which was subsequently confirmed in writing on January 10, 2022) of ProBank Austin to Comunibanc’s board of directors to the effect that, as of such Futuradate and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by ProBank Austin as set forth therein, the Exchange Ratio was fair to the holders of Comunibanc common shares, after the effective timefrom a financial point of the merger. To be entitled to such payment, a shareholder must deliver a written demand for payment to Futura on or before the tenth day following the Futura special meetingview, as more fully described below under “Opinion of Comunibanc’s Financial Advisor.”
Comunibanc’s board of directors also considered several potential risks and must otherwise comply with Section 1701.85. Any written demand must specify the shareholder’s name and address, the number and class of shares held by him or her on the Futura record date, and the amount claimed as the “fair cash value” of such Futura common shares. See the text of Section 1701.85 of the Ohio Revised Code attached as Annex B to this prospectus/proxy statement for specific information on the procedures to be followed in exercising dissenters’ rights.
If Futura so requests, dissenting shareholders must submit their share certificates to Futura within fifteen days of such request, for endorsement on such certificates by Futura that demand for appraisal has been made. Failure to comply with such request will terminate the dissenting shareholders’ rights. Such certificates will be promptly returned to the dissenting shareholders by Futura. If Futura and any dissenting shareholder cannot agree upon the “fair cash value” of the Futura common shares, either may, within three months after service of demand by the shareholder, file a petition in the Court of Common Pleas of Champaign County, Ohio, for a determination of the “fair cash value” of such dissenting shareholder’s Futura common shares. The fair cash value of a Futura common share to which a dissenting shareholder is entitled to under Section 1701.85 will be determined as of the day prior to the special meeting. The court may appoint one or more appraisers to determine the “fair cash value” and, if the court approves the appraisers’ report, judgment will be entered for the “fair cash value”, and the costs of the proceedings, including reasonable compensation of the appraisers, will be assessed or apportioned as the court considers equitable.
If a Futura shareholder exercises his or her dissenters’ rights under Section 1701.85, all other rightsuncertainties with respect to
such shareholder’s Futurathe Merger and factors unique to certain shareholders of Comunibanc, including, without limitation, the following:the challenges of integrating Comunibanc’s business, operations, and employees with those of Civista;
the need to and likelihood of obtaining requisite shareholder and regulatory approvals to complete the Merger;
the risks and costs associated with entering into the Merger Agreement;
the form and amount of the Merger Consideration, including the increased volatility associated with all-stock consideration and the risk that the consideration to be paid to Comunibanc shareholders could be adversely affected by a decrease in the trading price of Civista common shares willduring the pendency of the Merger;
the fact that a termination fee of $2,008,000 million would have to be suspended until Futura purchasespaid to Civista under certain circumstances described in the shares,Merger Agreement; and
| • | | the other risks described under the sections entitled “RISK FACTORS” beginning on page 21 and “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS” beginning on page 19. |
The foregoing discussion of the material information and factors considered by Comunibanc’s board of directors is not intended to be exhaustive. Comunibanc’s board of directors evaluated the above factors and unanimously determined that the Merger was in the best interests of Comunibanc and its shareholders. In reaching its determination to approve the Merger and recommend that Comunibanc shareholders approve the Merger, the board of directors considered the totality of the information presented to it and did not assign any relative or specific weights to any of the rightindividual factors considered, although individual directors may have given different weights to receivedifferent factors. The board of directors considered these factors, including the fair cash valuepotential risks, uncertainties and disadvantages associated with the Merger, in the aggregate rather than separately and determined the benefits of the Merger to be favorable to and outweigh the potential risks, uncertainties and disadvantages of the Merger. This explanation of the board of directors’ reasoning and certain other information presented in this section are forwarding-looking in nature and, therefore, should be read in the context of the factors discussed under “Cautionary Statement Concerning Forward-Looking Statements.”
Comunibanc’s board of directors determined that the Merger, the Merger Agreement and the transactions contemplated thereby are advisable and in the best interests of Comunibanc and its shareholders. The board of directors also unanimously determined that the Merger Agreement and the transactions contemplated thereby are consistent with, and in furtherance of, Comunibanc’s business strategies. Accordingly, Comunibanc’s board of directors unanimously approved and adopted the Merger Agreement and approved the Merger and unanimously recommends that Comunibanc shareholders vote “FOR” approval of the Merger Agreement and the Merger. The terms of the Merger Agreement were the product of arm’s-length negotiations between Comunibanc and Civista and their respective representatives.
The above discussion of the information and factors considered by Comunibanc’s board of directors is otherwise terminated. Such rights willnot intended to be reinstated should the right to receive the fair cash value be terminated other thanexhaustive but includes all material factors considered by the purchaseboard in arriving at its determination to approve, and to recommend that the Comunibanc shareholders vote to approve the Merger Agreement. The Comunibanc board of directors did not assign any relative or specific weights to the above factors, and individual directors may have given differing weights to each factor.
Recommendation of the shares.
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The
foregoing descriptionboard of directors of Comunibanc unanimously approved the Merger Agreement. The board of directors of Comunibanc believes that the Merger is in the best interests of Comunibanc and its shareholders, and, as a result, the directors unanimously recommend that Comunibanc shareholders vote “FOR” the adoption and approval of the
proceduresMerger Agreement and “FOR” the proposal to
be followedadjourn the special meeting, if necessary and appropriate, to solicit additional proxies.Opinion of Comunibanc’s Financial Advisor
On August 2, 2021, Comunibanc retained ProBank Austin to serve as exclusive financial advisor in exercising dissenters’ rights pursuantconnection with evaluating and implementing a potential transaction involving the sale or merger of Comunibanc. ProBank Austin is an investment banking and consulting firm specializing in community bank
mergers and acquisitions. Comunibanc selected ProBank Austin as its financial advisor on the basis of its experience and expertise in representing community banks in similar transactions and its familiarity with Comunibanc.
In its capacity as financial advisor, ProBank Austin provided a fairness opinion (the “ProBank Austin Opinion”) to Section 1701.85the board of directors of Comunibanc in connection with the Merger. At the meeting of the Ohio Revised Code may not be completeComunibanc board on January 7, 2022, ProBank Austin rendered its oral opinion (which was subsequently confirmed in writing by delivery of ProBank Austin’s written opinion dated January 10, 2022) that, based upon and subject to the various factors, assumptions and limitations set forth in such opinion, ProBank Austin representatives’ experience as investment bankers, ProBank Austin’s work as described in such opinion and other factors ProBank Austin deemed relevant, as of such date, the Merger Consideration set forth in the Merger Agreement was fair, from a financial point of view, to the shareholders of Comunibanc common stock.
The full text of the ProBank Austin Opinion, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken in rendering its opinion, is attached as Annex C to this proxy statement/prospectus and is incorporated herein by reference. The summary of the ProBank Austin Opinion set forth herein is qualified in its entirety by reference to the full text of Section 1701.85 attachedthe opinion. Comunibanc shareholders should read the full text of the opinion carefully and in its entirety. The ProBank Austin Opinion is addressed to the Comunibanc Board, is directed only to the fairness, from a financial point of view, of the Merger Consideration to the holders of Comunibanc common shares, and does not constitute a recommendation to any shareholder as Annex B to how such shareholder should vote or act on any matters relating to the Merger.
The ProBank Austin Opinion was reviewed and approved by the fairness opinion committee of ProBank Austin. The description of the opinion set forth below is qualified in its entirety by reference to the opinion. You should consider the following when reading the discussion of ProBank Austin’s opinion in this prospectus/proxy statement.
The Proposedopinion letter details the procedures followed, assumptions made, matters considered, and qualifications and limitations of the review undertaken by ProBank Austin in connection with its opinion, and should be read in its entirety;
ProBank Austin expressed no opinion as to the price at which Comunibanc’s or Civista’s common shares would actually trade at any given time;
ProBank Austin’s opinion does not address the relative merits of the Merger and the other business strategies considered by Comunibanc’s board, nor does it address the board’s decision to proceed with the Merger; and
ProBank Austin’s opinion rendered in connection with the Merger does not constitute a recommendation to any Comunibanc shareholder as to how he or she should vote at the special meeting.
preparation of a fairness opinion involves various determinations as to the most appropriate methods of financial analysis and the application of those methods to the particular circumstances. It is, therefore, not readily susceptible to partial analysis or summary description. In performing its analyses, ProBank Austin made numerous assumptions with respect to industry performance, business and economic conditions, and other matters, many of which are beyond the control of Comunibanc and Civista and may not be realized. Any estimates contained in ProBank Austin’s analyses are not necessarily predictive of future results or values, and may be significantly more or less favorable than the estimates. Estimates of values of companies do not purport to be appraisals or necessarily reflect the prices at which the companies or their securities may actually be sold. Unless specifically noted, none of the analyses performed by ProBank Austin was assigned a greater significance by ProBank Austin than any other. The merger agreementrelative importance or weight given to these analyses is not affected by the order of the analyses or the corresponding results. The summaries of financial analyses include information presented in tabular format. The tables should be read together with the text of those summaries.
With respect to the projections and estimates for Comunibanc and Civista, and the expected transaction costs, purchase accounting adjustments and cost savings, Comunibanc’s and Civista’s management and advisors confirmed to us that they reflected the best currently available estimates and judgments of management of the future financial performance of Comunibanc and Civista, respectively, and ProBank Austin assumed that such performance would be achieved. ProBank Austin expresses no opinion as to such financial projections and estimates or the assumptions on which they are based. ProBank Austin also assumed that there has been no material change in Comunibanc’s or Civista’s assets, financial condition, results of operations, business or prospects since the date of the most recent financial statements made available to us. ProBank Austin assumed, in all respects material to our analysis, that Comunibanc and Civista will remain as going concerns for all periods relevant to the analyses, that all of the representations and warranties contained in the Agreement are true and correct, that each party to the Agreement will perform all of the covenants required to be performed by such party under the Agreement, and that the closing conditions in the Agreement are not waived. Finally, ProBank Austin has relied upon the advice Comunibanc 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.
ProBank Austin has relied, without independent verification, upon the accuracy and completeness of the information it reviewed for the purpose of rendering its opinion. ProBank Austin did not undertake any independent evaluation or appraisal of the assets and liabilities of Comunibanc or Civista, nor was it furnished with any appraisals. ProBank Austin has not reviewed any individual credit files of Comunibanc or Civista, and has assumed that Comunibanc’s and Civista’s allowances are, in the aggregate, adequate to cover inherent credit losses. ProBank Austin’s opinion is based on economic, market and other conditions existing on the date of its opinion. No limitations were imposed by Comunibanc’s board or its management on ProBank Austin with respect to the investigations made or the procedures followed by ProBank Austin in rendering its opinion.
In rendering its opinion, ProBank Austin made the following assumptions:
all material governmental, regulatory and other consents and approvals necessary for the consummation of the Merger would be obtained without any adverse effect on Comunibanc, Civista or on the anticipated benefits of the Merger;
Comunibanc and Civista have provided all of the information that might be material to ProBank Austin in its review; and
the financial projections it reviewed were reasonably prepared on a basis reflecting the best currently available estimates and judgment of the management of Comunibanc and Civista as to the future operating and financial performance of Comunibanc and Civista, respectively.
In connection with its opinion, ProBank Austin reviewed:
| (i) | the Agreement dated January 10, 2022; |
| (ii) | certain publicly available financial statements and other historical financial information of Comunibanc and Civista that we deemed relevant; |
| (iii) | certain internal financial and operating data of Comunibanc and Civista that were prepared and provided to us by the respective management of Comunibanc and Civista; |
| (iv) | internal financial projections for Comunibanc for the year ending December 31, 2022, prepared by, and reviewed with, management of Comunibanc; |
| (v) | the pro forma financial impact of the Merger on Civista, based on assumptions relating to transaction expenses, acquisition accounting adjustments, and cost savings as discussed with representatives of Civista; |
| (vi) | publicly reported historical stock price and trading activity for Civista’s common shares, including an analysis of certain financial and stock information of certain other publicly traded companies deemed comparable to Civista; |
| (vii) | the financial terms of certain recent business combinations in the commercial banking industry, to the extent publicly available, deemed comparable to the Merger; |
| (viii) | the current market environment generally and the banking environment in particular; and, |
| (ix) | such other information, financial studies, analyses, and investigations, financial, economic, and market criteria as we considered relevant. |
ProBank Austin also discussed with certain members of senior management of Comunibanc the business, financial condition, results of operations and prospects of Comunibanc, including certain operating, regulatory and other financial matters. We held similar discussions with certain members of senior management of Civista regarding the business, financial condition, results of operations and prospects of Civista.
The following is a summary of the material factors considered and analyses performed by ProBank Austin in connection with its opinion dated January 10, 2022. The summary does not purport to be a complete description of the analyses performed by ProBank Austin. Capitalized terms used herein without definition shall have the meanings given to such terms in the Agreement.
Summary of Financial Terms of Agreement. The Agreement provides for the merger of Futura with and into First Citizens, with First Citizens surviving the merger. Immediately following that merger, and upon the receipteach of the required regulatory approvals, Champaign Bank, a wholly-owned banking subsidiary828,504 shares of Futura,Comunibanc common stock to be converted into the right to receive: (i) $30.13 in cash (the “Cash Consideration”); and (ii) 1.1888 shares of Civista common stock (the “Stock Consideration”). No fractional shares of Civista will be mergedissued in connection with the Merger, and into Citizens Bank,in lieu thereof, fractional shares will be paid in cash.
Based on 828,504 shares of Comunibanc outstanding common stock, a wholly-owned banking subsidiaryfixed exchange ratio of First Citizens, with Citizens Bank surviving1.1888 and Civista’s closing price of $25.00 on January 5, 2022, the merger and continuing as an Ohio state-chartered bank.
The merger agreement is attached to this prospectus/proxy statement as Annex A and is incorporated in this prospectus/proxy statement by reference.You are encouraged to read the merger agreement carefully, as it is the legal document that governs the merger.
Futura’s background and reasons for the mergerBackgroundimplied value of the Merger Consideration was $49.6 million in the aggregate or $59.85 per share. The implied transaction value of $49.6 million or $59.85 per share represented:153 percent of Comunibanc’s September 30, 2021 tangible book value per share; and
27.1 times Comunibanc’s earnings per share for twelve-months ending September 30, 2021.
The Agreement provides a termination right to Comunibanc if the Civista’s stock price declines by more than 20 percent as compared to the NASDAQ Bank Index.
Peer Analysis.
OneProBank Austin compared selected results of Henry County Bank’s operating performance to that of 32 selected commercial banks headquartered in Ohio with total assets between $250 million and $600 million. ProBank Austin considered this group of financial institutions comparable to Henry County Bank on the basis of asset size and geographic location. This peer group consisted of the
ongoing challengesfollowing banks: | | | | | | |
Bank Name | | City | | Bank Name | | City |
1st National Bank | | Lebanon | | Portage Community Bank | | Ravenna |
Belmont Savings Bank | | Bellaire | | RiverHills Bank | | Milford |
Buckeye State Bank | | Powell | | Somerville Bank | | Somerville |
CenterBank | | Milford | | The Andover Bank | | Andover |
Farmers & Merchants Bank | | Miamisburg | | The Citizens Bank Company | | Beverly |
Farmers Savings Bank | | Spencer | | The Community Bank | | Zanesville |
First Bank of Ohio | | Tiffin | | The Fahey Banking Company | | Marion |
First Federal Community Bank | | Dover | | The Farmers Bank and Savings Co. | | Pomeroy |
First National Bank in New Bremen | | New Bremen | | The First Citizens National Bank | | Upper Sandusky |
Greenville National Bank | | Greenville | | The First National Bank of Bellevue | | Bellevue |
Hometown Bank | | Kent | | The First National Bank of Dennison | | Dennison |
Kingston National Bank | | Kingston | | The Genoa Banking Company | | Genoa |
Liberty National Bank | | Ada | | The Hocking Valley Bank | | Athens |
North Valley Bank | | Zanesville | | The Savings Bank | | Circleville |
Ohio State Bank | | Bexley | | The St. Henry Bank | | Saint Henry |
Osgood Bank | | Osgood | | United Midwest Savings Bank | | De Graff |
ProBank Austin noted the following selected financial measures for Futura during the peer group as compared to Henry County Bank:
| | | | | | | | | | | | | | | | |
| | | Peer Financial Performance (1) | | | Henry County | |
| | | 25th Pct | | | Median | | | 75th Pct | �� | | Bank (1) | |
Total Assets ($millions) | | $ | 283.2 | | | $ | 348.1 | | | $ | 451.4 | | | $ | 329.0 | |
LTM PTPP (FTE) / Average Assets | | | 1.04 | % | | | 1.38 | % | | | 1.86 | % | | | 0.76 | % |
LTM Return on Average Assets (2) | | | 0.79 | % | | | 1.06 | % | | | 1.30 | % | | | 0.56 | % |
LTM Return on Average Equity (2) | | | 7.50 | % | | | 10.13 | % | | | 12.93 | % | | | 5.67 | % |
NPAs / Total Assets | | | 0.62 | % | | | 0.21 | % | | | 0.06 | % | | | 0.20 | % |
Tangible Equity / Tangible Assets | | | 8.88 | % | | | 9.71 | % | | | 11.93 | % | | | 9.94 | % |
LTM = Last Twelve Months PTPP = Pre-Tax Pre-Provision = Net Interest Income (FTE) + Noninterest Income – Noninterest Expense FTE = fully-tax equivalent Return on Average Assets = ROAA Return on Average Equity = ROAE NPAs = Nonperforming assets, defined as loans 90 or more days past several years has been providing its shareholders with opportunities for liquidity, particularly given Futura’s sizedue, nonaccrual loans, and Other Real Estate Owned. Restructured loans are not included.
| (1) | Peer financial performance and Henry County Bank’s performance for the twelve-month period ending September 30, 2021. |
| (2) | Based on tax-adjusted performance for S-Corporations. |
This comparison indicated that Henry County Bank was lower than the 25th percentile of the peer group in terms of ROAA, ROAE and PTPP earnings to average assets. Henry County Bank’s nonperforming asset levels approximated the median of the peer group. Henry County Bank’s tangible equity to tangible assets ratio was above the median of the peer group.
Comparable Transaction Analysis. ProBank Austin compared the financial performance of certain selling institutions and the fact that its common shares are not publicly traded. Futura’s 150 year history of success means that many of its shareholders have held Futura sharesprices paid in selected transactions to Comunibanc’s financial performance and the implied transaction multiples being paid by Civista for a generation or more. As the demographics of its shareholder base have shifted, Futura’s liquidity issues have been exacerbated by an aging shareholder base that increasingly wishesComunibanc. Specifically, ProBank Austin reviewed certain information relating to liquidate large blocks of shares to transfer wealth to their descendants.
Futura worksselect bank and thrift transactions in Ohio, Michigan, and Indiana announced between January 1, 2020 and December 31, 2021 with its market makers to pursue investors for its shares. However, the trading volume of Futura’s shares has traditionally been very thin and from time to time Futura shareholders have approached the company to repurchase shares that become available for sale. As a result, Futura has repurchased and retired a significant number of shares over the past few years at a significant cost to Futura.
The Futura Board realized that the company needed to find other ways to address creating liquidity and a market for Futura shares. Given the shareholder base, the Futura Board concluded that there was a strong likelihood that large blocks of shares from estates would continue to become available and that those blocks would put pressureseller’s assets less than $3 billion. Twelve (12) transactions were included in this group based on the
existing avenuesselected criterion. The following lists the transactions reviewed by ProBank Austin: | | | | | | | | |
Buyer | | ST | | Seller | | ST | | Announced
Date |
First Merchants Corp. | | IN | | Level One Bancorp Inc. | | MI | | 11/04/21 |
Arbor Bancorp Inc. | | MI | | FNBH Bancorp Inc. | | MI | | 08/09/21 |
Farmers Ntnl Banc Corp. | | OH | | Cortland Bancorp | | OH | | 06/23/21 |
Fentura Financial Inc. | | MI | | Farmers SB of Munith | | MI | | 06/22/21 |
Savings Bancorp Inc | | OH | | SSNB Inc | | OH | | 06/15/21 |
Double Bottomline Corp. | | — | | Cmnty Savings Bncp | | OH | | 06/09/21 |
Farmers & Merchants | | OH | | Perpetual FSB | | OH | | 05/04/21 |
Nicolet Bankshares | | WI | | Mackinac Fncl Corp | | MI | | 04/12/21 |
Farmers & Merchants Bancorp | | OH | | Ossian Financial Services | | IN | | 12/21/20 |
Crane CU | | IN | | Our Community Bank | | IN | | 08/19/20 |
SB Financial Group | | OH | | Edon Bancorp Inc. | | OH | | 02/07/20 |
ChoiceOne Financial Services | | MI | | Community Shores Bank Corp. | | MI | | 01/06/20 |
The following table highlights the median results of the guideline M&A transactions:
| | | | | | | | |
| | | M&A
Guideline
Median | | | Comunibanc (1) | |
Seller’s Financial Performance | | | | | | | | |
Total Assets ($millions) | | $ | 161.9 | | | $ | 329.0 | |
Tangible Equity / Tangible Assets | | | 9.99 | % | | | 9.94 | % |
Return on Average Assets | | | 0.75 | % | | | 0.56 | % |
Return on Average Equity | | | 7.32 | % | | | 5.67 | % |
Efficiency Ratio | | | 71.4 | % | | | 75.4 | % |
Nonperforming Assets (2) /Assets | | | 0.46 | % | | | 0.79 | % |
Deal Transaction Multiples | | | | | | | | |
Price/Tangible Book Value Ratio | | | 160 | % | | | 153 | % |
Price/LTM Earnings | | | 21.5 | | | | 27.1 | |
LTM = Last twelve month
Note: M&A Guideline transactions financial performance based on most recent 12-month data.
| (1) | Comunibanc’s financial performance and deal transaction multiples based on Henry County Bank’s performance for the twelve-month period ending September 30, 2021. |
| (2) | Nonperforming assets include nonaccrual loans and leases, restructured loans and leases, and other real estate owned. |
The median last twelve-month ROAA ratio of the selling banks in the guideline transactions was 0.75 percent compared to 0.56 percent for liquidityComunibanc. Comunibanc’s ROAE of 5.67 percent was lower than the peer median of 7.32 percent. The median nonperforming assets (“NPA”) to assets ratio measured 0.46 percent for the guideline transaction group which was lower than 0.79 percent for Comunibanc. The indicated price to tangible book ratio being paid by Civista for Comunibanc of 153 percent is lower than the median price to tangible book ratio of 160 percent for the guideline transactions. The implied price-to-earnings multiple for the Comunibanc transaction with Civista of 27.1 times was higher than the median multiple of 21.5 times.
Pro Forma Merger Analysis. ProBank Austin analyzed the potential pro forma effect of the merger to Civista’s performance metrics. Assumptions were made regarding the fair value accounting adjustments, cost savings and put downward pressureother acquisition adjustments based on the share price. The Futura Board recommended that management closely monitor the situation and work with the market makers to identify investors to purchase Futura common shares as they became available on the market.
The Futura Board also began to consider an affiliation with a larger, publicly-traded company that would benefit Futura shareholders by giving them the opportunity for current liquidity or continued ownership benefits in a larger community-focused bank. In the fall of 2006, Mr. Lamping had several preliminary discussions with management of
Comunibanc and Civista and their representatives. For Civista’s stand-alone performance, ProBank Austin relied on input from Civista’s management and their financial advisor for 2022 through 2024. The pro forma merger analysis indicated that the merger is expected to be dilutive to Civista’s tangible book value per share at closing and that such dilution is expected to be recovered within approximately 3.4 years (later revised by Civista to 2.9 years). The merger is expected to be 7.7 percent accretive to Civista’s earnings per share (excluding nonrecurring transaction expenses) for the calendar year 2022 and the accretion is expected to increase to 13.1 percent in the second full year following closing. For all the above analyses, the actual results achieved by Civista following the merger may vary from the projected results and the variance may be material.ProBank Austin’s Compensation and Other Relationships with Comunibanc and Civista. Comunibanc has agreed to pay ProBank Austin customary fees for its services as exclusive financial advisor in connection with the Merger. Comunibanc paid ProBank Austin $32,500 upon the issuance of the ProBank Austin Opinion. Comunibanc has also agreed to pay ProBank Austin a multi-state bank abouttransaction fee equal to 1.30 percent of the potentialtransaction value payable at closing of affiliatingthe Merger.
Comunibanc agreed to reimburse ProBank Austin for its reasonable out-of-pocket expenses, and to indemnify ProBank Austin against certain liabilities, including liabilities under securities laws. ProBank Austin has provided various consulting services to Comunibanc in the past. ProBank Austin does not have any prior, existing or pending engagements with their company. Mr. Lamping updated the Futura Board at the October 2006 meetingCivista.
Summary. Based on the status of these informal discussions. The Futura Board decided to seek additional inputpreceding summary discussion and information regarding the value of Futuraanalysis, and the market conditions for a potential sale or merger.
At the regular quarterly Futura Board meeting on November 21, 2006, representatives of Keefe, Bruyette & Woods, Inc. (“KBW”) were invited to present (1) a financial services market overview, (2) an analysis of Futura’s current franchise value, (3) comparative group analysis with Futura’s peers, and (4) the status of the current merger market. The Futura Board performed a detailed analysis of this information and decided to schedule a meeting on December 18th to discuss the strategic direction of Futura based on KBW’s presentation and the previous Futura Board discussions.
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On December 18, 2006, a special meeting of the Futura Board was held. The Futura Board discussed the issues of (1) the existing and continuing concerns about stock liquidity, (2) a decline in the market price, (3) the relatively high valuations paid for community banks in recent merger transactions, (4) the Ohio economy and demographic trends and Futura’s outlook in its various markets, and (5) the challenges that Futura would face in the future. Mr. Lamping updated the Futura Board on his most recent discussions with the multi-state bank. The Futura Board discussed how affiliating with a larger publicly-traded bank could benefit Futura’s shareholders. The Futura Board then discussed three options: staying independent, continuing discussions with the multi-state bank, or pursuing a controlled auction with multiple parties, including the multi-state bank. The Futura Board discussed the effect on Futura’s operations of conducting a controlled auction managed by an investment banking firm. The Futura Board determined that, in order to appropriately assess all of its strategic alternatives and maximize value to Futura’s shareholders, it should engage an investment banking firm to explore and evaluate the potential sale of Futura. The Futura Board also instructed Mr. Lamping to continue his informal discussions with the multi-state bank.
On January 16, 2007, Mr. Lamping updated the members of the Futura Board on his discussions with the multi-state bank and the anticipated timeline for that bank to provide an initial indication of interest. Mr. Lamping also explained the process that an investment bank would follow to market Futura and reported that he was negotiating an engagement letter with KBW.
On January 30, 2007, a special meeting of the Futura Board was held to review and discuss an oral indication of interest from the multi-state bank. The Futura Board discussed the proposed price range and business terms and determined that the offer from the multi-state bank was not attractive enough to preempt Futura’s plans to proceed with a controlled auction. The Futura Board decided to have KBW prepare a marketing package and target this package to selected financial institutions as well as the multi-state bank.
On February 2, 2007, Futura engaged KBW to act as its financial advisor.
On February 20, 2007, the regular Futura quarterly board meeting was held and representatives of KBW were invited guests. The Futura Board reviewed and approved a plan for marketing Futura and discussed due diligence and established key dates for timely completion of the sale process. The Futura Board then reviewed a list prepared by KBW of institutions that might have a strategic interest in a merger or other combination with Futura and identified a list of companies to be contacted by KBW.
On April 10, 2007, a special meeting of the Futura Board was held where representatives of KBW updated the Board on the status of the sale process and explained that 29 companies had been contacted for the purposes of affiliating with Futura. Eighteen of those institutions signed confidentiality agreements and were sent marketing materials. Three institutions submitted non-binding written, initial indications of interest.
KBW gave an overview of the three institutions that submitted non-binding initial indications of interest. The indication of interest submitted by First Citizens proposed a valuation ranging from $23.00 to $25.00 per share with 20% to 30% of that consideration paid in cash. The multi-state bank proposed a valuation of $22.00 to $23.00 per share with 70% paid in stock and 30% paid in cash. The third candidate proposed a price that was less than either of the other two offers. In each case, the indications of interest were subject to the results of due diligence. Following a detailed discussion,qualifications described herein, ProBank Austin determined the Futura Board decidedMerger Consideration to invite the two candidates that proposed the highest prices to complete a due diligence analysis of the books and records of Futura. The third candidate was notified by KBW that their offer was not competitive and would not be considered further.
During late April 2007, both candidates performed an extensive due diligence analysis on the books and records of Futura, Champaign Bank and Champaign Investment Company.
The multi-state bank submitted its final indication of interest on May 6, 2007. First Citizens requested and received permission to deliver its final indication of interest to the Futura Board in person.
On May 9, 2007, the Futura Board met at a special meeting, which was attended by representatives of KBW, representatives from First Citizens and its financial advisor. Management of First Citizens presented an overview of their company and gave a brief history of First Citizens’ previous experience with mergers and acquisitions. The financial advisor discussed the methodology First Citizens used to determine its offering
30
price for the Futura common shares. The representatives from First Citizens then communicated the details of First Citizens’ final indication of interest, including a purchase price of $23.00 per share. First Citizens provided its final indication of interest in writing after the meeting. After First Citizens’ representatives and advisors were excused, KBW informed the Futura Board that it had received one other final indication of interest (from the multi-state bank that had previously had discussions with Mr. Lamping) on May 6, 2007. The Futura Board determined that it needed time to review the two offers before making any decision and scheduled a board meeting on May 11, 2007 to conduct a detailed analysis of the offers and determine the appropriate course of action.
On May 11, 2007, a special meeting of the Futura Board was held. Those in attendance included all Futura Board members, representatives from KBW and a representative of Squire, Sanders & Dempsey, Futura’s outside legal counsel. KBW gave an overview of the sale process. KBW then reviewed a summary of the financial terms of each indication of interest. First Citizens proposed a price per share of $23.00 at a fixed exchange rate with up to 20% of the consideration paid in cash. The second candidate proposed a per share price less than $23.00 with a fixed exchange rate with up to 30% of the consideration paid in cash.
KBW then presented a current market overview including current earnings outlooks, monetary policy, funding pressures, and the general merger and acquisition market. Materials prepared by KBW summarized the 2006 and 2007 deals concluded in the Midwest, and compared the pricing of the closed deals to the pricing of the two offers being analyzed.
The Futura Board carefully reviewed each proposal with KBW, specifically focusing on the risks of a fixed exchange rate offer. The Board carefully examined the historic market fluctuations in the stock of each company and the historic financial performance and future prospects of each company. The board also reviewed the current dividend levels of both companies, considering the impact on Futura shareholders that would receive stock. Upon the completion of this review, the Futura Board concluded that each company had a solid performance record and that the market price for the shares of each company had generally tracked the general bank pricing indices.
The KBW representatives were then excused from the meeting.
The representative of Squire, Sanders & Dempsey discussed with the Futura Board of Directors the legal standards applicable to its consideration of the proposed transactions.
Following this discussion, the Futura Board of Directors discussed the following options in detail: (1) continue to operate Futura as a stand-alone entity; (2) merge with First Citizens; or (3) merge with candidate number two. After a detailed discussion of all of the information presented by KBW, the Futura Board unanimously decided to move forward to structure a transaction to sell or merge Futura. After reviewing the two proposals in detail, the Futura Board ultimately decided to proceed with negotiations with First Citizens primarily because the financial terms of its offer were superior to those presented by candidate number two. The Futura Board then authorized management, with the assistance of KBW and Squire, Sanders & Dempsey, to commence negotiations with First Citizens.
The Futura Board of Directors met on May 15, 2007 for a special meeting. As part of this meeting, Mr. Lamping updated the Futura Board on the status of the discussions with First Citizens and reviewed the changes to the business and financial terms that had been agreed to by First Citizens since the May 11, 2007 Futura Board meeting. Mr. Lamping reported that management and Futura’s outside legal counsel would keep the Futura Board fully informed while continuing to move forward as quickly as possible to determine if an acceptable deal could be reached with First Citizens.
During the next few weeks, Futura and First Citizens and their respective representatives negotiated the terms of the merger agreement and related documents. On May 22, 2007, a team representing Futura, including Mr. Lamping, other members of management and outside financial and legal advisors, visited First Citizens’ corporate headquarters in Sandusky to meet with First Citizens’ management and perform due diligence on the books and records of First Citizens. Futura’s due diligence continued up until the date the merger agreement was signed.
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The Futura Board of Directors met on June 7, 2007, in a special meeting attended by representatives of KBW and Squire, Sanders & Dempsey to review the terms and conditions of the definitive merger agreement. A copy of the proposed merger agreement and a summary of terms had been provided to the Futura Board members on June 6, 2007 for their review. Representatives of Squire, Sanders & Dempsey reviewed with the Futura Board:
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| • | the legal standards applicable to its consideration of the proposed transaction, |
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| • | the terms of the proposed merger agreement as well as related matters, including the potential payments that would be made to certain members of Futura management as a result of the transaction, and |
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| • | the shareholder and regulatory approvals that would be required to complete the merger and the likely process and timetable for completing the merger. |
KBW then reviewed the financial terms of the proposed merger and presented its financial analysis of the proposed transaction. In connection with the deliberations of the Futura Board of Directors, KBW rendered to Futura’s Board its oral opinion (subsequently confirmed in writing) as described under “The Proposed Merger — Opinion of Futura’s financial advisor” that as of the date of its opinion, the consideration payable to Futura in the merger was fair, from a financial point of view, to the shareholdersholders of Futura.
Following these discussionsComunibanc common shares.The opinion expressed by ProBank Austin was based on market, economic and the reviewother relevant considerations as they existed and discussion among memberscould be evaluated as of the Futura Boarddate of Directors,the opinion. Events occurring after the date of issuance of the opinion, including, but not limited to, changes affecting the securities markets, the results of operations or material changes in executive session, as well as the factors described under “Futura’sfinancial condition of either Civista or Comunibanc could materially affect the assumptions used in preparing this opinion.
Civista’s Reasons for the Merger” below, the Futura Board of Directors unanimously determinedMerger
Civista believes that the transactions contemplated by the merger agreement are advisable andMerger is in the best interests of FuturaCivista and its shareholders,shareholders. In reaching this determination, the Civista board of directors consulted with its management, as well as itsfinancial, accounting and legal advisors, and considered the projected pro forma impact of the Merger and a number of other factors, including, without limitation, the following:
each of Civista’s, Comunibanc’s and the directors voted unanimously to approvecombined company’s business, operations, financial condition, asset quality, earnings, and prospects. In reviewing these factors, including the merger with First Citizensinformation obtained through due diligence, Civista considered that Comunibanc’s business and to approveoperations and adoptrisk profile complement those of Civista, and that the merger agreementMerger and the other transactions contemplated by the merger agreement.Merger Agreement would result in a combined company with an expanded distribution and scale that would position Civista to serve an expanded customer base while still staying true to its community banking roots;
Futura’s Reasonsthe strategic rationale for the Merger, including enhancing scale and geographic reach of Civista in core markets.
the long-term interests of Civista and its shareholders, as well as the interests of its employees, customers, creditors and the communities in which Civista operates;
the opportunity to acquire an organization with deep community banking relationships;
enhanced market share in Northwest Ohio with incremental high-quality, low-cost core deposits;
the cost savings and other benefits of size and operating efficiencies that Civista believes it can realize;
that the Merger should assist Civista in maintaining its status as an independent holding company and Civista Bank as a community bank; and
the size and structure of the transaction allows Civista to maintain its strong capital position; additionally, Civista Bank will also maintain a strong capital position allowing the organization to expand within its new markets.
The board of directors of Civista also considered a variety of risks and other potentially negative factors in deliberations concerning the Merger. In particular, the board of directors of Civista considered:
the costs associated with the regulatory approval process, the costs associated with calling a special meeting of Comunibanc shareholder, transaction expenses, and other Merger related costs;
the possibility of encountering difficulties in achieving anticipated synergies and cost savings in the amounts estimated or in the timeframe contemplated;
the dilution to current Civista shareholders from the issuance of additional Civista common shares in the Merger;
the potential risk of diverting management attention and resources towards the completion of the Merger and the integration of Comunibanc;
potential run-off of deposits and loans following announcement and/or the closing of the Merger;
the risk that projected earnings, tangible book value increases and/or cost savings will not materialize or will be less than expected;
the likelihood that Civista common shares may trade down post-announcement and/or post-Merger;
the risk that Comunibanc’s loans and other items were not appropriately valued;
the risk that Comunibanc terminates the Merger Agreement by reason of a superior competing proposal; and
other risks described under the sections entitled “RISK FACTORS
” beginning on page 21 and “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS” beginning on page 19.The above discussion of the information and factors considered by the Civista board of directors is not intended to be exhaustive but includes the material factors considered by the Civista board of directors. In reaching its decision to approve the merger agreement andMerger Agreement, the transactions contemplated by the merger agreement, the Futura Board of Directors consulted with management, as well as its financial and legal advisors, and considered a number of factors, including, without limitation, the following:
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| • | the merger will provide all Futura shareholders with an opportunity for liquidity for all or a portion of their equity investment in Futura; |
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| • | following the merger, Futura shareholders that elect to take First Citizens’ shares as merger consideration should have greater liquidity by holding shares in a larger, publicly-traded company; |
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| • | the historical dividend payments made by First Citizens exceed the dividend payments historically made by Futura to its shareholders; |
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| • | First Citizens and Futura have complementary community banking businesses so that the impact on customers and communities served would be minimized; |
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| • | three current Futura directors will join the Board of Directors of First Citizens upon completion of the transaction; |
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| • | the structure of the merger and the terms of the merger agreement, including the fact that Futura shareholders will receive a significant equity ownership in the combined company; |
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| • | the Board believes that combining the two companies will create a larger and more diversified financial institution that is both better equipped to respond to economic and industry developments and better positioned to develop and build on its position in existing markets; |
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| • | the financial analyses presented by KBW to the Futura Board of Directors, and the opinion dated as of June 7, 2007 delivered to Futura by KBW to the effect that, as of that date, and subject to and based on the qualifications and assumptions set forth in the opinion, the consideration to be received by the holders of common shares of Futura in the merger was fair, from a financial point of view, to such shareholders; and |
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| | |
| • | the financial terms of the merger. |
The foregoing discussion of the factors considered by the Futura Board of Directors is not intended to be exhaustive, but, rather, includes the material factors considered by the Futura Board of Directors. In reaching its decision to approve the merger agreement, the mergerMerger and the other transactions contemplated by the merger agreement,Merger Agreement, the Futura BoardCivista board of Directorsdirectors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors.
The Civista board of directors considered all these factors as a whole, including through its discussions with Civista’s management and financial and legal advisors, in evaluating the Merger Agreement, the Merger, and the other transactions contemplated by the Merger Agreement.RecommendationRegulatory Approvals Required
To complete the Merger and Subsidiary Bank Mergers, Civista and Comunibanc need to obtain approvals or consents from, or make filings with, a number of U.S. federal and state bank and other regulatory authorities. Subject to the terms of the Futura BoardMerger Agreement, Civista and Comunibanc have agreed to cooperate with each other and use reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of Directors
For the reasons set forth above, the Futura Board of Directors unanimously determined that the merger, the merger agreementall third parties and governmental entities which are necessary or advisable to consummate the transactions contemplated by the merger agreement are fairMerger Agreement (including the Merger and the Subsidiary Bank Merger), and to comply with the terms and in the best interestsconditions of Futuraall such permits, consents, approvals and its shareholders,authorizations of all such third parties and unanimously approved and adopted the merger agreement. The Futura Board of Directors unanimously recommends that the Futura shareholders vote “FOR” the adoption of the merger agreement andgovernmental entities. These approvals include, among others, the approval of the transactions contemplated thereby, includingMerger and the merger of Futura withSubsidiary Bank Merger by the Federal Reserve and into First Citizens.
First Citizen’s backgroundthe ODFI, respectively. The Merger and reasonsthe Subsidiary Bank Merger must receive approval from both the ODFI and the Federal Reserve before the Merger may be consummated. On March 4, 2022, Civista submitted the applicable filings to the Federal Reserve for the mergerBackgroundapproval and/or nonobjection of the Merger
On or about March 20, 2007, KBW, financial advisor and an application to
Futura, asked whether First Citizens would have an interest in pursuing the
possibilityFederal Reserve and ODFI for approval of
a merger with an institution located westthe Subsidiary Bank Merger.The approval of Columbus, Ohio. Senior management responded inany regulatory applications merely implies the affirmative, signed a confidentiality agreement on March 21, 2007, and thereafter received a Confidential Offering Memorandum containing substantial information on Futura. The information included historic financial performance; loan and deposit datasatisfaction of regulatory criteria for each branch; loan delinquency information; allowance for loan loss provisions and charges; statistics for the markets of each branch; and information related to other aspects of Futura’s business. The Confidential Offering Memorandum also set forth a schedule for submitting a written, non-binding indication of interest to KBW to pursue a transaction with Futura. The schedule required the submission of an indication of interest by April 3, 2007.
To analyze the financial impact on First Citizens of a possible Futura merger, First Citizens retained KeyBanc as its financial advisor on March 30, 2007. Based upon aapproval, which does not include review of the Confidential Offering Memorandum, senior management and KeyBanc concluded that the possible merger with Futura was attractive for a number of reasons, including the potential economies of scale created by the $1 billion asset size of First Citizens following the merger and the attractive locations of Champaign Bank’s branches and office locations. A number of possible merger scenarios were then developed on the basis of whether each scenario would result in an accretionadequacy or dilution to the future earnings per share of First Citizens, how each would impact the capital of First Citizens after the merger and the ways in which each would otherwise impact First Citizens’ shareholders.
On April 3, 2007, First Citizens presented to KBW a non-binding indication of interest in which the financial structure and other aspects of a possible business combination with Futura were outlined. The indication provided for a transaction in which Futura would be merged with and into First Citizens and each share of Futura would be converted into the right to receive between $23 and $25 in value, the exact amount of which would be determined after a due diligence reviewfairness of the books and records of Futura. Such value could consist of a mix of First Citizens common shares and cash.
At a regular meetingMerger Consideration to Comunibanc shareholders. Furthermore, regulatory approvals do not constitute or imply any endorsement or recommendation of the First Citizens Board on April 17, 2007, the directors reviewed the non-binding indication of interest and discussed the transaction with management at length and in detail. Approving the parameters of the indication, the Board instructed management to continue to pursue the possibility of the Futura transaction and to continue to involve KeyBanc in the process.
After the Futura Board reviewed First Citizens’ indication of interest, KBW invited First Citizens to conduct a due diligence investigation of the books, records, loans, deposits and other aspects of Futura’s business. A team of First Citizens officers subsequently conducted the investigation in late April. Senior management updated the First Citizens Board of Directors regarding its due diligence investigation at a special
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meeting on May 8, 2007, and submitted a proposed transaction in which each Futura share would be converted into the right to receive $23 in value, payable, at the election of each Futura shareholder, in cash, First Citizens sharesMerger or a combination of cash and First Citizens’ shares. KeyBanc then presented a financial analysis of the transaction to the Board and indicated preliminarily that the proposal would be fair to First Citizens’ shareholders from a financial point of view. The directors then authorized management to present the proposed transaction to Futura.
On May 9, 2007, senior management of First Citizens met with the Futura Board to present the proposal, after which First Citizens delivered a non-binding letter of intent dated May 10, 2007, in which the proposal was summarized. On May 11, 2007, Futura indicated that the May 10, 2007, letter of intent provided a sufficient basis for the commencement of the negotiation of a merger agreement. During the next several weeks, First Citizens and Futura and their respective representatives negotiated the terms of
such merger agreementthe Merger Agreement.Civista and related documents. On June 4, 2007, the First Citizens Board approved the merger agreement and the transactions contemplated thereby after receiving the advice of counsel and the oral opinion of KeyBancComunibanc believe that the merger would be fair to First Citizens’ shareholders from a financial point of view. On June 7, 2007, First Citizens executed the merger agreement and signed a voting agreement with each of the directors of Futura.
First Citizens’ Reasons for the Merger
The First Citizens Board has concluded that the merger is in the best interests of First Citizens’ shareholders. In reaching this determination, the First Citizens Board consulted with management, as well as its financial and legal advisors, and considered a number of factors, including, without limitation, the following:
(i) The merger will facilitate the natural and logical expansion of First Citizens’ business into the counties of Champaign, Logan, Summit, Franklin and Madison Counties.
(ii) The merger will create a bank holding company with more than $1 billion in assets, a size at which the economies of scale will permit, First Citizens hopes, more profitable competition in an extremely competitive environment.
(iii) Futura’s management philosophies and its long-standing reputation of excellent customer service and community involvement are consistent with First Citizens’ philosophies toward community banking, emphasis on customer service and strong ongoing commitment to each community served.
(iv) Futura’s current products and services are similar to and, in many respects, complement products and services offered by First Citizens and its banking subsidiaries.
(v) The merger will potentially improve the trading market for and increase the liquidity of First Citizens’ common shares due to the additional issuance of First Citizens common shares.
(vi) First Citizens believes that the transaction will increase the earnings per share of First Citizens.
The First Citizens Board considered many different factors in its evaluation and did not believe it was practical to, and did not quantify or otherwise assign relative weights to, the individual factors considered in reaching its determination.
Recommendation of the First Citizens Board of Directors
In view of all the considerations described above, the Board of Directors of First Citizens unanimously concluded that the merger is fair to and in the best interests of the First Citizens shareholders and recommends that First Citizens shareholders vote “FOR” the adoption of the merger agreement and the approval of the transactions contemplated thereby, including the merger of Futura with and into First Citizens and issuance of common shares of First Citizens to shareholders of Futura in the merger.
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Opinion of First Citizens’ financial advisorKeyBanc was asked by the board of directors of First Citizens (the “Board”) to render an opinion to the Board as to whether the consideration to be paid by First Citizens pursuant to the merger agreement is fair, from a financial point of view, to First Citizens. On June 4, 2007, KeyBanc delivered to the Board its oral opinion, subsequently confirmed in writing on that date, that, as of the date of its opinion, based upon and subject to the assumptions, limitations and qualifications contained in its opinion, and other matters KeyBanc considers relevant, the consideration to be paid by First Citizens pursuant to the merger agreement is fair, from a financial point of view, to First Citizens.
The full text of the written opinion of KeyBanc is attached to this prospectus/proxy statement as Annex D and incorporated into this prospectus/proxy statement by reference. We urge you to read that opinion carefully and in its entirety for the assumptions made, procedures followed, other matters considered and limits of the review undertaken in arriving at that opinion.
KeyBanc was retained to serve as an advisor to the Board and not as an advisor to or agent of any shareholder of First Citizens. KeyBanc’s opinion was prepared for confidential use by the Board and is directed only to the fairness, from a financial point of view, as of the date of the opinion, of the consideration to be paid by First Citizens pursuant to the merger agreement and does not address First Citizens’ underlying business decision to enter into the merger agreement or any other terms of the merger or the merger agreement. KeyBanc’s opinion does not constitute a recommendation to any First Citizens shareholder as to how such shareholder should vote at any shareholders’ meeting held in connection with the merger.
No restrictions or limitations were imposed by the Board on KeyBanc with respect to the investigations made or the procedures followed by KeyBanc in rendering its opinion.
In rendering its opinion, KeyBanc reviewed, among other things:
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| • | a draft of the merger agreement, dated as of June 1, 2007; |
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| • | certain publicly available information concerning Futura; |
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| • | certain other internal information, primarily financial in nature, including projections concerning the business and operations of Futura furnished to KeyBanc by Futura’s management; |
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| • | certain publicly available information concerning the trading of, and the trading market for, Futura’s shares; |
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| • | certain publicly available information concerning First Citizens and its financing sources; |
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| • | certain publicly available information with respect to other publicly traded companies that KeyBanc believed to be comparable to Futura and the trading markets for certain of such other companies’ securities; and |
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| • | certain publicly available information concerning the nature and terms of certain other transactions that KeyBanc considered relevant to its inquiry. |
KeyBanc also met with certain officers and employees of First Citizens and Futura to discuss the respective business and prospects of First Citizens and Futura, as well as other matters KeyBanc believed were relevant, and considered such other data and information that KeyBanc judged necessary to render its opinion.
You should note that, in rendering its opinion, KeyBanc assumed and relied upon the accuracy and completeness of all of the financial and other information provided to it or otherwise reviewed by or discussed with KeyBanc or publicly available. KeyBanc also assumed the accuracy of and relied upon the representations and warranties of First Citizens and Futura contained in the merger agreement. KeyBanc was not engaged to, and did not independently attempt to, verify any of such information. KeyBanc also relied upon the management of First Citizens and Futura as to the reasonableness and achievability of the financial and operating projections (and the assumptions and bases for those projections) provided to it, and assumed, with the consent of the Board, that those projections, including, among other things, projected cost savings and operating synergies from the merger, were reasonably prepared and reflected the best currently available estimates and judgments of the managements of First Citizens and Futura as to the future financial
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performance of their respective companies. KeyBanc was not engaged to assess the reasonableness or achievability of those projections or the assumptions on which they were based and expressed no view on those matters. KeyBanc did not conduct a physical inspection or appraisal of any of the assets, properties or facilities of Futura, or of Futura’s liabilities (contingent or otherwise).
KeyBanc understood that the consummation of the merger is subject to, among other things, governmental,raise significant regulatory or other consents and approvals, and assumed that all those consents and approvals would be obtained without a material adverse effect on Futura, First Citizens or the merger. KeyBanc expressed no view as to the sufficiency of its opinion for purposes of obtaining those approvals or for any other regulatory or statutory purpose. KeyBanc expressed no opinion as to the decision of the Board to proceed with the merger or as to any other potential transaction in which First Citizens might engage in lieu of, or in addition to, the merger.
KeyBanc was not asked to, nor did it, render any opinion as to the material terms of the merger agreement or the form of the merger transaction. KeyBanc, with the consent of the Board, assumed that the final executed form of the merger agreement would not differ in any material respect from the draft that KeyBanc examined in rendering its opinion,concerns and that the conditions to the merger as set forth in the merger agreement would be satisfied and that the merger would be completed on a timely basis in the manner contemplated by the merger agreement. KeyBanc expressed no opinion on matters of a legal, regulatory, tax or accounting nature or the ability of the merger, as set forth in the merger agreement, to be consummated.
KeyBanc’s opinion is based on economic and market conditions and other circumstances existing on, and information made available, as of the date of its opinion and does not address any matters after such date. Although subsequent developments may affect its opinion, KeyBanc does not have the obligation to update, revise or reaffirm its opinion.
The following is a brief summary of the analyses performed by KeyBanc in connection with its opinion. This summary is not intended to be an exhaustive description of the analyses performed by KeyBanc but includes all material factors considered by KeyBanc in rendering its opinion. KeyBanc drew no specific conclusions from any individual analysis, but subjectively factored its observations from all of these analyses into its qualitative assessment of the merger consideration.
Each analysis performed by KeyBanc is a common methodology utilized in determining valuations. Although other valuation techniques may exist, KeyBanc believes that the analyses described below, when taken as a whole, provided the most appropriate analyses for KeyBanc to arrive at its opinion.
Precedent Transaction Analyses
KeyBanc reviewed approximately 900 transactions involving acquisitions of banks and thrifts announced between January 1, 1991 and May 30, 2007 for which transaction data was publicly available. Within this group, KeyBanc focused on approximately 580 transactions involving acquisitions of banks announced between January 1, 2004 and December 31, 2006, and on the approximately 200 transactions announced in 2006. As additional reference points in its valuation analyses, KeyBanc separately analyzed certain subsets of the above transactions, such as those in Ohio, those in the Midwest region (defined as Ohio, Indiana and Michigan) and those with transaction values less than $100 million.
KeyBanc performed three primary analyses of the selected comparable transactions based on publicly available information, including information obtained from online databases offered by SNL Financial LC. These analyses determined the following financial multiples and premiums, to the extent available, for each of the selected comparable transactions:
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| • | the transaction price as a multiple of tangible book value of the target bank or thrift; |
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| • | the premium of the transaction price over tangible book value in relation to the core deposits (total deposits minus all certificates of deposit in excess of $100,000) of the target bank or thrift; and |
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| • | the transaction price as a multiple of earnings of the target company during the latest twelve months, or LTM, immediately preceding announcement of the transaction. |
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KeyBanc next calculated the medians of these multiples and premiums for the selected comparable transactions involving banks announced in 2006, as well as for the Midwest subset of those transactions. KeyBanc then estimated ranges of comparable Futura multiples and premiums based on those medians and other quantitative and qualitative considerations, and, using those ranges, calculated ranges of implied equity values per Futura common share in the merger. The following table summarizes the results of these selected comparable transactions analyses:
| | | | | | | | | | | | | | | |
| | | 2006
| | | 2006
| | | | | Implied Equity
| |
| | | National Median | | | Midwest Median | | | Estimated Range | | Value per Share | |
| |
Price/Tangible Book Value | | | 2.33 | x | | | 2.42 | x | | 2.3x - 2.7x(1) | | $ | 21.75 -$25.50 | |
Core Deposit Premium | | | 19.1 | % | | | 21.3 | % | | 17.0% - 23.0%(2) | | $ | 21.00 - $25.00 | |
Price/LTM Earnings(3) | | | 23.6 | x | | | 23.6 | x | | 21.0x - 25.0x(4) | | $ | 22.25 - $26.50 | |
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(1) | | Multiple of Futura tangible book value per share of $9.44 as of March 31, 2006. |
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(2) | | Premium to Futura core deposits as of March 31, 2007. |
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(3) | | Excludes acquisitions with transaction values of $100 million and above. |
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(4) | | Multiple of Futura 2006 earnings per share of $1.06. |
KeyBanc noted that the merger consideration of $23.00 per Futura share falls within the per-share price ranges calculated based on the comparable transactions.
No transaction utilized in the precedent transaction analyses is identical to the merger. In evaluating the transactions, KeyBanc made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of either First Citizens or Futura.
Conclusion
The summary set forth above describes the principal analyses performed by KeyBanc in connection with its opinion delivered to the Board on June 4, 2007. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances and, therefore, the analyses underlying the opinion are not readily susceptible to summary description. Each of the analyses conducted by KeyBanc was carried out in order to provide a different perspective on the merger and add to the total mix of information available. KeyBanc did not form a conclusion as to whether any individual analysis, considered in isolation, supported or failed to support an opinion as to fairness from a financial point of view. Rather, in reaching its conclusion, KeyBanc considered the results of the analyses in light of each other and ultimately reached its opinion based upon the results of all analyses taken as a whole. Except as indicated above, KeyBanc did not place particular reliance or weight on any individual analysis, but instead concluded that its analyses, taken as a whole, support its determination. Accordingly, notwithstanding the separate factors summarized above, KeyBanc believes that its analyses must be considered as a whole and that selecting portions of its analysis and the factors considered by it, without considering all analyses and factors, could create an incomplete or misleading view of the evaluation process underlying its opinion. In performing its analyses, KeyBanc made numerous assumptions with respect to industry performance, business and economic conditions and other matters. The analyses performed by KeyBanc are not necessarily indicative of actual value or future results, which may be significantly more or less favorable than suggested by the analyses.
Miscellaneous
KeyBanc has also acted as financial advisor to the Board in connection with the merger and, pursuant to the terms of an engagement letter dated March 30, 2007, the Board agreed to cause First Citizens to pay KeyBanc a fee for such services, a significant portion of which is contingent upon the consummation of the merger, and a fee for rendering its opinion to the Board that is customary in transactions of this nature, which feethey will be credited against any fee earned by KeyBanc for its role as financial advisor to First Citizens in connection with the merger. The Board also agreed to cause First Citizens to reimburse KeyBanc for its
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reasonable out-of-pocket expenses under certain circumstances, and to indemnify KeyBanc and related persons against liabilities in connection with its engagements. The terms of the fee arrangement with KeyBanc were negotiated at arm’s-length between the Board and KeyBanc.
In the ordinary course of business, KeyBanc may actively trade the securities of First Citizens for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in those securities.
Opinion of Futura’s financial advisorOn February 2, 2007, KBW was retained by Futura to evaluate Futura’s strategic alternatives and to evaluate any specific proposals that might be received regarding an acquisition of Futura. KBW, as part of its investment banking business, is regularly engaged in the evaluation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, and distributions of listed and unlisted securities. The Futura Board of Directors selected KBW on the basis of the firm’s reputation and its experience and expertise in transactions similar to the merger.
Pursuant to its engagement, KBW was asked to render an opinion as to the fairness, from a financial point of view, of the merger consideration to shareholders of Futura. KBW delivered its opinion to the Futura Board that, as of June 7, 2007, the merger consideration is fair, from a financial point of view, to the shareholders of Futura. No limitations were imposed by the Futura Board upon KBW with respect to the investigations made or procedures followed by it in rendering its opinion. KBW has consented to the inclusion herein of the summary of its opinion to the Futura Board and to the reference to the entire opinion attached hereto as Annex C.
The full text of the opinion of KBW, which is attached as Annex C to this prospectus/proxy statement, sets forth certain assumptions made, matters considered and limitations on the review undertaken by KBW, and should be read in its entirety. The summary of the opinion of KBW set forth in this prospectus/proxy statement is qualified in its entirety by reference to the opinion.
In connection with this opinion KBW reviewed certain financial and other business data supplied to it by Futura, including (i) the Agreement and Plan of Merger, (ii) Proxy Statement dated March 16, 2007, (iii) Annual Reports for the years ended December 31, 2006, 2005 and 2004, and (iv) other information it deemed relevant. KBW also discussed with senior management and directors of Futura, the current position and prospective outlook for Futura. KBW reviewed financial and stock market data of other banks and the financial and structural terms of several other recent transactions involving mergers and acquisitions of banks or proposed changes of control of comparably situated companies.
Analysis of Recent Comparable Acquisition Transactions
In rendering its opinion, KBW analyzed certain comparable merger and acquisition transactions of both pending and completed bank deals, comparing the acquisition price relative to tangible book value, last twelve months earnings, and premium to core deposits. All comparative metrics were as of each respective deal’s announcement date. The analysis included a comparison of the minimum, median and maximum of the above ratios for pending and completed acquisitions where the seller was a bank and pricing metrics were available, based on the following three criteria:
(i) Deal was announced on or after January 1, 2006,
(ii) Deal value was between $20 Million and $80 Million, and
(iii) Target was headquartered in Ohio, Kentucky, Indiana or Michigan.
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The selected comparable transactions that the three criteria produced include the following:
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Acquiror
| | Target
|
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Southern Michigan Bancorp Inc. | | FNB Financial Corporation |
Citizens National Corp. | | Kentucky NB of Pikeville |
Firstbank Corp. | | ICNB Financial Corp. |
Bank of Kentucky Finl Corp. | | F.N.B. Bancorporation Inc. |
LNB Bancorp Inc. | | Morgan Bancorp Inc. |
Old National Bancorp | | St. Joseph Capital Corp. |
Dearborn Bancorp Inc. | | Fidelity Fncl. Corp. of MI |
Citizens First Corp. | | Kentucky Banking Centers |
Farmers Capital Bank Corp. | | Citizens National Bcshrs Inc. |
Community Bank Shares of IN | | Bancshares Inc. |
KBW derived the minimum, median and maximum pricing metrics of the three aforementioned criteria as stated below:
| | | | | | | | | | | | | |
| | | Price to | | | Core
| |
| | | Tangible
| | | LTM
| | | Deposit
| |
| | | Book | | | Earnings | | | Premium | |
| |
| Minimum | | | 166.2 | % | | | 16.8 | x | | | 9.8 | % |
| Median | | | 225.9 | % | | | 21.1 | x | | | 17.5 | % |
| Maximum | | | 276.8 | % | | | 28.6 | x | | | 29.9 | % |
| Consideration: $23.00 per share | | | 247.9 | % | | | 20.2 | x | | | 20.7 | % |
KBW viewed the three aforementioned criteria as the most appropriate in deriving a comparable transaction value based on the transaction’s size and market area. KBW viewed the fact that the combined criteria produced a comparable group with ten transactions, as being significant for the purposes of comparison. KBW viewed the three resulting metrics (price to tangible book value, price to last twelve months earnings and core deposit premium) from the comparable group on a minimum, median and maximum basis, as the three key metrics used to evaluate the fairness, from a financial point of view, of the transaction.
Given that the value of the consideration to be paid in the merger, as of the date of the opinion, exceeds the median for two of the metrics, and is reasonably close to the median on the remaining metric, KBW believes that this analysis supports the fairness, from a financial point of view, to Futura and its shareholders of the consideration to be paid in the merger.
Discounted Cash Flow Analysis
KBW performed a discounted cash flow analysis to estimate a range of intrinsic values per Futura common share. This range was determined by adding (1) the present value, which is a representation of the current value of a sum that is to be received some time in the future, of the estimated future cash flows that Futura could generate over the next five years and (2) the present value of a terminal value, which is a representation of the current value of an entity at a specified time in the future. The terminal value was determined by applying a range of price to earnings multiples based on similar publicly traded institutions.
The discounted cash flow analysis based on a trading multiple applied a range of year five terminal value multiples of 14.0x to 17.0x based on a midpoint price to last twelve months earnings multiple of 15.2x. The midpoint terminal multiple was based on the median price to last twelve months earnings multiple for Midwest banks with assets between $250 million and $300 million. The discount rate applied to the projected cash flows and calculated terminal value ranged from 10.0% to 14.0%. Based on the foregoing criteria and assumptions, KBW determined that the stand-alone present value of the Futura common shares ranged from $15.38 to $20.81 per share, with a midpoint price of $17.50.
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Given that the value of the consideration on a per share basis to be paid in the merger, as of the date of the opinion, exceeds the intrinsic value range derived from the discounted cash flow analysis, KBW believes that this analysis supports the fairness, from a financial point of view, to Futura and its shareholders of the consideration to be paid in the merger.
The intrinsic values of Futura derived using discounted cash flow analysis do not necessarily indicate actual values or actual future results and do not purport to reflect the prices at which any securities may trade at the present or at any time in the future. Discounted cash flow analysis is a widely used valuation methodology, but the results of this methodology are highly dependent upon numerous assumptions that must be made, including earnings estimates, terminal values, and discount rates.
Based on the above analyses KBW concluded that the consideration paid in the merger, was fair, from a financial point of view, to shareholders of Futura. This summary does not purport to be a complete description of the analysis performed by KBW and should not be construed independently of the other information considered by KBW in rendering its opinion. Selecting portions of KBW’s analysis or isolating certain aspects of the comparable transactions without considering all analyses and factors, could create an incomplete or potentially misleading view of the evaluation process.
In rendering its opinion, KBW assumed and relied upon the accuracy and completeness of the financial information provided to it by Futura and First Citizens. In its review, with the consent of the Futura Board of Directors, KBW did not undertake any independent verification of the information provided to it, nor did it make any independent appraisal or evaluation of the assets or liabilities and potential or contingent liabilities of Futura or First Citizens.
The fairness opinion of KBW is limited to the fairness as of its date, from a financial point of view, of the consideration to be paid in the merger and does not address the underlying business decision to effect the merger (or alternatives thereto) nor does it constitute a recommendation to any shareholder of Futura as to how such shareholder should vote with respect to the proposal to adopt the merger agreement.
Furthermore, KBW expresses no opinion as to the price or trading range at which shares of the pro forma entity will trade following the consummation of the merger.
KBW is a nationally recognized investment banking firm and is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, secondary distributions of listed and unlisted securities and private placements.
In preparing its analysis, KBW made numerous assumptions with respect to industry performance, business and economic conditions and other matters, many of which are beyond the control of KBW and Futura. The analyses performed by KBW are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses and do not purport to be appraisals or reflect the prices at which a business may be sold.
KBW will receive a fee of 0.95% of the closing deal value, as set forth in the Engagement Letter dated February 2, 2007, for services rendered in connection with advising and issuing a fairness opinion regarding the merger. As of the date of the prospectus/proxy statement, KBW has received $75,000 of such fee, the remainder of the fee is due upon the close of the transaction.
Regulatory approvals requiredFirst Citizens and Futura have submitted applications to the Board of Governors of the Federal Reserve System and the Ohio Division of Financial Institutionsable to obtain their approval of the transactions contemplated by the merger agreement, including the proposed merger of Futura and First Citizens and the subsequent merger of Champaign Bank and Citizens Bank. Theseall requisite regulatory applications are currently pending.
We anticipate that the necessary regulatory approvals will be obtained.approvals. However, there can be no assurance that any one or moreall of the required regulatory approvals described herein will be obtained thatand, if obtained, there can be no assurances regarding the timing of the approvals, willthe companies’ ability to obtain the approvals on satisfactory terms or the absence of litigation challenging such approvals. In addition, there can be received on a timely basis orno assurance that thesuch approvals will not impose conditions or requirements that, individually or in the aggregate, would so materially reduceor could reasonably be expected to have an adverse effect on the economicfinancial condition, results of operations, assets or business benefits of the merger that, had such conditions or requirements
40combined company
been known, either First Citizens or Futura would not have entered into the merger agreement. The merger may not be consummated for up to 30 days after approval by the Board of Governorsfollowing completion of the Federal Reserve Board, during which timeMerger. There can likewise be no assurances that U.S. federal or state regulatory or competition authorities will not attempt to challenge the United States DepartmentMerger or, if such a challenge is made, what the result of Justice may bring an action challenging the merger on antitrust grounds.
such challenge will be.Interests of FuturaComunibanc Directors and Officers in the Merger
As described below, some of Comunibanc’s directors and executive officers in the merger
Some of the directors and executive officers of Futura have interests in the
merger as described belowMerger that
aremay be different from, or in addition to, the interests of
FuturaComunibanc shareholders generally. The
Futura BoardComunibanc board of
Directorsdirectors was aware of these interests and considered them in approving the
mergerMerger Agreement.Change-in-Control Agreements.Comunibanc and Henry County Bank are parties to certain change in control agreements with certain executive officers.
Anthony Grieser has a change in control agreement with Comunibanc and Henry County Bank. Under that agreement, in the event of the Merger, Mr. Grieser will be entitled to receive a payment equal to 2.5 times the sum of his (i) base salary, as in effect immediately prior to the effective date of the Merger, and (ii) the average annual bonus paid to, or earned by, Mr. Grieser during the two (2) calendar years immediately preceding the effective date of the Merger. The estimated benefit payable to Mr. Grieser under the terms of his change in control agreement as a result of the Merger is $500,753.
Sharon Mack has a change in control agreement with Comunibanc and Henry County Bank. Under that agreement, in the event of the Merger, Ms. Mack will be entitled to receive a payment equal to 1.0 times the sum of her (i) base salary, as in effect immediately prior to the effective date of the Merger, and (ii) the average annual bonus paid to, or earned by, Ms. Mack during the two (2) calendar years immediately preceding the effective date of the Merger. Ms. Mack will be entitled to a second payment equal to 0.5 times her base salary and the merger.
average annual bonus paid to, or earned by, Ms. Mack during the two (2) calendar years immediately preceding the effective date of the Merger, provided however that Ms. Mack remains employed by Comunibanc, Henry County Bank or any successor entity of either as of October 31, 2022, or earlier if Ms. Mack is terminated without cause by Comunibanc, Henry County Bank, or any successor entity prior to October 31, 2022, in which case payment will be made within seven (7) days of termination. The estimated benefit payable to Ms. Mack under the terms of her change in control agreement as a result of the Merger is $275,430, of which $183,620 which will be paid at the time of the Merger and $91,810 will be paid subject to certain conditions and on a delayed basis as provided for above.James K. Yarnell has a change in control agreement with Comunibanc and Henry County Bank. Under that agreement, in the event of the Merger, Mr. Yarnell will be entitled to receive a payment equal to 1.5 times the sum of his (i) base salary, as in effect immediately prior to the effective date of the Merger, and (ii) the average annual bonus paid to, or earned by, Mr. Yarnell during the two (2) calendar years immediately preceding the effective date of the Merger. The estimated benefit payable to Mr. Yarnell under the terms of his change in control agreement as a result of the Merger is $258,573.
Cash-out of options and stock appreciation rightsSeverance Payments
Under the terms of the merger agreement,Merger Agreement Civista shall pay to each outstanding option to purchase Futura common shares and each outstanding stock appreciation right granted under oneemployee of Futura’s equity-based compensation plans, whetherComunibanc or its Subsidiaries who (i) is not then vested and exercisable, will be terminated and converted into the right to receive an amount of cash equal to the product of (1) the difference between $23.00, less the exercise price of each such option or stock appreciation right, multiplied by (2) the number of Futura common shares subject to each such option an existing contract providing for severance and/or stock appreciation right. The 10 directors and executive officers of Futura, as a group, hold outstanding options to purchase 192,455 Futura common shares with a weighted average exercise price of $14.35 per share, and stock appreciation rights with respect to 30,999 common shares with a weighted average exercise price of $15.23 per share. A total of 6,600 of these options and 5,400 of these stock appreciation rights are not presently vested or exercisable.
Change in control and separation agreements
Futura’s chief executive officer and chief financial officer have change in control agreements with Futura. Certain payments will be required under these agreements ifpayment, (ii) is an employee of Comunibanc or any of its Subsidiaries immediately before the CEOEffective Time, (iii) is not offered continued employment by Civista or CFO voluntarily terminates his employmentany of its Subsidiaries after the Effective Time or is terminated by First CitizensCivista without cause within twelvethree (3) months of completion of the merger. As of the date of this prospectus/proxy statement, neither the CEO nor the CFO of Futura have been offered continued employment arrangements with First Citizens, and it is anticipated that their employment will terminate shortly after the merger is completed. If the CEO is terminated, he will receiveEffective Time, and (iv) who sign and deliver Civista’s standard form of termination and release agreement, a lump sum paymentseverance amount equal to two weeks of thirty (30) monthspay, at their base rate of his base salary aspay in effect at the time of termination, as well as COBRA health insurance payments for a certain periodmultiplied by the number of time. Ifwhole years of service of such employee with Comunibanc or any of its Subsidiaries, less applicable local, state and federal tax
withholding; provided, however, that the CFO is terminated, he will receiveminimum severance payment shall equal four 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 paymentwithin 14 days following the employee’s termination, provided that such employee has not been terminated for cause. In addition, Civista will offer outplacement assistance to any such terminated employee for the same period of twenty four (24) monthstime during which such employee is entitled to severance hereunder. For any employee of his base salary asComunibanc or its Subsidiaries participating in effectComunibanc’s, or any of its Subsidiaries’, group health program at the time of termination as well as COBRAEffective Time who is entitled to a severance payment, the employee will be able to purchase health insurance paymentscoverage at the full premium rate for a certain period of time.
Two other officers, the
chief lending officer and the vice president, business banker, may receive payments in accordance with their separation agreements if they resign their employment or if they are terminated within six months following the merger. If such officers leave the employment of First Citizens during that time period, First Citizensentire COBRA period; Civista will pay the
officercost of COBRA coverage for such employees for a
severance payperiod equal to the number of weeks such employee is entitled to severance.Mr. Anthony E. Grieser, the Chief Financial Officer of Henry County Bank, has entered into an independent consulting agreement with Civista to be effective as of the closing of the Merger. Mr. Grieser is agreeing to assist Civista, on an as needed basis, until completion of core banking processor data conversion, in October of 2022, providing advice and support in the amount of twelve (12) monthsmanagement of the base salary in effect atexisting accounting and financial reporting systems of Henry County Bank, and the timepreparation and processing of terminationaccounting and financial reports relating to the Henry County Bank’s business. Civista will pay Mr. Grieser $100 per hour of employment.
First Citizens Board membership
In accordance withactual work completed pursuant to the terms of the merger agreement, First Citizens has selected current Futura directors Barry W. Boerger, Allen R. Maurice and Richard A. Weidrick to serve on the First Citizens Board of Directors upon completion of the merger. First Citizens has further agreed to nominate and recommend those directors for election to the First Citizens Board of Directors at the three annual meetings of shareholders following the merger (subject to certain conditions and limitations). Upon completion of the merger, First Citizens will also establish and maintain for up to three years a bank community board to be comprised of all current outside directors on the Futura Board who wish to participate and who have not been appointed to serve on the First Citizens Board. See “The Merger Agreement — First Citizens Board of Directors structure following the merger” beginning on page of this prospectus/proxy statement.
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Indemnification and directors’Directors’ and officers’ liability insuranceOfficers’ Liability Insurance
For a period of six years following the merger and subjectSubject to compliance with applicable state and federal laws, First CitizensCivista will indemnify each person who served as a director or officer of FuturaComunibanc on or after the date of the Merger Agreement and before the completionEffective Time of the mergerMerger to the fullest extent permitted under Futura’sprovided by Comunibanc’s governing documents and Ohioapplicable law, from and against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed action, suit or proceeding by reason of the fact that the person served aswas an officer or director of Futura. First CitizensComunibanc or Henry County Bank. In addition, the Merger Agreement provides that, prior to the Merger, Comunibanc will also purchase a directors’ and officers’ and company liability insurance policy to be effective for fourup to six years following the merger,effective date of the Merger, on terms no less advantageous than those contained in Futura’sComunibanc’s existing policy, subject to certain limitations.
Material federal income tax consequencesGeneral
The obligation of First Citizens and Futura to consummateprovided, however, that the
merger is conditionedpremium on the
receiptpolicy shall not exceed 150% of Comunibanc’s current premium levels.Director Appointments
Promptly following the Effective Time, Civista shall cause one (1) person who is currently a member of the Comunibanc Board to be vetted and appointed to the Civista Bank board of directors for a term commencing as soon as practicable after the Effective Time, in accordance with the Civista Bank regulations, corporate governance guidelines, and applicable law. The person selected to be appointed to the Civista Bank board will be mutually agreed to in writing by First CitizensCivista and Comunibanc, acting in good faith.
Termination and payout of an opinion of First Citizens’ counsel, Vorys, Sater, Seymourcertain fully vested compensation agreements.
Director Deferred Fee Agreements and Pease LLP,Director Supplemental Retirement Program. Henry County Bank maintains a voluntary director deferred fee plan (“Deferred Fee Plan”) and a Director Supplemental Retirement Program (the “Director Deferred Plan”). Directors Chamberlin, Fisher, Freppel, Stober, and Wendt participate in the Deferred Fee Plan and directors Anthony E. Grieser, Jacob A. Freppel, and William L. Wendt participate in the Director SERP Plan. All participants are fully vested in their benefits and the receiptobligations of Henry County Bank are fully accrued for under both plans. Under the terms of the Merger Agreement, Henry County Bank will take action to terminate the Director Fee Plan and the Director SERP plan at or immediately prior to the Effective Time and distribute the vested and accured benefits to the participating directors.
Salary Reduction Deferred Compensation Agreements. Henry County Bank maintains a voluntary salary reduction deferred compensation plan (the “Executive Deferred Compensation Plan”). Henry County Bank
officers Anthony E. Grieser, Sharon S. Mack, William L. Wendt, David L. Wills, and J. Kevin Yarnell each have elected to participate in the plan. Participants are at all times fully vested in their volutary deferral amounts and the obligations of Henry County Bank are fully accrued for under the plan. Under the terms of the Merger Agreement, Henry County Bank will take action to terminate the Executive Deferred Compensation Plan at or immediately prior to the Effective Time and distribute the vested and accrued benefits to the participating executives.
Split Dollar Agreements
Henry County Bank maintains split dollar plans for the benefit of its directors and officers. Under the terms of the plans participants have the right during and after employment to designate beneficiares to receive death benefits from life insuarnce policies owned by FuturaHenry County Bank and maintained on the life of an opinionthe participant. Except for directors Fisher and Freppel, all participants under the director and officer split dollar plan are fully vested in their split dollar benefits based upon their current service and the actuarial net present value of Futura’s counsel, Squire, Sanders & Dempsey L.L.P.,the obligations of Henry County Bank have been fully accrued. Directors Fisher and Freppel have not fulfilled the employment service requirement to be vested in their benefit, but their benefit will become fully vested in connection with the Merger under the terms of the change in control provisions of their split dollar agreements. As of December 31, 2021, the most recent date for which information is available, the accuarial net present value of the unaccrued split dollar benefit that will accelerate and vest upon the Merger was $7,751 and $25,571 for Mr. Fisher and Mr. Freppel, respectively. Civista has agreed in the Merger Agreement to assume the obligations of Henry County Bank under the split dollar agreement. If requested by Civista, Comunibanc and Henry County Bank have agreed to use their reasonable best efforts to terminate each datedparticipant agreement under the Split Dollar Plans. Any payment made to a participant in connection with the termination of their respective split dollar agreement under the Split Dollar Plans must be approved by Civista prior to payment.
MERGER-RELATED COMPENSATION TO NAMED EXECUTIVE OFFICERS
The discussion and table below reflect the estimated amount of compensation and benefits that each of the named executive officers of Comunibanc and Henry County Bank are entitled to receive where the compensation or benefits are based on or otherwise relate to the Merger.
The amounts in the table below assume the named executive officer remains employed and is not terminated with cause as of the effective dateEffective Time. Amounts do not include compensation benefits available to all of Comunibanc’s general employees on a non-discriminatory basis. All of the merger and substantially toemployment arrangements described above comply with or are excepted from Section 409A of the effect thatInternal Revenue Code.
| | | | | | | | | | | | |
Name | | Change in
Control Cash
Payments (1)
($) | | | Retention
Payments (2)
($) | | | Total
($) | |
Anthony E. Grieser | | $ | 500,753 | | | | — | | | $ | 500,753 | |
Sharon S. Mack | | $ | 183,620 | | | $ | 91,810 | | | $ | 275,430 | |
J. Kevin Yarnell | | $ | 258,573 | | | | — | | | $ | 258,573 | |
| (1) | The amounts in this column reflect the value of single trigger cash payments to be made to the named executives under their Change in Control agreements, executed January 7, 2022. These numbers may be subject to change based on compensation of the named parties. At present, the payments are not expected to trigger 280G tax considerations. |
| (2) | The amounts in this column are based on retention payments earned by Comunibanc Officers and Executives pursuant to the Change in Control agreements dated January 7, 2022. |
Material U.S. Federal Income Tax Consequences of the Merger
This section describes the intended, material U.S. federal income tax consequences of the merger will be as described below. The opinions are based on the Internal Revenue Code, the applicable Treasury Department regulations (the “Treasury Regulations”), judicial authorities,Merger to Civista, Comunibanc, and current administrative rulings and practices as in effect on the dateU.S. holders of the opinions, all of which are subject to change, possibly with retroactive effect, and to differing interpretations. Opinions of counsel are not binding upon the Internal Revenue Service (“IRS”) or the courts, either of which could take a contrary position. No rulings have been, or will be, sought from the IRS in connection with the merger. The opinions of counsel to First Citizens and Futura will rely on certain assumptions that customarily are made with respect to transactions of this kind, and on certain representations and covenants, including those contained in officers’ certificates of First Citizens and Futura, which representations and covenants counsel to First Citizens and Futura will assume to be true, correct, and complete. If any such assumption, representation or covenant is inaccurate, the opinions could be adversely affected. In addition, the opinions will assume that any Futura shareholder that has asserted, as of the effective time of the merger, dissenters’ rights will receive, pursuant to statutory procedures, an amount per share of dissenting FuturaComunibanc common shares that does not exceed $23.00 (which is thewho exchange their shares for a combination of Civista common shares and cash consideration per share payable pursuant to the merger). The opinion of Vorys, Sater, SeymourMerger. Civista and Pease LLP set forth as an exhibitComunibanc intend for the Merger to the registration statement of which this prospectus/proxy statement is a part, as well as the assumptions, representations, and covenants described above, support the following discussion of the anticipated material federal income tax consequences of the merger to First Citizens, Futura and the Futura shareholders.
This description of anticipated material federal income tax consequences of the merger assumes that the merger will be consummated in accordance with the terms and provisions of the merger agreement. This description does not address, among other matters, the tax consequences to a Futura shareholder who holds Futura common shares other thantreated as a capital asset for federal income tax purposes. The description also does not address all of the tax consequences that may be relevant to Futura shareholders in light of their particular tax circumstances, including, without limitation, shareholders that are: (i) persons who hold Futura common shares as part of a straddle, hedge, conversion, or other risk-reduction transaction; (ii) broker-dealers; (iii) persons who have a functional currency other than the U.S. dollar; (iv) tax-exempt entities; (v) foreign persons; (vi) insurance companies; (vii) financial institutions; (viii) persons that acquired Futura common shares pursuant to the exercise of employee stock options or otherwise as compensation; (ix) persons who receive First Citizens common shares other than in exchange for Futura common shares; (x) retirement plans; or (xi) pass-through entities and investors in those entities. In addition, this description does not address the tax consequences to the holders of options to acquire Futura common shares. Furthermore, the discussion does not address any alternative minimum tax or any foreign, state, or local tax consequences of the merger. Futura shareholders with special particular tax circumstances or who are subject to special tax treatment are strongly urged to consult with their tax advisors regarding their individual tax consequences.
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Reorganization treatment
The merger will be a reorganization“reorganization” within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code, and First CitizensCivista and FuturaComunibanc intend that each will be a “party to the reorganization” within the meaning of Section 368(b) of the Internal Revenue Code.
Tax Civista has received an opinion of Dinsmore & Shohl LLP, and Comunibanc has received an opinion of Shumaker, Loop & Kendrick, LLP, dated as of the effective date of the Merger, substantially to the effect that, on the basis of facts, representations and assumptions set forth in that opinion (including factual representations contained in certificates of officers of Civista and Comunibanc), the Merger constitutes a reorganization under Section 368(a) of the Internal Revenue Code.The following discussion assumes that the U.S. Internal Revenue Service (“IRS”) and the courts agree that the Merger is a reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code, and that Civista and Comunibanc are each a “party to the reorganization” within the meaning of Section 368(b) of the Internal Revenue Code. However, Civista and Comunibanc have not requested and do not intend to request any ruling from the IRS as to the U.S. federal income tax consequences of the Merger, and the tax opinions to be delivered in connection with the Merger are not binding on the IRS or any court or other administrative body. Consequently, there is no assurance of the accuracy of the anticipated U.S. federal income tax consequences to First CitizensCivista, Comunibanc, and Futurathe shareholders of Comunibanc described in this proxy statement/prospectus. In addition, if any of the facts, representations or assumptions upon which the opinions are based are inconsistent with the actual facts, the U.S. federal income tax consequences of the Merger could be adversely affected. The actual tax consequences to you of the Merger may be complex and will depend upon your specific situation and upon factors that are not within the control of Civista or Comunibanc. You should consult with your own tax advisor as to the tax consequences of the Merger in light of your particular circumstances, including the applicability and effect of the alternative minimum tax and any state, local, foreign, and other tax laws, your basis in any Civista common shares received in the Merger, your holding period with respect to any Civista common shares received in the Merger, your tax return reporting requirements, or the applicability and effect of any proposed changes in any tax laws.
The following discussion is based on the Internal Revenue Code, existing and proposed Treasury Department regulations promulgated thereunder and published judicial and administrative rulings and decisions, all as currently in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. Any such change could affect the continuing validity of this discussion. This summary does not address any tax consequences of the Merger under state, local or foreign laws, or any federal laws other than those pertaining to income tax.
For purposes of this discussion, a “U.S. holder” is a beneficial owner of Comunibanc common shares who, for U.S. federal income tax purposes, is:
an individual citizen or resident of the U.S.;
a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the U.S. or any state thereof or the District of Columbia;
a trust if (i) its administration is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable Treasury Department regulations to be treated as a United States person; or
an estate that is subject to U.S. federal income tax on its income regardless of its source.
If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds Comunibanc common shares, the tax treatment of a partner generally will depend on the status of the partners and the activities of the partnership. If you are a partnership, or a partner in such partnership, holding Comunibanc common shares, you should consult your tax advisors.
This discussion is applicable only to those U.S. resident Comunibanc shareholders that hold their Comunibanc common shares as a capital asset within the meaning of Section 1221 of the Internal Revenue Code (generally, property held for investment), and does not address all of the U.S. federal income tax consequences that may be relevant to particular Comunibanc shareholders in light of their individual circumstances or to Comunibanc shareholders that are subject to special rules, such as:
S corporations or other pass-through entities and investors in those through entities;
retirement plans, individual retirement accounts or other tax-deferred accounts;
tax-exempt organizations;
dealers in securities or foreign currencies;
traders in securities who elect to use the mark-to-market method of accounting;
regulated investment companies;
real estate investment trusts;
holders of Comunibanc common shares subject to the alternative minimum tax provisions of the Internal Revenue Code;
persons that exercise dissenters’ rights;
persons that hold Comunibanc common shares as part of a straddle, hedge, constructive sale, conversion transaction or other risk management transaction;
persons who purchase or sell their Comunibanc common shares as part of a wash sale;
expatriates or persons that have a functional currency other than the U.S. dollar;
persons who are not U.S. holders;
expatriates of the United States;
persons that have a functional currency other than the U.S. dollar;
holders that hold (or that held, directly or constructively, at any time during the five year period ending on the date of the disposition of the Comunibanc common shares pursuant to the merger) 5% or more of the outstanding Comunibanc common shares; and
persons that acquired their Comunibanc common shares through the exercise of an employee stock option or otherwise as compensation or through a tax-qualified retirement plan.
In addition, the discussion does not address any alternative minimum tax, U.S. federal estate or gift tax or any state, local or foreign tax consequences of the Merger, nor does it address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010 or any consequences under the Foreign Account Tax Compliance Act of 2010 (including the Treasury Department regulations issued thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith). Determining the actual tax consequences of the Merger may be complex.
They will depend on specific situations and on factors that are not within the control of Comunibanc or Civista All holders of Comunibanc common shares should consult their tax advisors as to the specific tax consequences of the Merger to them, including the applicability and effect of the alternative minimum tax and any state, local, foreign, and other tax laws, your basis in any Civista common shares received in the Merger, your holding period with respect to any Civista common shares received in the Merger, your tax return reporting requirements, or the applicability and effect of any proposed changes in any tax laws.
The following discussion summarizes the matters addressed in the tax opinion of Dinsmore & Shohl LLP and Shumaker, Loop & Kendrick LLP filed as an exhibit to the registration statement of which this proxy statement/prospectus is a part.
Reorganization Treatment
The Merger is intended to be a reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code, and Civista and Comunibanc are each intended to be a “party to the reorganization” within the meaning of Section 368(b) of the Internal Revenue Code. If the intended reorganization treatment is respected by the Internal Revenue Service and the courts, then the material federal income tax consequences described below are anticipated.
Federal Income Tax Consequences to Civista and Comunibanc
No Gain or Loss. No gain or loss will be recognized by First CitizensCivista or FuturaComunibanc as a result of the merger.
Merger.Tax Basis. The aggregate tax basis of the assets of FuturaComunibanc in the hands of First CitizensCivista will be the same as the aggregate tax basis of such assets in the hands of FuturaComunibanc immediately prior to the merger.
Merger.Holding Period. The holding period of the assets of FuturaComunibanc to be received by First CitizensCivista will include the period during which such assets were held by Futura.
Comunibanc.Federal Income Tax consequencesConsequences to Futura shareholders who receive only cashU.S. Holders of Comunibanc Common Shares
A Futura shareholder who receives only cash in exchange for such shareholder’s Futura common shares (as a result of such shareholder’s dissent to the merger or election to receive the cash consideration for all of such shareholder’s Futura common shares) will recognize gain or loss as if such shareholder had received such cash as a distribution in redemption of such shareholder’s Futura common shares, subject to the provisions and limitations of Section 302The U.S. federal income tax consequences of the Internal Revenue Code. The gainMerger to a U.S. holder will depend on whether such U.S. holder receives cash or loss will be long-term capital gain or loss if the Futura common shares surrendered in the merger were held as capital assets for a period exceeding one year ascombination of the time of the exchange.
Tax consequences to Futura shareholders who receive only First Citizens common shares, except for cash in lieu of fractional shares
A Futura shareholder who receives only First Citizensand Civista common shares in exchange for such
shareholder’s FuturaU.S. holder’s Comunibanc common shares. Although the Exchange Ratio, Cash Consideration, and Stock Consideration provisions of the Merger Agreement are generally fixed, cash payments in lieu of fractional Civista common shares
(not includingor in connection with dissenters’ rights could alter the mix of consideration a shareholder will receive.Exchange of Comunibanc Common Shares for a combination of Civista Common Shares and Cash
A U.S. holder of Comunibanc common shares will recognize gain (but not loss) with respect to the Civista common shares and cash such U.S. holder receives pursuant to the Merger in an amount equal to the lesser of (i) the amount by which the sum of the fair market value of the Civista common shares and the amount of cash received by such U.S. holder, exceeds such U.S. holder’s basis in its Comunibanc common shares surrendered in the Merger, and (ii) the amount of cash received by such U.S. holder (other than any cash received in lieu of a fractional First CitizensCivista common shares) will not recognizeshare, as discussed below under “—Cash In Lieu of Fractional Shares”). For purposes of this calculation, the fair market value of Civista common shares is based on the trading price of Civista common shares on the date of the Merger, rather than price negotiated between Civista and Comunibanc in the Merger Agreement used to calculate the number of shares of Civista common stock to be issued to the shareholder. In the case of any U.S. holder who acquired different blocks of Comunibanc common shares at different times and at different prices, any realized gain or loss on the receipt of such First Citizens common shares.
Tax consequences to Futura shareholders who receive a combination of cash (other than cash in lieu of fractional shares) and First Citizens common shares
A Futura shareholder who receives a combination of cash (other than cash in lieu of fractional shares) and First Citizens common shares in exchange for Futura common shares will recognize gain, but not loss, in an amount not to exceed the amount of cash received (excluding cash received in lieu of fractional First Citizens common shares). For this purpose, a Futura shareholder generally must calculate gain or lossbe determined separately for each identifiable block of FuturaComunibanc common shares exchanged by the shareholder in the merger, and aMerger. A loss realized on the exchange of one block of Futura common shares may notcannot be used by the shareholder to offset a gain realized on the exchange of another block, ofbut a U.S. holder will generally be able
to reduce its Futura common shares. Shareholderscapital gains by capital losses in determining its income tax liability. Prior to voting on the Merger, any U.S. holder potentially in that circumstance should consult theirits tax advisors regardingadvisor with regard to identifying the manner in which cash and First Citizensbasis or holding periods of the particular Civista common shares should be allocated among their Futurareceived in the Merger. Subject to possible dividend treatment (as discussed in more detail under “—Possible Dividend Treatment,” below), gain that U.S. holders of Comunibanc common shares andrecognize in connection with the specific federal income tax consequences thereof.
For purposes of determining the character of the gain recognized on account of the cash received by a Futura shareholder, such Futura shareholderMerger generally will be treated as having received only First Citizens common shares in exchange for such shareholder’s Futura common shares, and as having immediately redeemed a portion of such First Citizens common shares for the cash received (excluding cash received in lieu of fractional First Citizens common shares). Unless the redemption is treated as a dividend under the principles of Section 302(d) of the Internal Revenue Code (to the extent of such shareholder’s ratable share of the undistributed earnings and profits of Futura), the gain will beconstitute capital gain if the Futura common shares arethey held by such shareholderstock as a capital asset at the time of the merger.
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Cash in lieu of fractional shares
A Futura shareholder who receives cash in lieu of a fractional First Citizens common shareMerger and will recognizeconstitute long-term capital gain or loss as if such fractional First Citizensholders have held their Comunibanc common share were distributed as partshares for more than one year at the effective time of the merger and then redeemed by First Citizens,Merger. Long-term capital gain of certain non-corporate U.S. holders of Comunibanc common shares, including individuals, is generally taxed at preferential rates. The deductibility of capital losses is subject to the provisions and limitations of Section 302 of the Internal Revenue Code.
Tax basis
limitations.The aggregate tax basis of the First CitizensCivista common shares received by a Futura shareholder in the mergerU.S. holder of Comunibanc common shares described above (including a fractional shares,Civista common share, if any, deemed to be issued and redeemed by First Citizens) generallyCivista) will be equal to the aggregatesame as the tax basis of the FuturaComunibanc common shares surrendered in exchange for the merger,Civista common shares and cash, reduced by the amount of cash received by the shareholdersuch a U.S. holder in the mergerMerger (other than any cash received in lieu of a fractional shares)Civista common share), and increased by the amount ofany gain recognized by the shareholdersuch a U.S. holder in the mergerMerger (including any portion of the gain that is treated as a dividend (as described below), but excluding any gain or loss resulting from the deemed issuance and redemption of a fractional shares)Civista common share).
Holding period
The holding period
of the First Citizensfor Civista common shares received by
such a
Futura shareholderU.S. holder (including a fractional Civista common share, if any, deemed to be issued and redeemed by Civista) will include
thesuch U.S. holder’s holding period
of the Futurafor Comunibanc common shares surrendered in exchange for the
First CitizensCivista common shares.Cash in Lieu of Fractional Shares
A U.S. holder of Comunibanc common shares that receives cash in lieu of a fractional Civista common share generally will be treated as having received such fractional share and then having received such cash in redemption of such fractional share. Gain or loss generally will be recognized based on the difference between the amount of cash received in lieu of the fractional share and the portion of the U.S. holder’s aggregate adjusted basis in the merger, provided that the FuturaComunibanc common shares weresurrendered which is allocable to the fractional share. Subject to possible dividend treatment (as discussed in more detail under “Possible Dividend Treatment”, below), such gain or loss generally will be long-term capital gain or loss if the U.S. holder held such stock as a capital asset at the time of the merger.
Reporting requirements
A Futura shareholder owningMerger and the U.S. holder’s holding period for its Comunibanc common shares exceeds one year at
least one percent (by vote or value)the effective time of the
total outstanding FuturaMerger. The Internal Revenue Code contains limitations on the extent to which a taxpayer may deduct capital losses from ordinary income.Tax Consequences to Comunibanc Shareholders who Receive Only Cash
A U.S. holder of Comunibanc common shares immediately beforewho properly exercises its dissenters’ rights and receives solely cash in exchange for all of its Comunibanc common shares (and is not treated as constructively owning Civista common shares after the merger, is requiredMerger under the circumstances referred to filebelow under “Possible Dividend Treatment”) will recognize a statement with the shareholder’s U.S.gain or loss for federal income tax return setting forthpurposes equal to the difference between the cash received and such U.S. holder’s tax basis in the FuturaComunibanc’s common shares exchangedsurrendered in exchange for the merger, the fair market valuecash. Subject to possible dividend treatment (as discussed in more detail under “Possible Dividend Treatment”, below), such gain or loss will be a capital gain or loss, provided that such shares were held as capital assets of the First CitizensU.S. holder at the effective time of the Merger. Such gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period is more than one year. The Internal Revenue Code contains limitations on the extent to which a taxpayer may deduct capital losses from ordinary income.
Possible Dividend Treatment
In some cases, if a U.S. holder of Comunibanc common shares andactually or constructively owns Civista common shares other than the amountCivista common shares received pursuant to the Merger, the gain recognized by such holder could be treated as having the effect of any cash receivedthe distribution of a dividend under tests set forth in the merger. In addition, all Futura shareholders will
Internal Revenue Code, in which case such gain would be requiredtreated as dividend income. This could happen, for example, because of ownership of additional Civista common shares by such holder, ownership of Civista common shares by a person related to retain permanent records relating tosuch holder, or a share repurchase by Civista from other holders of Civista common shares. Because the amount, basis, and fair market valuepossibility of all property transferred individend treatment depends primarily upon each holder’s particular circumstances, including the merger, and relevant factsapplication of certain constructive ownership rules, U.S. holders of Comunibanc’s common shares should consult their tax advisors regarding any liabilities assumed or extinguished as partthe application of the merger.
foregoing rules to their particular circumstances.Backup withholdingWithholding and Reporting Requirements
Under certain circumstances, cash payments made to a Futura shareholderU.S. holder of Comunibanc common shares pursuant to the mergerMerger may be subject to backup withholding at a rate of 28%. There is no withholding for a shareholder who provides of the exchange agent with such shareholder’s correct U.S. federalcash payable to the holder, unless the holder furnishes its taxpayer identification number in the manner prescribed in applicable Treasury Department regulations, and who certifies that no lossotherwise complies with all applicable requirements of exemption fromthe backup withholding has occurred on IRSForm W-9 or its substitute. Certain categories of Futura shareholders, such as corporations and some foreign individuals, are not subject to backup withholding. In order for a foreign individual to qualify as an exempt recipient, such individual generally must provide the exchange agent with a completed IRSForm W-8BEN or its substitute.rules. Any amounts withheld from payments to a Futura shareholderholder under the backup withholding rules are not an additional tax. Rather, any such amountstax and will be allowed as a refund or credit or refund against such shareholder’sthe holder’s U.S. federal income tax liability, provided that the shareholder furnishesrequired information is timely furnished to the IRSIRS.
A U.S. holder of Comunibanc common shares owning at least 5% (by vote or value) of the outstanding shares of Comunibanc common shares or having a basis of $1,000,000 or more in its Comunibanc common shares, immediately before the Merger, is required to file a statement with such holder’s U.S. federal income tax return setting forth such holder’s tax basis in and the fair market value of shares of the Comunibanc common shares exchanged by such holder pursuant to the Merger. In addition, all U.S. holders of Comunibanc common shares will be required information.
to retain records pertaining to the Merger.The preceding discussion of material U.S. federal income tax consequences of the mergerMerger is included in this prospectus/proxy statementstatement/prospectus for general information only.Each Futuraonly, and is intended only as a summary of material U.S. federal income tax consequences of the Merger. It is not a complete analysis or discussion of all potential tax effects that may be important to you and is not tax advice.
We recommend that each Communibanc shareholder should consult with his, her or its own tax advisor regarding the specific tax consequences to the shareholder of the merger,Merger, including the application and effect of state, local and foreign income and other tax laws.
Accounting treatmentTreatment
The mergerMerger will be accounted for as a purchaseunder the acquisition method of accounting in accordance with generally accepted accounting principles generally accepted in the United States of America.States. Under the purchaseacquisition method of accounting, the tangible and identifiable intangible assets and liabilities of FuturaComunibanc will be recorded and assumed at estimated fair values at the time the
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merger Merger is consummated, and theconsummated. The excess of the estimated fair value of First CitizensCivista common shares issued and the cash proceeds plus the direct costs of the acquisitionpaid over the net tangible and identifiable intangiblefair values of the assets will be recorded as goodwill. The adjustments necessary to record tangible andacquired, including identifiable intangible assets, and liabilities at fair valueassumed will be amortized torecorded as goodwill and will not be deductive for income and expensed over the estimated remaining lives of the related assets and liabilities. Remaining goodwilltax purposes. Goodwill will be subject to an annual test for impairment and the amount impaired, if any, will be charged toas an expense at the time of impairment.
The pro forma resultsResale of applying the purchase method of accounting are shown in the unaudited pro forma financial information appearing elsewhere in this prospectus/proxy statement. See “Pro Forma Financial Information” beginning on page of this prospectus/proxy statement.
Stock exchange listingCivista’s Common SharesFirst CitizensCivista has registered its common shares to be issued to Futura shareholders in the merger will be authorized for listing on NASDAQMerger with the SEC under the symbol “FCZA.”
ResaleSecurities Act of First Citizens common shares1933, as amended (the “Securities Act”). No restrictions on the sale or other transfer of the First CitizensCivista’s common shares issued in the mergerMerger will be imposed solely as a result of the merger,Merger, except for restrictions on the transfer of First CitizensCivista’s common shares issued to any FuturaComunibanc shareholder who may be deemed to bebecome an “affiliate” of FuturaCivista for purposes of Rule 145144 under the Securities Act. The term “affiliate” is defined in Rule 144 under the Securities Act and generally includes executive officers, directors and shareholders beneficially owning 10% or more of the outstanding FuturaCivista common shares.
Futura affiliates may resell the First Citizens common shares they receive in the merger only (i) in compliance with Rule 145 or another applicable exemption from the registration requirements under the Securities Act or (ii) pursuant to an effective registration statement under the Securities Act covering their First Citizens common shares. Rule 145, as currently in effect, restricts the manner in which affiliates may resell shares and also restricts the number of shares that affiliates, and others with whom they might act in concert, may sell within any three-month period. The merger agreement required Futura to use its reasonable best efforts to cause each person who may be deemed to be an affiliate of Futura to execute and deliver, on or before the date of mailing of this prospectus/proxy statement, an agreement stating that the affiliate will not sell, transfer, or otherwise dispose of any First Citizens common shares acquired in the merger except in compliance with the Securities Act and the rules and regulations under the Securities Act.
DividendsTHE MERGER AGREEMENT
The merger agreement generally restricts the payment of dividends to Futura shareholders to the extent the timing of the closing of the merger would result in First Citizens shareholders receiving a Futura dividend and a First Citizens dividend for the same period. Pursuant to the terms of the merger agreement, Futura is not permitted, without the prior written consent of First Citizens, to make, declare, pay or set aside for payment any dividend to Futura shareholders except for (a) the payment of the previously declared cash dividend on Futura common shares in an amount equal to $.15 per share for the quarter ended June 30, 2007, (b) the declaration and payment of a cash dividend on Futura common shares in an amount equal to $.15 per share with a record date and a payment date in the quarter ended September 30, 2007, and (c) the declaration and payment of a cash dividend on Futura common shares in an amount not to exceed $.17 per share with a record date and a payment date in November or December 2007. If the closing occurs before any of these declaration and payment dates for Futura dividends, then Futura shareholders will not be entitled to a Futura dividend for the relevant period but may be entitled to receive a First Citizens dividend for such period on the First Citizens common shares received in the merger.
The merger agreement provides that employees of Futura who become employees of First Citizens or one of its subsidiaries as a result of the merger will, as determined by First Citizens, participate in either Futura’s
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employee benefit plans (for so long as First Citizens determines necessary or appropriate) or in the employee benefit plans sponsored by First Citizens for First Citizens’ employees. Employees of Futura will receive credit for their years of service with Futura for participation and vesting purposes under the applicable First Citizens employee benefit plans, including credit for years of service and for seniority under vacation and sick pay plans and programs. In addition, to the extent employees of Futura participate in the First Citizens group health plan, First Citizens will waive all restrictions and limitations for pre-existing conditions under the First Citizens group health plan.
If, within 120 days after the effective date of the merger, an employee of Futura (other than an employee who has a written agreement with Futura or any of its subsidiaries which provides for severance benefits) is either terminated by First Citizens other than for “cause,” or voluntarily terminates because of a material diminution in the employee’s base compensation or because the geographic location at which the employee must perform his or her services is changed by more than 25 miles from the primary location at which the employee performs services at the effective time of the merger, then the terminated employee will be entitled to receive from First Citizens (a) up to a maximum of 26 weeks of severance pay based upon a formula of two weeks’ pay for each year of service and (b) payment of COBRA premiums for the period that the terminated employee receives his or her severance benefits.
Proposed Amendment to the First Citizens Articles of Incorporation to Increase
the Number of Authorized First Citizens Common SharesArticle FOURTH of the First Citizens Articles of Incorporation of the Company currently authorizes 10,000,000 common shares, without par value. As of the date of this prospectus/proxy statement, First Citizens common shares were issued and outstanding, First Citizens common shares were held as treasury shares, and First Citizens common shares were subject to outstanding options. An additional First Citizens common shares are expected to be issued to shareholders of Futura in connection with the merger.
The First Citizens Board of Directors has unanimously adopted a resolution authorizing and approving an amendment to Article FOURTH of the First Citizens Articles of Incorporation to increase the number of authorized shares of First Citizens to 20,000,000 common shares, without par value. The First Citizens Board believes that the increase in the number of authorized common shares from 10,000,000 to 20,000,000 will provide First Citizens with additional flexibility to issue additional common shares to meet future business and financial needs and is, therefore, in the best interests of shareholders. The additional common shares may be used for various purposes, including the following:
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| • | share distributions and dividends; |
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| • | acquisitions and mergers; |
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| • | public offerings and other capital raising transactions; |
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| • | stock-based employee benefit plans; and |
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| • | other proper business purposes. |
The proposed increase in the number of authorized First Citizens common shares would enable First Citizens to issue additional authorized common shares as such needs arise without further shareholder approval, except to the extent otherwise required by the Ohio General Corporation Law, state and federal securities laws, or the rules of any securities exchange on which the Company’s common shares are then listed. There are no present plans to issue any of the additional common shares to be authorized by the proposed amendment to Article FOURTH, nor are there any pending negotiations, agreements or understandings with any third party which would involve the issuance of any of the additional common shares. The First Citizens Board does not intend to issue any of the additional common shares except on terms which the First Citizens Board deems to be in the best interests of First Citizens and its shareholders.
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The additional common shares to be authorized by the proposed amendment to Article FOURTH of the First Citizens Articles of Incorporation will have rights identical to the current issued and outstanding First Citizens common shares. Adoption of the proposed amendment and issuance of the additional First Citizens common shares will not affect the rights of the holders of issued and outstanding First Citizens common shares, except for effects incidental to increasing the number of common shares outstanding.
The proposed increase in the number of authorized First Citizens common shares could be deemed to have an anti-takeover effect by discouraging an attempt by a third party to acquire control of First Citizens because First Citizens could issue the additional authorized common shares in an effort to dilute the common share ownership of the person seeking to obtain control or increase the voting power of persons who would support the First Citizens in opposing the takeover attempt. The proposal to increase the number of authorized First Citizens common shares is not in response to any effort of which the First Citizens Board is aware to obtain control of First Citizens.
The First Citizens Board recommends that the shareholders of First Citizens vote for the adoption of the proposed amendment to Article FOURTH of the First Citizens Articles of Incorporation to increase the number of authorized common shares from 10,000,000 to 20,000,000. Accordingly, the shareholders of First Citizens will be asked to adopt the following resolution at the First Citizens special meeting:
RESOLVED, that Article FOURTH of the Articles of Incorporation of First Citizens Banc Corp be, and it hereby is, amended to read as follows:
FOURTH, the number of authorized shares of the corporation shall be 20,000,000, all of which shall be common shares, without par value.
If the proposed amendment to Article FOURTH is adopted by the shareholders of First Citizens at the First Citizens special meeting, the amendment will become effective upon the filing of a Certificate of Amendment to the Articles of Incorporation of First Citizens with the Ohio Secretary of State. Such filing is expected to be accomplished as promptly as practicable following the First Citizens special meeting.
The proposed merger of Futura with and into First Citizens is not contingent upon the adoption of this amendment by the First Citizens shareholders, and the approval or disapproval of this proposal by the First Citizens shareholders will have no effect on the consummation of the merger.
Adoption of the proposed amendment to Article FOURTH of the First Citizens Articles of Incorporation requires the affirmative vote of the holders of a majority of the outstanding First Citizens common shares entitled to vote at the First Citizens special meeting. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” adoption of the proposed amendment. Unless otherwise indicated, the persons named in the enclosed proxy card will vote the First Citizens common shares represented by all proxies received prior to the special meeting and not properly revoked, excluding broker non-votes, “FOR” the adoption of the proposed amendment.
Adjournment of the Special MeetingAdjournment of the First Citizens Special MeetingIn the event there are not sufficient votes to adopt the merger agreement and to approve the transactions contemplated thereby at the time of the First Citizens special meeting, the First Citizens shareholders cannot adopt the merger agreement and approve the transactions contemplated thereby unless the First Citizens special meeting is adjourned to a later date or dates in order to permit the solicitation of additional proxies. Similarly, in the event there are not sufficient votes to adopt the proposed amendment to the Articles of Incorporation of First Citizens to increase the number of authorized common shares, without par value, of First Citizens from 10,000,000 to 20,000,000, the First Citizens shareholders cannot adopt the proposed amendment to the Articles of Incorporation unless the First Citizens special meeting is adjourned to a later date or dates in order to permit the solicitation of additional proxies. Pursuant to Ohio law, no notice of an
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adjourned meeting need be given if the time and place to which the meeting is adjourned are fixed and announced at the meeting.
In order to permit proxies that have been received by First Citizens at the time of the First Citizens special meeting to be voted for an adjournment, if necessary, First Citizens has submitted the proposal to adjourn the special meeting to the First Citizens shareholders as a separate matter for their consideration. The proposal to adjourn the special meeting must be approved by the holders of a majority of the First Citizens common shares present, in person or by proxy, at the special meeting.
The Board of Directors of First Citizens recommends that you vote“FOR” the proposal to adjourn the special meeting.
Adjournment of the Futura Special MeetingIn the event there are not sufficient votes to adopt the merger agreement and to approve the transactions contemplated thereby at the time of the Futura special meeting, the Futura shareholders cannot adopt the merger agreement and approve the transactions contemplated thereby unless the special meeting is adjourned to a later date or dates in order to permit the solicitation of additional proxies. Pursuant to the provisions of Futura’s Code of Regulations and Ohio law, no notice of an adjourned meeting need be given if the time and place to which the meeting is adjourned are fixed and announced at the meeting.
In order to permit proxies that have been received by Futura at the time of the Futura special meeting to be voted for an adjournment, if necessary, Futura has submitted the proposal to adjourn the special meeting to the Futura shareholders as a separate matter for their consideration. The proposal to adjourn the special meeting must be approved by the holders of a majority of the Futura common shares present, in person or by proxy, at the special meeting.
The Board of Directors of Futura recommends that you vote“FOR”the proposal to adjourn the special meeting.
The following is a description of the material terms of the merger agreement.Merger Agreement. A complete copy of the merger agreementMerger Agreement is attached as Annex A to this prospectus/proxy statementstatement/prospectus and is incorporated into this prospectus/proxy statementstatement/prospectus by reference.We encourage you to read the merger agreementMerger Agreement carefully, as it is the legal document that governs the merger.Merger.
The merger agreementMerger Agreement contains representations and warranties of FuturaComunibanc and First Citizens.Civista. The assertions embodied in those representations and warranties are qualified by information contained in confidential disclosure schedules that the parties delivered in connection with the execution of the merger agreement.Merger Agreement. In addition, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from the standard of materiality generally applicable to statements made by the companya corporation to shareholders or may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts, or for any other purpose, at the time they were made or otherwise.
The mergerMerger and Subsidiary Bank Mergers
Pursuant to the terms and subject to the conditions of the Merger Agreement, upon filing the applicable certificate of merger, agreement, FuturaComunibanc will merge with and into First Citizens,Civista, with First CitizensCivista surviving the mergerMerger and continuing as an Ohio corporation and a registered financial holding company.company and the separate corporate existence of Comunibanc shall cease. Immediately following that merger, Champaignafter the Merger or at such later time specified by Civista, Civista will cause Henry County Bank a wholly-owned banking subsidiary of Futura, willto be merged with and into CitizensCivista Bank, a wholly-owned banking subsidiary of First Citizens, with CitizensCivista Bank surviving the mergerMerger and continuing as an Ohio state-charteredOhio-chartered commercial bank.
First Citizens has agreed to use its reasonable best efforts to continue to use the name “Champaign Bank” at the Champaign Bank branchesEffective Time
Civista and in the markets serviced by those branches through the end of 2008.
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WeComunibanc will cause the effective date of the merger of Futura with and into First CitizensMerger to occur as soon as practicable after the last of the conditions set forth in the merger agreement hasMerger Agreement have been satisfied or waived. Unless weCivista and Comunibanc otherwise agree in writing, the effective date of the mergerMerger will not be after December 31, 2007, or after the date on which any regulatory approval (or any extension thereof) expires.later than November 30, 2022. The mergerMerger will become effective upon the later to occur of (a) the filing of a Certificatecertificate of Mergermerger with the Ohio Secretary of State, or (b) at a later time that weCivista and Comunibanc agree to in writing and specify in the Certificatecertificate of Merger.
Wemerger.Civista and Comunibanc currently anticipate closing the transactions contemplated by the merger agreementMerger and filing the Certificatecertificate of Mergermerger with the Ohio Secretary of State on or before , 2007.
in the second quarter of 2022.ConversionMerger Consideration
Under the terms of Futurathe Merger Agreement, if the Merger is completed, shareholders of Comunibanc will be entitled to receive for each Comunibanc common share: (i) $30.13 in cash and (ii) 1.1888 Civista common shares
At the effective time (the “Merger Consideration”).The value of the merger,cash consideration to be received by each issued and outstanding FuturaComunibanc shareholder with respect to each common share excluding any Futurais fixed at $30.13. The implied value of stock consideration will fluctuate as the market price of Civista common shares if any, held by First Citizens or by Futura as treasury shares and any Futurafluctuates before the completion of the Merger. The value of the stock consideration that a Comunibanc shareholder actually receives will be based on the closing price on the Nasdaq Capital Market® of Civista common shares if any, as to whichupon completion of the holders have properly exercised dissenters’ rights, will be converted into the right to receive either (a) 1.1726 common shares of First Citizens, (b) cash in the amount of $23.00, or (c) a combination of common shares of First Citizens and cash, all subject to the election and allocation procedures set forth in the merger agreement.
First CitizensMerger.Civista will not issue any fractional First Citizens common shares, or certificates or scrip representing First Citizens common shares in connection with the merger.Merger. Instead, First Citizens will pay to each holder of FuturaComunibanc common shares who would otherwise be entitled to receive a fractional First Citizensfraction of a Civista common share (after
(after taking into account all Futura share certificates surrenderedComunibanc common shares owned by such holder) an amount inholder at the effective time of the Merger) will receive cash, without interest, determined by multiplyingin an amount (rounded to the nearest cent) equal to the Civista fractional First Citizens common share to which thesuch holder would otherwise be entitled, multiplied by $23.00.
(i) the average of the closing-sale prices of Civista common shares on the Nasdaq Capital Market® as reported by The Wall Street Journal for the five (5) consecutive full trading days ending on the trading day preceding the closing date by (ii) the fraction of a share (rounded to the nearest one-thousandth when expressed in decimal form) of Civista common shares which such holder would otherwise be entitled to receive.The Merger Agreement also requires that the merger consideration, specifically the Exchange Ratio, be adjusted if the number of Comunibanc common shares or the Civista common shares outstanding between the date of the Merger Agreement and the effective time 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 a 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 to give holders of the Comunibanc common shares the same economic effect contemplated by the Merger Agreement prior to any such event.
Additionally, in order to satisfy the “continuity of interest” requirements under applicable federal income tax principles relating to reorganizations under Section 368(a) of the Internal Revenue Code, Civista may increase the stock Consideration per share (and cause a corresponding decrease in the cash Consideration per share equal to the economic value of any such increase) to the minimum extent necessary to enable the Merger to satisfy the “continuity of interest” requirements under applicable federal income tax principles relating to reorganizations under Section 368(a) of the Code.
At the effective time of the merger, the FuturaMerger, Comunibanc common shares will no longer be outstanding and will automatically be cancelled and cease to exist, and holders of FuturaComunibanc common shares will cease to be, and will have no rights as, shareholders of Futura,Comunibanc, other than to receive the merger consideration pursuant to the terms and conditions of the merger agreementMerger Agreement (and dissenters’ rights under Section 1701.85 of the Ohio Revised CodeOGCL in the case of FuturaComunibanc common shares as to which athe holder has properly exercised dissenters’ rights).
Under certain circumstances involving a fall in the market price of Civista common shares, Civista may, at its election, increase the Merger consideration by adjusting the Exchange Ratio in order to avoid termination of the Merger Agreement.
See the section of this discussion titled “—Termination of the Merger Agreement” for more information.
Election proceduresExchange and Payment Procedure; Surrender of Certificates
Election. Each FuturaCivista will engage American Stock Transfer & Trust Company, LLC (the “Exchange Agent”) to act as its exchange agent to handle the exchange of Comunibanc common shares for the merger consideration. As soon as practicable, but not more than five business days after the effective time, the Exchange Agent will send to each Comunibanc shareholder a letter of transmittal for use in the exchange with instructions explaining how to surrender Comunibanc common share certificates (or book entry shares) to the Exchange Agent. Comunibanc shareholders that surrender their certificates to the Exchange Agent, together with a properly completed letter of transmittal, will havereceive the merger consideration, including the stock consideration and cash consideration, plus any cash payable in lieu of any fractional shares of Civista, and any dividends or distributions such holder has the right to electreceive pursuant to the Merger Agreement. Comunibanc shareholders that do not exchange their Comunibanc common shares will not be entitled to receive for the FuturaMerger Consideration or any dividends or other distributions by Civista until their certificates are surrendered. Only after surrender of the certificates representing Comunibanc shares, will any unpaid dividends or distributions with respect to Civista common shares (excludingrepresented by the certificates be paid, without interest. No interest will be paid or accrue on any Futura 401(k) shares) held, either (a) allcash
Merger consideration or cash (b) all First Citizens commonin lieu of fractional shares or (c) a combination of cash and First Citizens common shares.
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| • | All Cash Election. A Futura shareholder who elects to receive all cash will receive an amount equal to $23.00 for each Futura common share owned, subject to the allocation procedures described in the following section. |
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| • | All Stock Election. A Futura shareholder who elects to receive all First Citizens common shares will receive 1.1726 First Citizens common shares for each Futura common share owned, subject to the payment of cash in lieu of the issuance of fractional First Citizens common shares, subject to the allocation procedures described in the following section. |
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| • | Mixed Election. A Futura shareholder who elects to receive a combination of cash and First Citizens common shares will receive (a) cash, in an amount equal to $23.00 per share, for 20% of the Futura common shares owned and (b) First Citizens common shares, at the exchange ratio of 1.1726 First Citizens common shares for each Futura common share owned, for 80% of the Futura common shares owned, subject to the payment of cash in lieu of the issuance of fractional First Citizens common shares. |
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| • | No Election. Futura shareholders who do not make a valid election as to the form of consideration they wish to receive in the merger will receive, in exchange for their Futura common shares, either all cash, all First Citizens common shares, or any combination of cash and First Citizens common shares, |
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| | as determined by First Citizens or the exchange agent, subject to the payment of cash in lieu of the issuance of fractional First Citizens common shares. First Citizens or the exchange agent will allocate the merger consideration (i.e., cash and First Citizens common shares) among all non-electing Futura shareholders in a manner that will (a) achieve the overall ratio of 80% of Futura common shares converted into First Citizens common shares and 20% of Futura common shares converted into cash and (b) satisfy the elections made be the Futura shareholders to the greatest extent possible subject to such overall ratio. |
Election Form. Priordividends or distributions payable to the special meeting of Futura shareholders, an Election Form and other appropriate transmittal materials will be mailed to each Futura shareholder. The Election Form will allow each Futura shareholder to elect to receive all cash, all First Citizens common shares, a combination of cash and First Citizens common shares, or to indicate that the shareholder makes no election. Futura shareholders who wish to elect the type of merger consideration they will receive in the merger should carefully review and follow the instructions included with the Election Form and transmittal materials.
The deadline for submitting an Election Form will be the fifth day prior toComunibanc shareholders.After the effective time of the merger. An electionMerger, the stock transfer books of Comunibanc will be considered to have been validly made by a Futura shareholder only if the exchange agent receives, prior to the election deadline, an Election Form properly completedclosed and executed by the shareholder, accompanied by a certificate or certificates representing the Futurathere will be no further registration of transfers of Comunibanc common shares as to which the election is being made, duly endorsed in blank or otherwise in form acceptable for transfer on the booksrecords of Futura,Comunibanc. Any certificates or containing an appropriate guaranty of delivery from a member of a national securities exchange, a member ofbook entry shares presented to Civista after the NASD, or a commercial bank or trust company in the United States.
Any Futura shareholder may, at anyeffective time
prior to the election deadline, revoke his or her electionwill be cancelled and
either (a) submit a new Election Formexchanged in accordance with the
procedures described above or (b) withdraw the Election Form and Futura share certificates deposited withMerger Agreement.Any portion of the exchange agent by providing written noticefund that is receivedremains unclaimed by the exchange agent by 5:00 p.m., Eastern Standard Time, on the business day prior to the election deadline. All elections will be deemed to be revoked if the merger agreement is terminated in accordance with its terms.
Futura shareholders should not surrender their Futura share certificates until they receive the Election Form and transmittal materials from the exchange agent.
Futura 401(k) Shares. All Futura common shares held in Futura’s 401(k) plan will be converted into and exchangedof Comunibanc for cash in the amount of $23.00 per share, and none of the Futura 401(k) shares will be converted into First Citizens common shares. In the event that the cash election is undersubscribed, the Futura 401(k) shares will be counted toward the 20% cash allocation.
Because the federal income tax consequences of receiving all First Citizens common shares, all cash, or a mixture of First Citizens common shares and cash will differ, Futura shareholders are urged to read carefully the information set forth under the heading “The Merger — Material federal income tax consequences” and to consult their own tax advisors for a full understanding of the merger’s tax consequences to them.
Subject to adjustment for cash paid in lieu of fractional First Citizens common shares, the merger agreement requires that the aggregate consideration for the merger be a mixture of First Citizens common shares and cash, with (a) 80% of the Futura common shares outstanding atsix months following the effective time of the
merger (excluding Futura 401(k) shares) being exchanged for First CitizensMerger will be paid to the surviving corporation. From and after such time, any former holders of Comunibanc common shares
who have not properly surrendered their shares may thereafter seek only from the surviving corporation the Merger consideration payable in respect of such Comunibanc common shares, any cash payable in lieu of any fractional shares of Civista and
20%any dividends or distributions such holder has the right to receive pursuant to the Merger Agreement.If any certificate representing Comunibanc common shares is lost, stolen or destroyed, upon the making of an affidavit of such fact by the person claiming the certificate to be lost, stolen or destroyed and, if required by Civista or the Exchange Agent, the posting by such person of a bond in such amount as Civista or the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such certificate, the Exchange Agent or Civista, as applicable, will issue in exchange for the lost, stolen or destroyed certificate the applicable Merger consideration, cash in lieu of fractional shares and any dividends or other distributions that have been payable or become payable in respect of the FuturaComunibanc common shares outstanding atrepresented by that certificate pursuant to the effective timeMerger Agreement.
Civista will be entitled to deduct and withhold, or cause the Exchange Agent to deduct and withhold, from any Merger consideration or other amounts payable pursuant to the Merger Agreement to any holder of Comunibanc common shares such amounts as Civista or the Exchange Agent is required to deduct or withhold under applicable tax laws, and any such withheld amounts that are paid to the appropriate taxing authorities will be treated for purposes of the merger (excluding Futura 401(k) shares) being exchanged for cash,Merger Agreement as having been paid to the holder of Comunibanc common shares from whom such amounts were deducted or withheld.
Comunibanc Shares in the ESOP
At the Effective Time, any remaining shares of Comunibanc common shares held in the Comunibanc ESOP shall be converted into the right to receive, without interest, the Merger Consideration. Within sixty (60) days following the Effective Time, Civista and (b) 100% of the Futura 401(k) shares outstanding atESOP Trustee shall arrange to request from the effective time of the merger being exchanged for cash. For purposes of these allocations, all cash amounts paid in connection withIRS a determination that the termination of outstanding Futura stock optionsthe Comunibanc ESOP is in compliance with Sections 401(a) and stock appreciation rights are excluded, and Futura shareholders who exercise dissenters’ rights will be treated as having elected to receive all cash for their Futura common shares.
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If the elections by Futura shareholders do not result in the required ratio of cash and stock consideration, the allocation procedures described below will be used to allocate the available cash and First Citizens common shares among the Futura shareholders to preserve the required ratio of cash and stock consideration.
Reduction of Futura Common Shares Deposited for Cash. If, at the election deadline and after allocation409 of the “No Election” shares as described above, more than 20%Code. Civista and the ESOP trustee shall arrange to make partial distributions of up to 75% of the total number of outstanding Futura common shares (excluding Futura 401(k) shares) have been deposited for cash pursuantaccount balances credited to the All Cash Election or the Mixed Election or have perfected dissenters’ rights, then the exchange agent will reallocate on a pro rata basis a certain number of Futura common shares deposited for cash pursuant to the All Cash Election so that only 20%ESOP participants as of the total number of outstanding Futura common shares (excluding Futura 401(k) shares) will be exchanged for cash. Futura shareholders who have made the Mixed Election will not be subject to any required reallocation. All common shareseffective date (taking into account that are eliminated from the shares deposited for cash pursuant to the All Cash Election will be converted into First Citizens common shares.
Increase of Futura Common Shares Deposited for Cash. If, at the election deadline and after allocationportion of the
“No Election” sharesMerger Consideration received by the ESOP on the effective date) as
described above, less than 20%soon as administratively practicable after the effective date, with the remaining portion to be distributed as soon as administratively practicable after receipt by Civista of the
total numberESOP determination letter.Indemnification and Directors’ and Officers’ and Company Liability Insurance
For a period of outstanding Futura common shares (excluding Futura 401(k) shares) have been deposited for cash pursuant to the All Cash Election or the Mixed Election or have perfected dissenters’ rights, then the exchange agent will add to the shares deposited for cash such number of Futura 401(k) shares required to reach the 20% cash requirement. If the Futura 401(k) shares are not sufficient to reach the 20% cash requirement, then the exchange agent will reallocate on a pro rata basis a certain number of Futura common shares deposited for First Citizens common shares pursuant to the All Stock Election so that 20% of the total number of outstanding Futura common shares (excluding 401(k) shares) will be exchanged for cash. Futura shareholders who have made the Mixed Election will not be subject to any required reallocation. All common shares that are eliminated from the shares deposited for First Citizens common shares pursuant to the All Stock Election will be converted into cash.
Surrender of certificatesAs promptly as practicablesix (6) years after the effective time of the merger and upon the surrender of a Futura share certificate to the exchange agent for cancellation, First Citizens will cause new certificates representing the First Citizens common shares into which a shareholder’s Futura common shares were converted in the merger,and/or any check in respect of cash to be paid as part of the merger consideration and in respect of any fractional share interests or dividends or distributions which such shareholder is entitled to receive, to be delivered to the shareholder. No interest will be paid on any cash to be paid in exchange for Futura common shares or in respect of dividends or distributions which any shareholder is entitled to receive under the terms of the merger agreement.
Until surrendered, each Futura share certificate will be deemed after the effective time of the merger to represent only the right to receive, upon surrender of such certificate, a First Citizens share certificateand/or a check in an amount equal to the sum of the cash to be paid to the holder as part of the merger consideration, any cash to be paid in lieu of any fractional First Citizens common shares to which the holder is entitled under the terms of the merger agreement and any cash to be paid in respect of any dividends or distributions to which the holder may be entitled with respect to his or her First Citizens common shares (in each case, without interest).
A Futura shareholder will not be entitled to receive payment of any dividends or distributions with respect to First Citizens common shares with a record date occurring on or after the effective time of the merger until the shareholder has followed the procedures described above for surrendering his or her Futura share certificates. After a Futura shareholder has properly surrendered his or her Futura share certificates in exchange for First Citizens common shares, the shareholder will be entitled to receive any dividends or distributions on the First Citizens common shares with a record date occurring on or after the effective time of the merger. No interest will be paid on such dividends or distributions.
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If any Futura share certificate has been lost, wrongfully taken, or destroyed, the transmittal materials received from the exchange agent will explain the steps that the Futura shareholder must take. Those steps may include providing the exchange agent or First Citizens with:
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| • | evidence to the reasonable satisfaction of First Citizens that the Futura share certificate has been lost, wrongfully taken, or destroyed; |
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| • | a bond in an amount reasonably requested by First Citizens or the exchange agent as indemnity against any claim that may be made against First Citizensand/or the exchange agent with respect to the Futura share certificate; and |
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| • | evidence to the reasonable satisfaction of First Citizens that the person was the owner of the Futura common shares represented by the Futura share certificate claimed to be lost, wrongfully taken or destroyed and that such person is the person who would be entitled to present such certificate for exchange pursuant to the merger agreement. |
Futura stock options and stock appreciation rightsUnder the terms of the merger agreement, each outstanding option to purchase Futura common shares (that is not exercised prior to the election deadline specified in the merger agreement) granted under one of Futura’s equity-based compensation plans, whether or not then vested and exercisable, will be terminated and converted into the right to receive an amount of cash equal to the product of (1) the difference between $23.00 less the exercise price of each such option multiplied by (2) the number of Futura common shares subject to each such option.
Under the terms of the merger agreement, immediately prior to the effective time of the merger, each outstanding and unexercised stock appreciation right granted pursuant to one of Futura’s equity-based compensation plans, whether or not then vested or exercisable, will be terminated and converted into the right to receive an amount of cash equal to the product of (1) the difference between $23.00, less the exercise price of such stock appreciation right, multiplied by (2) the number of Futura common shares subject to such stock appreciation right.
First Citizens Board of Directors structure following the mergerPursuant to the terms of the merger agreement, the Board of Directors of First Citizens, or an appropriate committee of the Board, will select three members of Futura’s current Board of Directors to become members of the First Citizens Board of Directors. Upon completion of the merger, the First Citizens Board will take the necessary actions to appoint those three former Futura directors to serve on the Board of First Citizens until First Citizens’ next annual shareholder meeting. For the three annual shareholder meetings following the merger, First Citizens will, subject to compliance with applicable fiduciary duties and law and First Citizens’ governance documents (and in the absence of unethical behavior or other cause for removal on the part of the director), nominate and recommend the three former Futura directors for reelection. However, if the number of directors serving on the First Citizens Board is reduced during that time period, the number of former Futura directors appointed in accordance with the merger agreement may be reduced but must continue to represent at least 20% of the total members of the First Citizens Board.
Upon completion of the merger, First Citizens will also establish a bank community board to be comprised of all current outside directors on the Futura Board who wish to participate and who have not been appointed to serve on the First Citizens Board. This bank community board may remain in place for up to three years. First Citizens has also agreed to use its reasonable best efforts to continue to use the “Champaign Bank” name at all Champaign Bank branches and in the markets serviced by those branches through the end of 2008.
Indemnification and directors’ and officers’ liability insuranceFor a period of six years following the mergerMerger and subject to compliance with applicable state and federal laws, First CitizensCivista will indemnify each person who served as a director or officer of FuturaComunibanc on or after the date of the Agreement and before the merger
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effective time of the Merger to the fullest extent permitted under Futura’sprovided by Comunibanc’s governing documents, and Ohio law from and against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed action, suit or proceeding by reason of the fact that the person served aswas an officer or director of Futura. First CitizensComunibanc. In addition, the Merger Agreement provides that, prior to the Merger, Comunibanc will also purchaseprocure, at the expense of Civista, a policy of directors’ and
officers’ and company liability insurance policy to be effective for foura period of up to six years following the merger,Merger, on terms no less advantageous than those contained in Futura’sComunibanc’s existing policy,policy. However, the combined company is not obligated to expend an amount in excess of 150% of the current annual premium paid as of the date of the Merger Agreement by Comunibanc for such insurance (the “premium cap”).
Employee Matters
Participation by Comunibanc Employees in Civista’s Employee Benefit Program(s): The Merger Agreement provides that employees of Comunibanc or the Subsidiary Bank who become employees of Civista as a result of the Merger will, as determined by Civista, participate in the employee benefit plans sponsored by Civista for Civista’s employees immediately after the Effective Date. Employees of Comunibanc or the Subsidiary Bank will receive credit for their years of service with Comunibanc or the Subsidiary Bank, as applicable, for participation and vesting purposes under the applicable Civista employee benefit plans, including credit for years of service and for seniority under Civista’s vacation and sick pay plans and programs, but subject to the eligibility and other terms of such plans. In addition, Civista will waive all restrictions and limitations on pre-existing conditions to the extent the group health plan and insurance policy of Civista or Civista Bank permit (or may be amended to permit), and give effect, in determining any deductible, co-insurance and maximum out-of-pocket limitations, to amounts paid by such continuing employees (and their covered dependents) under the group health plan maintained by Comunibanc or the Subsidiary Bank during the portion of the 2022 plan year prior to the Effective Time.
Severance: Subject to any applicable regulatory restrictions, Civista shall pay to each employee of Comunibanc or its subsidiaries who (i) is not subject to an existing contract providing for severance and/or a change in control payment, (ii) is an employee of Comunibanc or any of its subsidiaries immediately before the Effective Time, (iii) is not offered continued employment by Civista or any of its subsidiaries after the Effective Time or is terminated by Civista without cause within three (3) months after the Effective Time, and (iv) who sign and deliver Civista’s standard form of termination and release agreement, a severance amount equal to two weeks 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 Comunibanc or any of its Subsidiaries, less applicable local, state and federal tax withholding; provided, however, that the minimum severance payment shall equal four 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 14 days following the employee’s termination, provided that such employee has not been terminated for cause. In addition, Civista will offer outplacement assistance to any such terminated employee for the same period of time during which such employee is entitled to severance. For any employee of Comunibanc or its Subsidiaries participating in Comunibanc’s, or any of its subsidiaries’, group health program at the Effective Time who is entitled to a severance payment, the employee will be able to purchase health insurance coverage at the full premium rate for the entire COBRA period. Civista will pay the cost of COBRA coverage for such employees for a period equal to the number of weeks such employee is entitled to severance.
Termination of The Henry County Bank Profit Sharing and 401(k) Plan (the “Communibanc 401(k) Plan”): Comunibanc is required to terminate the Comunibanc 401(k) Plan effective immediately prior to the effective time of the Merger. In addition, as soon as feasible after the closing of the Merger, Civista will take commercially reasonable steps to allow employees of Comunibanc and the Subsidiary Bank who continue as employees of Civista and its subsidiaries to participate in the Civista 401(k) Plan and to accept roll-overs of benefits from the Comunibanc 401(k) Plan to the Civista 401(k) Plan.
Termination of ESOP: Comunibanc is required to terminate the ESOP effective as of the date immediately preceding to the effective time of the Merger. At the Effective Time, any remaining Comunibanc common shares held in the ESOP shall be converted into the right to receive, without interest, the Merger Consideration. Within sixty (60) days following the effective time, Civista and the ESOP Trustee shall arrange to request from the IRS a determination that the termination of the ESOP is in compliance with Sections 401(a) and 409 of the Code. Civista and the ESOP Trustee shall arrange to make partial distributions of up to 75% of the account balances
credited to the ESOP participants as of the effective date (taking into account that portion of the Merger Consideration received by the ESOP on the effective date) as soon as administratively practicable after the effective date, with the remaining portion to be distributed as soon as administratively practicable after receipt by Civista of the ESOP determination letter.
Termination of Additional Comunibanc Employee Benefit Plans. On or prior to the effective date, Comunibanc is required to terminate and pay all accrued benefit amounts to the respective participants under (i) the Henry County Bank Director Supplemental Retirement Program, (ii) the Henry County Bank Salary Reduction Deferred Compensation Plan, and (iii) the Director Deferred Fee Plan. Additionally, on or prior to the effective date Civista will take all actions necessary to assume and thereafter discharge each respective split dollar agreement with certain limitations.
executives and directors under (i) the Split Dollar Life Insurance Agreement & Endorsement Method Split Dollar Plan – Executives and (ii) the Split Dollar Life Insurance Agreement & Endorsement Method Split Dollar Plan – Directors.NASDAQ Stock Listing
Civista’s common shares currently are listed on the Nasdaq Capital Market® under the symbol “CIVB.” The shares to be issued to Comunibanc shareholders as Merger Consideration also will be eligible for trading on the NASDAQ. Civista will list, prior to the Effective Time, the Civista common shares to be issued pursuant to the Merger.
Conditions to consummationConsummation of the mergerMerger
Conditions of First CitizensCivista and Futura.Comunibanc. The respective obligations of First CitizensCivista and FuturaComunibanc to complete the mergerMerger are subject to the satisfactionfulfillment or written waiver of each of the following conditions:
the Merger Agreement shall have been duly adopted and approved by the requisite vote of the shareholders of Comunibanc.
all regulatory approvals required to consummate the Merger must have been obtained and 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 board of directors of Civista reasonably determines would, either before or after the effective time of the Merger, have a material adverse effect on Civista 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 board of directors of Civista reasonably determines would, either before or after the effective time of the Merger, be unduly burdensome. For purposes of this condition, the failure of any regulatory order applicable to Comunibanc or the Subsidiary Bank to be terminated or the pendency or threat of any of certain regulatory actions against Comunibanc or the Subsidiary Bank shall constitute grounds for Civista to terminate the Merger Agreement;
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 the Merger Agreement;
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| | • | the merger agreement must be duly adopted by the requisite vote of the shareholders of Futura and the shareholders of First Citizens; |
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| | • | we must have received all required regulatory approvals and all applicable statutory waiting periods must have expired or been terminated, and no regulatory approval or statute, rule or order may contain any conditions, restrictions or requirements (i) that the First Citizens Board of Directors reasonably determines would, either before or after the effective time of the merger, have a material adverse effect on First Citizens and its subsidiaries taken as a whole after giving effect to the consummation of the merger or (ii) that are not customary or usual for approvals of such type and that the First Citizens Board of Directors reasonably determines would be, either before or after the effective time of the merger, unduly burdensome; |
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| • | there must not be any temporary, preliminary or permanent injunction or other order, statute, rule, regulation, judgment, decree, or other legal restraint issued by or imposed by any court or any other governmental authority, prohibiting consummation of the merger transactions; |
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| • | the registration statement filed with the Securities and Exchange Commission in connection with the issuance of the First Citizens common shares in the merger must be effective with no stop order or similar restraining order suspending such effectiveness initiated or threatened by the Securities and Exchange Commission; |
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| • | all permits and other authorizations under state securities laws necessary to consummate the merger and to issue the First Citizens common shares in the merger must be in full force and effect; and |
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| • | the First CitizensCivista common shares to be issued in the merger mustMerger shall have been approvedauthorized for listing on NASDAQ, subject to official notice of issuance.the Nasdaq—Capital Market®; and |
this proxy statement/prospectus and the registration statement must have been declared effective by the SEC and must not be subject to any stop order or any threatened stop order.
Conditions of Futura.Comunibanc. FuturaComunibanc will not be required to complete the mergerMerger unless the following conditions are satisfiedfulfilled or waived:waived in writing:
the representations and warranties of Civista contained in the Merger Agreement must not be in breach, subject to the standard set forth in the Merger Agreement, as of the date of the Merger Agreement and
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| | • | the representations and warranties of First Citizens contained in the merger agreement must be true and correct in all material respects as of the dateEffective Time of the merger agreement and as of the effective time of the mergerMerger (or if any representation or warranty speaks as of a specific date, as of that date), and FuturaComunibanc must have received a certificate, dated as of the effective date, signed on behalf of First CitizensCivista by its chief executive officer and chief financial officer to such effect; |
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| • | First Citizens must have performed in all material respects all of its obligations under the merger agreement which are required to be performed prior to the effective time of the merger, and Futura must have received a certificate, dated as of the effective date, signed on behalf of First Citizens by its chief executive officer and chief financial officer to such effect; |
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| • | Futura’s legal counsel must have delivered a written opinion to the effect that, on the basis of facts, representations and assumptions set forth in such opinion, the merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, and no gain or loss will be recognized by Futura shareholders who receive First Citizens common shares in the merger; |
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Civista must have performed in all material respects all of its obligations under the Merger Agreement which are required to be performed at or prior to the Effective Time of the Merger, and Comunibanc must have received a certificate, dated as of the effective date, signed on behalf of Civista by its chief executive officer to such effect.
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| • | First Citizens must purchase a policy of directors’ and officers’ liability insurance to be effective for a period of four years from the effective time of the merger, on terms no less advantageous than those contained in Futura’s existing officers’ and directors’ liability insurance policy (subject to certain limitations), which policy will reimburse present and former officers and directors of Futura with respect to claims arising from facts or events which occurred before the merger; |
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| • | First Citizens must deliver the aggregate merger consideration to the exchange agent on or before the effective time of the merger, and the exchange agent must provide Futura with a certificate evidencing such delivery; and |
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| • | there shall not have occurred any material adverse effect with respect to First Citizens, or any change, condition, event or development that, individually or in the aggregate, has resulted in or could reasonably be expected to result in a material adverse effect on First Citizens, between the date of the merger agreement and the effective time of the merger. |
Conditions of First Citizens.Civista. First CitizensCivista will not be required to consummate the mergerMerger unless the following conditions are also satisfiedfulfilled or waived:
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| • | the representations and warranties of Futura contained in the merger agreement must be true and correct in all material respects as of the date of the merger agreement and as of the effective time of the merger (or if any representation or warranty speaks as of a specific date, as of that date), and First Citizens must have received a certificate, dated as of the effective date, signed on behalf of Futura by its chief executive officer and chief financial officer to such effect; |
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| • | Futura must have performed in all material respects all of its obligations under the merger agreement which are required to be performed prior to the effective time of the merger, and First Citizens must have received a certificate, dated as of the closing date, signed on behalf of Futura by its chief executive officer and chief financial officer to such effect; |
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| • | First Citizens must receive from (i) each holder of an outstanding option to purchase Futura common shares and (ii) each holder of an outstanding stock appreciation right granted pursuant to Futura’s equity-based plans an executed and legally binding agreement pursuant to which each such option or stock appreciate right is cancelled and terminated; |
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| • | Futura must use its reasonably best efforts to cause each person who may be deemed to be an “affiliate” of Futura (as defined in Rule 145 under the Securities Act) to execute and deliver to Futura, on or before the date of mailing of this prospectus/proxy statement, an affiliate agreement, and Futura must deliver such agreements to First Citizens; |
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| • | Futura must have obtained all material third-party consents required in connection with the merger; |
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| • | the holders of not more than 10% of the outstanding Futura common shares have perfected dissenters’ rights under Section 1701.85 of the Ohio Revised Code in connection with the merger transactions; |
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| • | First Citizens must receive a statement executed on behalf of Futura, dated as of the effective date, certifying that the Futura common shares do not represent United States real property interests within the meaning of the Internal Revenue Code and the Treasury Department regulations promulgated thereunder; |
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| • | First Citizens’ legal counsel must have delivered a written opinion to the effect that, on the basis of facts, representations and assumptions set forth in such opinion, the merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, and no gain or loss will be recognized by Futura shareholders who receive First Citizens common shares in the merger; and |
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| • | there shall not have occurred any material adverse effect with respect to Futura, or any change, condition, event or development that, individually or in the aggregate, has resulted in or could reasonably be expected to result in a material adverse effect on Futura, between the date of the merger agreement and the effective time of the merger. |
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First Citizens or Futura could waive somethe representations and warranties of Comunibanc contained in the Merger Agreement shall not be in breach, subject to the standard set forth in the Merger Agreement, as of the conditions listed above, unlessdate of the waiverMerger Agreement and as of the Effective Time of the Merger (or if any representation or warranty speaks as of a specific date, as of that date), and Civista must have received a certificate, dated as of the effective date, signed on behalf of Comunibanc by its president to such effect;
Comunibanc must have performed in all material respects all of its obligations under the Merger Agreement which are required to be performed at or prior to the Effective Time of the Merger, and Civista must have received a certificate, dated as of the effective date, signed on behalf of Comunibanc by its president to such effect;
Comunibanc must have obtained the consent or approval of each person (other than governmental authorities) whose consent or approval is prohibitedrequired under the Merger Agreement under any loan or credit agreement, note, mortgage, indenture, lease, license or other agreement or instrument in connection with the Merger Agreement, except those for which failure to obtain such consents and approvals would not, individually or in the aggregate, have a material adverse effect on Civista after the Merger;
Civista must have received a statement executed on behalf of Comunibanc, dated as of the effective date of the Merger, that satisfies the requirements of regulations of the United States Department of Treasury (“Treasury Regulations”) Section 1.1445-2(c)(3), in a form reasonably applicable to Civista certifying that Comunibanc’s common shares do not represent United States real property interests within the meaning of Section 897 of the Internal Revenue Code and the Treasury Regulation promulgated thereunder;
the holders of not more than 5% of the outstanding Comunibanc common shares shall have perfected their dissenters’ rights under the OGCL in connection with the transactions contemplated by law.the Merger Agreement;
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 by Comunibanc or any of its subsidiaries, including real estate acquired in connection with foreclosure.
either (i) the results of each Phase I Environmental Site Assessment conducted pursuant to the Merger Agreement as reported shall not reveal results unsatisfactory to Civista which, in Civista’s reasonable judgment, would require the expenditure of greater than $100,000 in the aggregate to remedy; (ii) any violation or potential violation of the representations and warranties contained in the Merger Agreement disclosed in a Phase I report conducted by Civista shall have been remedied by Comunibanc or the subsidiary banks to the reasonable satisfaction of Civista, or (iii) Civista and Comunibanc shall have agreed to an adjustment to the Merger Consideration to account for any unsatisfactory items in the Phase I;
Comunibanc shall have procured a policy of directors’ and officers’ and company liability insurance (the “Tail Policy”) in accordance with the terms of the Merger Agreement;
Comunibanc shall have used its best efforts to deliver to Civista an estoppel certificate for each applicable lease agreement; and
there must not have occurred any event, circumstance or development that has resulted in or could reasonably be expected to result in a material adverse effect on Comunibanc.
Representations and warrantiesWarranties
First Citizens and Futura have eachComunibanc has made customary representations and warranties in the merger agreementMerger Agreement relating to:
corporate organization, standing and authority;
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| • | corporate organization, qualification and good standing; |
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| • | capitalization; |
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| • | subsidiaries; |
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| • | corporate power and authority to execute, deliver and perform the merger agreement; |
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| • | enforceability of the merger agreement; |
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| • | regulatory filings; |
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| • | accuracy of financial statements and reports filed with the Securities and Exchange Commission; |
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| • | legal proceedings; |
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| • | regulatory matters; |
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| • | compliance with laws; |
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| • | broker’s and finder’s fees; |
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| • | taxes; |
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| • | books and records; |
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| • | accuracy and completeness of representations and warranties; and |
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| • | absence of certain material adverse changes or events. |
In addition, Futuracorporate power;
corporate authority and enforceability of the Merger Agreement;
consents and regulatory approvals;
financial statements; material adverse effect; and internal controls;
material contracts; defaults;
broker’s and finder’s fees;
employee benefit plans and employee matters;
risk management instruments;
title to real property and assets;
loans and insider transactions;
allowance for loan losses;
investment securities portfolio;
The Bank Secrecy Act, anti-money laundering and Office of Foreign Assets Control and customer information;
Community Reinvestment Act compliance;
related party transactions;
ProBank Austin’s fairness opinion;
absence of undisclosed liabilities;
tax treatment of Merger; and
absence of untrue statements or omissions of material fact.
Civista has made customary representations and warranties in the merger agreementMerger Agreement relating to:
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| • | material contracts; |
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| • | employee benefit plans; |
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| • | labor matters; |
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| • | takeover laws; |
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| • | environmental matters; |
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| • | risk management instruments; |
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| • | insurance; |
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| • | absence of undisclosed liabilities; |
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| • | property and title; |
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| • | loans; |
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| • | allowance for loan losses; |
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| • | repurchase agreements; |
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| • | deposit insurance; |
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| • | compliance with the Bank Secrecy Act, anti-money laundering laws and customer privacy laws; and |
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| • | Community Reinvestment Act compliance. |
55corporate organization, standing and authority;
no ownership of Comunibanc’s common shares;
In addition, First Citizens has made representationscorporate authority and warranties in the merger agreement relating to:
| | |
| • | ownership of Futura common shares; and |
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| • | validity of the First Citizens common shares to be issued in the merger. |
The representations and warranties in the merger agreement terminate upon completionenforceability of the merger.Merger Agreement;
compliance with SEC reporting requirements;
consents and regulatory approvals;
financial statements, material adverse effect, and internal controls;
broker’s and finder’s fees;
tax treatment of Merger; and
absence of untrue statements or omissions of material fact.
Futura’s conductComunibanc’s Conduct of business pendingBusiness Pending the mergerMerger
From June 7, 2007,the date of the Merger Agreement until the effective timeEffective Time of the merger,Merger, except as expressly contemplated or permitted by the merger agreementMerger Agreement or withrequired by any applicable law, regulatory order or regulation, without the prior written consent of First Citizens, FuturaCivista, Comunibanc and its subsidiariesthe Subsidiary Bank must conduct their respective businessesthe business of Comunibanc and the Subsidiary Bank in the ordinary and usual course and use reasonable efforts to preserve intact their respective business organizations and assets use reasonable efforts to preserveand maintain their respective rights, franchises and existing relations with customers, suppliers, vendors, employees and business associates, and not (i) voluntarily take any action which, at the time taken, is reasonably likely to have an adverse effect upon Futura’sComunibanc’s and the Subsidiary Bank’s ability to perform any of its material obligations under the merger agreement. Merger Agreement or prevent or materially delay the consummation of the transactions contemplated by the Merger Agreement, or (ii) enter into any new line of business or materially change its lending, investment, underwriting, risk, asset liability management or other banking and operating policies, except as required by applicable law or policies imposed by any governmental authority or by any applicable regulatory order.
During the same period, FuturaComunibanc has agreed not to, and to cause its subsidiariesthe Subsidiary Bank not to, take any of the following actions without the prior written consent of First Citizen,Civista, except as otherwise expressly contemplated or permitted by the merger agreement:Merger Agreement or required by any applicable law, regulatory order or regulation:
issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional Comunibanc common shares, other capital stock or any rights to capital stock of Comunibanc;
enter into any agreement with respect to the same;
permit any additional common shares to become subject to any subject to new grants of its stock options or similar stock-based employee rights;
effect any recapitalization, reclassification, stock split, or similar change in capitalization;
make, declare, pay or set aside for payment any dividend or distribution on any shares of its capital stock, other than dividends from Henry County Bank to Comunibanc, and dividends payable by Comunibanc to its shareholders of a dividend of $0.41 on each outstanding share of common stock for the six-month period January 1, 2022 through June 30, 2022, to be declared and paid in June, 2022 consistent with past practices, prorated if the Effective Time occurs prior to the declaration of such dividend, and a dividend $0.20 on each outstanding share of Comunibanc common stock if the Effective Time occurs after October 31, 2022, subject to coordinating with Civista regarding issuance of any dividend to ensure holders of Comunibanc common shares do not receive two (2) dividends, or fail to receive one dividend, in any quarter with respect to their shares of Comunibanc common stock and any of the Civista common shares such holder receives as result of the Merger;
directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock;
enter into, modify, amend, renew or terminate any employment, consulting, severance, retention, change in control or similar agreements or arrangements with directors, consultants, officers or employees of Comunibanc or any of its Subsidiaries;
hire or engage any full-time employee or consultant, other than as replacements for positions then existing;
grant any salary or wage increase or bonus or increase any employee benefit (including incentive or bonus payments), except: (i) for changes that are required by applicable law, and (ii) for changes that are in the ordinary course of business and consistent with past practice;
enter into, establish, adopt, amend, modify, make any contributions to or terminate any pension, retirement, 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, with respect to any director, consultant, officer or employee of Comunibanc or any of its subsidiaries, or take any action to accelerate the payment of benefits or the vesting or exercisability of any restricted stock, phantom stock or other compensation or benefits payable, except (i) as may be required by law, (ii) as contemplated in the Merger Agreement, or (iii) to renew insurance contracts;
sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or any business to any person other than a wholly owned subsidiary, or cancel, release or assign any indebtedness of any person or any claims against any person, in each case other than in the ordinary course, consistent with past practices, including any debt collection or foreclosure transactions.;
acquire (other than by way of foreclosure or acquisition of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith and 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;
amend Comunibanc Articles or of the organizational and governing documents of its Subsidiaries;
implement or adopt any change in its accounting principles, practices or methods other than as required by generally accepted accounting principles;
terminate, amend, or waive any provision of, any material contract; (ii) make any change in any instrument or agreement governing the terms of any of its securities, or material lease or any other material contract, other than normal renewals of leases and other material contracts without material adverse changes of terms with respect to Comunibanc or any Comunibanc Subsidiary; (iii) enter into any material contract that (A) would constitute a material contract if it were in effect on the date of the Merger Agreement or (B) that has a term of one year or longer and that requires payments or other obligations by Comunibanc or any Comunibanc 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 Comunibanc or any Comunibanc Subsidiary from and after the date of the Merger Agreement would result in aggregate required payments by Comunibanc or any Comunibanc Subsidiary in excess of $100,000;
settle any claim, suit, action or proceeding, 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 $50,000 or in the aggregate not to exceed $100,000for all such claims, actions or proceedings;
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 at any time at or prior to the Effective Time, (ii) any of the conditions to the consummation of the Merger not being satisfied, or (iii) a violation of any provision of the Merger Agreement except, in each case, as may be required by applicable law or by any governmental authority;
except pursuant to applicable law or as required by any governmental authority, (i) implement or adopt any material change in its interest rate or other risk management policies, procedures or practices, (ii) fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk, (iii) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk, or (iv) fail to follow its existing policies or practices with respect to managing its fiduciary risks;
other than in the ordinary course, consistent with past practice, assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, 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 deposit liabilities, issuance of letters of credit, purchases of federal funds, borrowings from any of the Federal Home Loan Banks, borrowings from the Federal Reserve Bank, advances on existing lines of credit, sales of certificates of deposit, and entry into repurchase agreements);
make or purchase any indirect or brokered loans;
purchase from or sell to any financial institution or other non-depository lender an interest in a loan, except for such credit facilities made to borrowers in Comunibanc’s territory which are secured by collateral located in the Comunibanc’s territory in the ordinary course and consistent with past practices;
make, or commit to make, any capital expenditures that exceed by more than five percent (5%) Comunibanc’s capital expenditure budget;
(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
| | |
| | • | issue, sellmodify, renew or otherwise permitextend any loan except for loans made acquired, renewed or extended in the ordinary course, consistent with past practices and in compliance with Henry County Bank’s loan policies and underwriting guidelines and standards as in effect as of the date of the Merger Agreement; (iii) make or acquire, or modify, renew or extend any loan (A) in the case of new loans (other than unsecured loans), if immediately after making the loan the person obtaining the loan and the person’s affiliates would have debt owed to become outstanding,Comunibanc or authorizeany of its Subsidiaries that is, in the creationaggregate, in excess of $1,000,000, (B) in the case of the modification, renewal, or extension of any additional Futura common shares otherloan (other than pursuant to rightsunsecured loans) outstanding as of the date of the merger agreement; |
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| • | permit any additional Futura common shares to become subject to new grants of stock optionsMerger Agreement, if immediately after the modification, renewal, or similar stock-based rights; |
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| • | make, declare, pay or set aside for payment any dividend or distribution other than (i) the paymentextension of the previously declared cash dividend on Futura common shares inloan the amount equal to $.15 per share forperson obtaining the quarter ended June 30, 2007, (ii) the declaration and payment of a cash dividend on Futura common shares in an amount not to exceed $.15 per share with a record date and a payment date in the quarter ended September 30, 2007, (iii) the declaration and payment of a cash dividend on Futura common shares in an amount not to exceed $.17 per share with a record date and a payment date in Novembermodification, renewal, or December 2007 and (iv) dividends from wholly-owned Futura subsidiaries to Futura, or directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire any shares of its capital stock; |
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| • | enter into, amend, modify, renew or terminate any employment, consulting, severance, retention, change in control or similar agreements or arrangements with directors, officers or employees; |
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| • | enter into, establish, adopt, amend, modify or terminate any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement or similar arrangement, with respect to any director, officer or employee of Futura, except as may be required by law, to satisfy contractual obligations or as contemplated in the merger agreement; |
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| • | sell, transfer, mortgage, pledge or subject to any lien or otherwise encumber or dispose of any of its assets, deposits, business or properties other than in the ordinary and usual course of business for full and fair consideration actually received; |
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| • | acquire (other than by way of foreclosure or acquisition of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith and in the ordinary and usual course of business consistent with past practice) all or any portionextension of the assets, business, deposits or properties of any other entity; |
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| • | amendloan and the organizational documents of Futuraperson’s affiliates would have an aggregate credit exposure to Comunibanc or any of its subsidiaries; |
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| • | implement or adopt any changeSubsidiaries that is, in its accounting principles, practices or methods other than as required by generally accepted accounting principles; |
56
| | |
| • | enter into or terminate any material contract, or amend or modify any material contract in any material respect, exceptexcess of $1,000,000, (C) in the ordinary and usual coursecase of business consistent with past practice or in connection with the merger agreementnew unsecured loans, or the transactions contemplated bymodification, renewal, or extension of any unsecured loan outstanding as of the merger agreement; |
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| • | settledate of the Merger Agreement, if immediately after making the new unsecured loan or immediately after the modification, renewal or extension of the unsecured loan the person obtaining the new unsecured loan or the modification, renewal or extension of the unsecured loan and the person’s affiliates would have unsecured debt owed to Comunibanc or any material claim, action or proceeding, exceptof its Subsidiaries that is, in the ordinary and usual courseaggregate, in excess of business consistent with past practice$500,000 , or in connection with the merger agreement or the transactions contemplated by the merger agreement; |
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| • | knowingly take any action that would disqualify the merger as a “reorganization” within the meaning of Section 368(a) of the Code; |
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| • | knowingly take any action(D) that is intendedin excess of $500,000 and that is classified by Henry County Bank as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “Watch List” or is reasonably likely to result in any representations or warranties in the merger agreement being or becoming untrue in any material respect, any conditions in the merger agreement not being satisfied or a material violationwords of any provision of the merger agreement except,similar import, in each case, as may be required by applicable law, rule or regulation; |
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| • | except pursuant to applicable lawexisting commitments entered into prior to the date of the Merger Agreement (iv) grant, or regulation, implement or adoptrenew the prior grant of, the deferral of any material change in its interest rate and other risk management policies, procedures or practices, fail to follow in any material respect its existing policies or practices with respect to managing its exposure to interest rate and other risk, fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk or fail to follow its existing policies or practices with respect to managing its fiduciary risks; |
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| • | incur any indebtedness for borrowed money other than in the ordinary course of business; |
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| • | make or purchase any indirect or brokered loans, not including participation in loans with other banks; |
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| • | make any capital expenditure or capital additions or improvements which individually exceed $50,000 or in the aggregate exceed $100,000, except as previously disclosed to First Citizens; |
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| • | originate or issue a commitment to originatepayments under any loan in a principal amount in excess of $2,500,000; |
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| • | fail to prepare and file in a timely manner all tax returns that are required to be filed, fail to pay any tax shown, or required to be shown, on any such tax return, make change or revoke any tax election or tax accounting method, file any amended tax return, settle any tax claim or assessment, consent to the extension or waiver of any statute of limitations with respect to taxes or offer or agree to domake any other modification that would result in the loan being, or continue the status of the foregoing or surrender its rightsloan as, a CARES Act Modified Loan; provided that in the case of each of items (i) – (iv) above Civista shall be required to respond to any request for a consent to make such Loan or extension of credit in writing within three (3) business days after the foregoing orloan package is delivered to claim any tax refund or file any amended tax return; or |
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| • | agree or commit to do any of the foregoing.Civista; |
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 otherwise purchase or sell securities in the portfolio individually that exceed $3,000,000 or in the aggregate that would exceed $15,000,000;
First Citizens’ conduct(i) fail to prepare and file or cause to be prepared and filed in a timely manner consistent with past practice all tax returns that are required to be filed (with extensions) on or before the Effective Time of the Merger, (ii) fail to pay timely any tax due, or (iii) make, change or revoke any tax election or tax accounting method, file any amended tax return, settle any tax claim or assessment, consent to the extension or waiver of any statute of limitations with respect to taxes or offer or agree to do any of the foregoing or surrender its rights to any of the foregoing or to claim any tax refund or file any amended tax return;
open, close or relocate any branch office, ATMs, loan production office or other significant office or operations facility of Comunibanc or its subsidiaries at which business pendingis conducted, or fail to use commercially reasonable efforts to maintain and keep their respective properties and facilities in their present condition and working order, ordinary wear and tear excepted;
increase or decrease the rate of interest paid on time deposits or certificates of deposit, except in a manner consistent with past practices in relation to rates prevailing in the relevant market;
foreclose upon or otherwise cause Comunibanc or the Subsidiary Bank to take title to or possession or control of any real property or entity on such property without first obtaining a Phase I Environmental Site Assessment, except that no such report will be required to be obtained with respect to single-family residential real property of one acre or less to be foreclosed upon unless Comunibanc or the Subsidiary Bank reasonably believe such real property may contain any such hazardous material;
cause any material change in the amount or general composition of deposit liabilities that would constitute a material adverse effect;
not take, or fail to take, any action that would reasonably be expected to prevent or impede the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code; or
agree or commit to do any of the foregoing.
Civistas’ Conduct of Business Pending the Merger
From June 7, 2007,the date of the Merger Agreement until the effective timeEffective Time of the merger,Merger, except as expressly contemplated or permitted by the merger agreementMerger Agreement or withrequired by any applicable law, regulatory order or regulation, without the prior written consent of Futura, First Citizens and its subsidiaries must conduct their respective businesses in the ordinary and usual course, use reasonable efforts to preserve intact their business organizations and assets, use reasonable efforts to preserve their respective rights, franchises and existing relations with customers, suppliers, employees and business associates, and not voluntarily take any action which, at the time taken, is reasonably likely to have an adverse effect upon First Citizens’ ability to perform any of its material obligations under the merger agreement. During the same period, First CitizensComunibanc, Civista has agreed not to, and to cause its subsidiariesCivista Bank not to takedo any of the following actions withoutfollowing:
effect any recapitalization, reclassification, stock split, or similar change in capitalization;
amend the Civista Articles or the Civista Regulations in a manner that would materially and adversely affect the holders of Comunibanc common shares, or adversely affect the holders of Comunibanc common shares relative to other holders of Civista common shares;
take any action that is intended or is reasonably likely to result in any of its representations or warranties in the Merger Agreement becoming materially inaccurate at any time at or prior written consentto the effective time of Futura,the Merger, any conditions in the Merger Agreement not being satisfied, a violation of any provision of the Merger Agreement except, in each case, as otherwise expresslymay be required by applicable law or by any governmental authority, or a delay in the consummation of the transactions contemplated by the merger agreement:
| | |
| • | declare, set aside, makeMerger Agreement; or pay any dividend other than (i) cash dividends on First Citizens common shares in an amount not to exceed, on an annualized basis, the aggregate per share amount of $1.16, with record and payment dates consistent with past practices, and (ii) dividends from any wholly-owned subsidiary to First Citizens; |
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| • | implement or adopt any change in its accounting principles, practices or methods, other than as may be required by generally accepted accounting principles; |
57
agree or commit to do any of the foregoing. | | |
| • | knowingly take any action that would disqualify the merger as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code; |
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| • | knowingly take any action that is intended or is reasonably likely to result in any representations or warranties in the merger agreement being or becoming untrue in any material respect, any conditions in the merger agreement not being satisfied or a material violation of any provision of the merger agreement except, in each case, as may be required by applicable law, rule or regulation; |
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| • | except pursuant to applicable law or regulation, implement or adopt any material change in its interest rate and other risk management policies, procedures or practices, fail to follow in any material respect its existing policies or practices with respect to managing its exposure to interest rate and other risk, fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk or fail to follow its existing policies or practices with respect to managing its fiduciary risks; |
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| • | issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional First Citizens common shares or any stock-based rights or enter into any agreement with respect to the foregoing; |
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| • | acquire (other than (i) by way of foreclosure or acquisition of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith and in the ordinary and usual course of business consistent with past practice or (ii) the acquisition of deposits or individual branches) all or any portion of the assets, business, deposits or properties of any other entity; or |
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| • | agree or commit to do any of the foregoing. |
Expenses of the mergerMerger First CitizensCivista and FuturaComunibanc are each required to bear their own expenses incurred by it in connection with the merger agreementMerger Agreement and the transactions contemplated by the merger agreement, except that printing and mailing expenses will be shared equally between First Citizens and Futura. All fees to be paid to regulatory authorities and the Securities and Exchange Commission in connection with the transactions contemplated by the merger agreement will be borne by First Citizens.
Merger Agreement.Termination of the merger agreementMerger Agreement
Termination by mutual agreement.consent Pursuant to the merger agreement, First Citizens. Civista and FuturaComunibanc may mutually agreeconsent to terminate the merger agreementMerger Agreement and abandon the mergerMerger at any time before the mergerMerger is effective, whether before or after shareholder approval, if the Boardboards of Directorsdirectors of each companyCivista and Comunibanc both approve the termination by vote of a majority of the members of its entire board.
Termination by either Civista or Comunibanc. Either Civista or Comunibanc acting alone upon written notice to the other party may terminate the Merger Agreement and abandon the Merger at any time before the Merger is effective, if the Civista or Comunibanc board of directors approves the termination by vote of a majority of the members of its entire Board.board in the following circumstances:
if there is a material breach by the other party of any representation, warranty, covenant or agreement contained in the Merger Agreement that cannot be or has not been cured by the breaching party within 30 days after the giving of written notice to the breaching party of such breach;
if the Merger has not been consummated by November 30, 2022, unless the failure to complete the Merger by that date is due to the knowing action or inaction of the party seeking to terminate the Merger Agreement;
if the approval of any governmental authority required for consummation of the Merger and the other transactions contemplated by the Merger Agreement has been denied; or
if the Comunibanc shareholders fail to adopt and approve the Merger Agreement at their special meeting, unless the party has breached in any material respect any of its obligations under the Merger Agreement in a manner that primarily caused the failure to obtain the requisite Comunibanc shareholder vote at the special meeting.
Termination by either First Citizens or Futura.Civista Either First Citizens or Futura acting alone. Civista may terminate the merger agreementMerger Agreement and abandon the mergerMerger at any time before the mergerMerger is effective whether before or after shareholder approval,upon written notice to Comunibanc if the BoardComunibanc board of Directorsdirectors:
fails to recommend to the Comunibanc shareholders in this proxy statement/prospectus that they adopt the Merger Agreement;
changes Comunibanc’s recommendation to shareholders, including by publicly approving, endorsing or either company approves the termination by vote of a majorityrecommending, or publicly proposing to approve, endorse or recommend, any other acquisition proposal; or
fails to comply with its obligations under certain provisions of the members of its Board in the following circumstances:
| | |
| • | if any of the regulatory approvals required for consummation of the merger transactions are denied by final nonappealable action; |
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| • | if there is a material breach by the other party of any representation, warranty, covenant or agreement contained in the merger agreement that cannot be or has not been cured by the breaching party within 30 days of after the giving of written notice to the breaching party of such breach; |
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| • | if the merger has not been consummated by December 31, 2007, unless the failure to complete the merger by that date is due to the knowing action or inaction of the party seeking to terminate the merger agreement; or |
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| • | if the Futura shareholders or the First Citizens shareholders fail to adopt the merger agreement at the respective special meetings. |
58Merger Agreement.
Termination following decline in First Citizens’ share price.by Comunibanc. Pursuant to the merger agreement, FuturaComunibanc may
but is not obligated to, terminate the
merger agreementMerger Agreement and abandon the
merger Merger at any time before the Merger is effective upon written notice to Civista:if Comunibanc intends to enter into an agreement relating to a superior acquisition proposal in accordance with the average of the closing sale price of the First Citizens common shares on NASDAQ during the 20trading-day period ending on the fifth trading dayMerger Agreement; or
if, prior to the effective datetime of the merger (the “average First Citizens share price”) is less than $16.67 (as adjusted pursuant toMerger and during the terms of the merger agreement for any stock split, stock dividend, recapitalization, reclassification, split up, combination, exchange of shares, readjustment or similar transaction). However, the merger agreement may not be terminated by Futura following such a decline if First Citizens, within five business days following receipt of Futura’s notice of its intent to terminate, offers to distribute to Futura shareholders an additional number of First Citizens common shares necessary in order to increase the share exchange ratio to equal 85% of the quotient of $23.00 divided by the average First Citizens share price. If the average First Citizens share price is less than $16.67 and if First Citizens elects not to distribute such additional First Citizens common shares, the Futura Board of Directors will determine,time period specified in the exercise of its fiduciary duties, whether to terminate the merger agreement or to waive its right to terminate and proceed with the merger. There can be no assurance that the Futura Board of Directors would elect to terminate or not terminate the merger agreement under such circumstances and, if the merger agreement is not terminated, thenMerger Agreement, the market value of each First CitizensCivista’s common share receivedshares drops below a certain pre-determined threshold while the Nasdaq Bank Index does not; subject, however, to Civista’s right to cure by Futura shareholders may be less than $16.67 per share.providing notice to Comunibanc that Civista intends to proceed with the Merger by paying additional consideration.
Automatic termination. The mergerSupport Agreements
Under the Merger Agreement, the directors of Comunibanc executed support agreements pursuant to which they agreed to vote their shares of Comunibanc stock owned directly or indirectly, and to request their spouses to consent to such agreement will automatically terminate, without further act or action by either Futura or First Citizens,to the extent of such spouse’s interest in eithersuch shares in favor of the following circumstances:
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| • | if First Citizens does not elect to increase the share exchange ratio if necessary to preserve the status of the merger as a tax-free reorganization; or |
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| • | if Futura or Champaign Bank executes an agreement in respect of, or closes, any acquisition or purchase of all or substantially all of the assets of Futura or Champaign Bank or any merger, consolidation or business combination business with any party other than First Citizens. |
In the event that the merger agreement is terminatedMerger.Acquisition Proposals and the merger abandoned, neither Futura nor First Citizens will have any liability or further obligation to the other party, except (i) for continued compliance with certain surviving covenants and agreements identified in the merger agreement and (ii) that termination will not relieve a breaching party from liability for any willful breach of the merger agreement giving rise to such termination.
Acquisition proposals and termination feeTermination FeePursuant to the merger agreement, FuturaMerger Agreement, Comunibanc may not, and must cause its subsidiariesthe Subsidiary Bank and its and its subsidiaries’ officers, directors, employees, advisors and other agents not to, directly or indirectly take any action to (i) solicit, initiate, encourage, facilitate or initiateinduce any inquiries, proposals or proposals with respect to, or enter intooffers of any acquisition proposal; (ii) engage in negotiations concerning, or provide any confidential information to, any partyperson other than First CitizensCivista with respect to any inquiry, proposal or offer, (iii) take any action intended to facilitate an inquiry or proposal, (iv) approve, endorse or recommend any other transaction or proposal; (v) enter into any agreement contemplating or otherwise relating to any sale of allacquisition proposal; (vi) enter into any agreement or substantially allagreement in principle requiring, directly or indirectly, Comunibanc to abandon, terminate or fail to consummate the transactions contemplated by the Merger Agreement; or (vii) propose or agree to do any of the assetsforegoing, unless (a) Comunibanc’s board of Futura or Champaign Bank or any merger, consolidation or business combinationdirectors, after consultation with Futura or Champaign Bank, unless Futura’s Boardand based upon the advice of financial and legal advisors, determines in good faith that it must enter into negotiations or discussions with another party that has made anyan unsolicited acquisition proposal in order to fulfill its fiduciary duties to FuturaComunibanc shareholders under applicable law.
Inlaw and (b) before furnishing any information to, or entering into discussions or negotiations with another party, Comunibanc provides immediate written notice to Civista of such action, the
event that Futura or Champaign Bank executes a definitive agreement in respect of, or closes, any acquisition or purchase of all or substantially allidentity of the
assetsbidder and the substance of
Futurasuch unsolicited acquisition proposal.If (a) Civista terminates the Merger Agreement due to Comunibanc’s acceptance of another acquisition proposal, failure to recommend to the shareholders adoption of the Merger Agreement, or Champaign BankComunibanc’s breach
of the support agreement or any merger, consolidationthe Merger Agreement’s prohibition on solicitation of other acquisition proposals, or business combination business(b) Comunibanc terminates the Merger Agreement with any party other than First Citizens, Futura mustthe intention of entering into or accepting an alternate, superior proposal, then, in the case of either (a) or (b) above, Comunibanc shall pay to First Citizens in immediately available funds the sum of $2,200,000 within ten days after the earlier of such execution or closing.
Civista $2,008,000.00.Amendment
The merger agreementMerger Agreement may be amended or modified at any time prior to the effective time of the mergerMerger by an agreement in writing signed by First CitizensCivista and Futura, providedComunibanc, except that the merger agreementMerger Agreement may not
59
be amended after the
Futura special meeting or the First CitizensComunibanc special meeting if such amendment would violate Ohio
law orlaw.COMPARISON OF CERTAIN RIGHTS OF COMUNIBANC AND CIVISTA SHAREHOLDERS
If the federal securities laws.
Description of First Citizens Common SharesAsMerger is completed, the rights of the , 2007, First Citizens had authorized 10,000,000 common shares, without par value, shares of which were issued and outstanding, shares of which were held as treasury shares, and shares of which were subject to outstanding options granted under First Citizens’ Stock Option and Stock Appreciation Rights Plan. Each outstanding First Citizens common share is duly authorized, validly issued, fully paid and nonassessable. The holders of First Citizens common shares have one vote per share on each matter on whichComunibanc shareholders are entitled to vote and, in accordance with Ohio law, cumulative voting rights if properly requested in connection with the election of directors. Directors are elected each year at the annual meeting of shareholders to a one-year term. Upon liquidation or dissolution of First Citizens, the holders of First Citizens common shares are entitled to share ratably in such assets as remain after creditors have been paid.
Holders of First Citizens common shares have the pre-emptive rights described in Section 1701.15 of the Ohio Revised Code. Pursuant to Section 1701.15 of the Ohio Revised Code, no pre-emptive rights are available in connection with shares issued or agreed to be issued for considerations other than money, as is the case in the merger of Futura with and into First Citizens.
First Citizens’ Board of Directors determines whether to declare dividends and the amount of any dividends declared. Such determinations by the Board of Directors take into account First Citizens’ financial condition, results of operations and other relevant factors. While management expects to maintain its policy of paying regular cash dividends, no assurances can be given that any dividends will be declared, or, if declared, what the amount of such dividends will be. See “Comparative Per Share Data” on page of this prospectus/proxy statement for information regarding dividends declared by the First Citizens Board of Directors during the most recent fiscal year and interim period(s).
The Illinois Stock Transfer Company is the exchange agent for First Citizens common shares.
Provisions relating to business combinationsBusiness combinations. Article SIXTH (“Article SIXTH”) of First Citizens’ Articles of Incorporation sets forth certain requirements in connection with the approval or authorization of any of the following types of business combinations:
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| • | any merger or consolidation involving First Citizens or any subsidiary of First Citizens; |
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| • | any sale, lease, exchange, transfer or other disposition of all or a substantial part of the assets of First Citizens or any subsidiary of First Citizens; |
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| • | any sale, lease, exchange, transfer or other disposition of all or a substantial part of the assets of any entity to First Citizens or any subsidiary of First Citizens; |
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| • | any issuance, sale, exchange, transfer or other disposition by First Citizens or any subsidiary of First Citizens of any corporation; |
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| • | any recapitalization or reclassification of First Citizens’ securities or other transaction that would have the effect of increasing the voting power of a “related person” (as defined below); |
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| • | any liquidation, spin-off,split-up or dissolution of First Citizens; and |
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| • | any agreement, contract or other arrangement providing for any of the foregoing transactions. |
For purposes of Article SIXTH, “related person” generally means any person, entity or group, including any affiliate or associate thereof, (other than First Citizens, any wholly-owned subsidiary of First Citizens and
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any employee benefit plan sponsored by First Citizens or any such subsidiary of First Citizens) that, at the time any business combination is agreed to, authorized or approved, is the beneficial owner of not less than 10% of the First Citizens common shares entitled to vote on such business combination.
Board considerations. Article SIXTH provides that, when evaluating a business combination or any tender or exchange offer, the Board of Directors of First Citizens shall consider, without limitation: (i) the social and economic effects of the transaction on First Citizens and its subsidiaries, employees, customers, creditors and community; (ii) the business and financial conditions and earning prospects of the acquiring person or persons; and (iii) the competence, experience and integrity of the acquiring person or persons and its or their management.
Shareholder considerations. Article SIXTH further provides that the affirmative vote of the holders of not less than 80% of each class of First Citizens common shares entitled to vote on the transaction shall be required for the approval of any business combination in which a related person has an interest (except proportionately as a shareholder); provided, however, that the 80% voting requirement shall not be applicable if (i) the continuing directors, who at the time constitute at least a majority of the Board of Directors of First Citizens, have approved the business combination by at least two-thirds vote or (ii) certain conditions relating to the fairness of the transaction have been satisfied. Pursuant to Article FIFTH of First Citizens’ Articles of Incorporation, if the 80% voting requirement is inapplicable, the transaction under consideration may be authorized by the affirmative vote of the holders of First Citizens common shares entitling them to exercise a majority of the voting power of First Citizens. The 80% voting requirement is inapplicable to the proposed merger of Futura with and into First Citizens because the merger agreement and the transactions contemplated thereby, including the merger of Futura with and into First Citizens, have been unanimously approved by the Board of Directors of First Citizens.
Article SEVENTH of First Citizens’ Articles of Incorporation provides that no amendment of the Articles of Incorporation shall be effective to amend, alter or repeal any of the provisions of Article SIXTH unless such amendment shall receive the affirmative vote of the holders of not less than 80% of the First Citizens common shares entitled to vote thereon; provided, however, that the 80% voting requirement shall not be applicable if such amendment shall have been proposed and authorized by the Board of Directors of First Citizens by the affirmative vote of at least two-thirds of the continuing directors.
Comparison of Certain Rights of First Citizens and Futura ShareholdersShareholders of Futura who receive
First CitizensCivista common shares in the
merger will become shareholders of First Citizens and their rights as shareholders of First CitizensMerger will be governed by the Ohio
Revised Code and by First Citizens’ Articles of Incorporation and Amended and Restated Code of Regulations. In many instances,General Corporation Law (“OGCL”), the
rights of Futura shareholders, which are currently governed by the Ohio Revised Code and theSecond Amended and Restated Articles of Incorporation
of Civista and
Code ofthe Amended and Restated Regulations of
Futura,Civista. Prior to the Merger, Comunibanc shareholders’ rights are
substantiallydetermined by the
sameOGCL and the Articles of Incorporation of Comunibanc as
Comunibanc does not have regulations.Although the rights of First Citizens shareholders. For example,Civista shareholders and the rights of Futura shareholders and First CitizensComunibanc shareholders are substantiallysimilar in many respects, there are some differences. The following is a summary of the same with respect to cumulative votingmaterial differences between (1) the current rights quorum requirements, waiver of noticeholders of meetings,Comunibanc common shares under the OGCL and the capacity to take action without a meeting.
Comunibanc Articles of Incorporation and (2) the current rights of holders of Civista common shares under Ohio law and the Articles of Incorporation and Regulations.Civista and Comunibanc believe that this summary describes the material differences between the rights of holders of Civista common shares as of the date of this proxy statement/prospectus and the rights of holders of Comunibanc common shares as of the date of this proxy statement/prospectus. The following summarychart compares certain rights of the holders of FuturaComunibanc’s common shares to the rights of holders of First CitizensCivista common shares in areas where those rights are materially different. This summary, however, does not purport to be a complete description of such differences and is qualified in its entirety by reference to the relevant provisions of Ohio Revised Codelaw and the respective corporate governance instruments of FuturaComunibanc and First Citizens.
AuthorizedCivista. Copies of Comunibanc’s and outstanding sharesAsCivista’s governing documents have been filed with the SEC. To find out where copies of these documents can be obtained, see the datesection entitled “WHERE YOU CAN FIND MORE INFORMATION” at the forepart of this prospectus/proxy statement, First Citizens had authorized 10,000,000 common shares, without par value, shares of which were issued and outstanding, shares of which were held as treasury shares, and shares of which were subject to outstanding options. At the First Citizens special meeting to be held on , 2007, the First Citizens shareholders will vote upon a
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proposal to adopt an amendment to the First Citizens Articles of Incorporation to increase the number of authorized common shares, without par value, of First Citizens from 10,000,000 to 20,000,000.
As of the date of this prospectus/proxy statement, Futura had authorized 3,000,000 common shares, without par value, of which 2,617,314 shares were issued and outstanding, 15,946 shares were held as treasury shares, and 276,640 shares were subject to outstanding options to purchase Futura common shares.
Notice of shareholder meetingsNotice of a meeting of the First Citizens shareholders must be given to each shareholder of record in accordance with applicable law at least seven (7) and not more than sixty (60) days prior to the date of the meeting.
Written notice of a meeting of the Futura shareholders must be given to each shareholder entitled to notice as provided by law not less than seven (7) nor more than ninety (90) days before the date of such meeting.
Calling of special meetings of shareholdersSpecial meetings of the shareholders of First Citizens may be called at any time by the Chairman of the Board of Directors, the President, a majority of the Board of Directors acting with or without a meeting or shareholders owning, in the aggregate, not less than twenty-five percent (25%) of the outstanding shares of First Citizens.
Special meetings of the shareholders of Futura may be called at any time by the President, a Vice President or by the directors by action at meeting or a majority of the directors acting without a meeting, or by shareholders holding fifty percent (50%) or more of the outstanding shares entitled to vote at such meetings.
Notice of shareholder proposalsNotice of any proposal to be presented by any shareholder at an annual meeting of First Citizens shareholders must be given in writing and received by First Citizens not less than sixty (60) nor more than ninety (90) days prior to the meeting. However, in the event that less than 75 days’ notice to the shareholders is given, written notice of the shareholder’s intent to make a proposal must be received by First Citizens not later than the fifteenth day following the day on which such notice of the date of the meeting was given. Any shareholder giving notice of a proposal shall deliver with such proposal (i) the text of the proposal, (ii) a brief written statement of the reasons why such shareholder favors the proposal, (iii) such shareholder’s name and record address and the number and class of all shares of securities of First Citizens beneficially owned by such shareholder and (iv) any material interest of such shareholder in the proposal. No proposals by shareholders will be considered at any special meeting of the First Citizens shareholders unless the special meeting was called for the purpose of considering such proposal.
For business to be properly brought before a meeting of shareholders of Futura by a shareholder, the shareholder must deliver notice to Futura not less than sixty (60) days nor more than ninety (90) days prior to the meeting. However, in the event that less than seventy-five (75) days’ notice of the date of the meeting is given to the shareholders, notice by the shareholder must be received by Futura not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed. A shareholder’s notice must set forth (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business, (ii) the name and record address of such shareholder, (iii) the class and number of shares of Futura which are beneficially owned by such shareholder and (iv) any material interest of such shareholder in such business.
Under Ohio law, shareholders have the right to make a request, in accordance with applicable procedures, to cumulate their votes in the election of directors unless a corporation’s articles of incorporation eliminate
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that right. Neither First Citizens’ Articles of Incorporation nor Futura’s Amended and Restated Articles of Incorporation have been amended to eliminate cumulative voting in the election of directors. Accordingly, if, in accordance with Ohio law, any First Citizens or Futura shareholder makes a proper request for cumulative voting and announcement of such request is made at a meeting to elect directors, each shareholder will have votes equal to the number of directors to be elected, multiplied by the number of First Citizens common shares or Futura common shares, as appropriate, owned by such shareholder, and will be entitled to distribute such votes among the candidates in any manner the shareholder wishes. Except with respect to an election of directors for which cumulative voting has been properly requested, each First Citizen common share or Futura common share, as appropriate, entitles its holder to one vote on each matter submitted to the respective shareholders of First Citizens or Futura for consideration.
In most instances, matters submitted to the First Citizens shareholders are decided by a majority of votes cast with respect to such matters. Under the default provisions of the Ohio Revised Code, certain extraordinary corporate actions, including mergers and other business combinations, must be approved by the affirmative vote of the holders of common shares entitling them to exercise at least two-thirds of the voting power of the corporation. In addition, Article SIXTH of First Citizens’ Articles of Incorporation requires an 80% affirmative vote of the shareholders to approve any business combination in which a related person has an interest. This 80% voting requirement, however, is not applicable if (i) the continuing directors have approved the business combination by at least a two-thirds vote or (ii) certain conditions relating to the fairness of the transaction have been satisfied. See “Description of First Citizens common shares — Provisions relating to business combinations” beginning on page of this prospectus/proxy statement. First Citizens’ Articles of Incorporation may be amended by the affirmative vote of the holders of shares entitling them to exercise a majority of the voting power of First Citizens; provided, however, that an 80% affirmative vote is required for shareholder amendments to Article SIXTH unless such amendment has been proposed and authorized by at least a two-thirds vote of the continuing directors.
In most instances, matters submitted to the Futura shareholders are decided by a majority of votes cast with respect to such matters. Unlike First Citizens, pursuant to Article NINTH of Futura’s Amended and Restated Articles of Incorporation, Futura modified the Ohio Revised Code’s shareholder approval requirement in connection with certain extraordinary corporate actions, including the proposed merger, so that those transactions may be authorized by the affirmative vote of the holders of common shares entitling them to exercise at least a majority voting power of Futura. Although Futura’s Amended and Restated Articles of Incorporation Article SIXTH includes a control share acquisition provision which requires the affirmative vote of the holders of Futura common shares entitling them to exercise at least 66% of the voting power of Futura, such provision is not applicable to the proposed merger. The affirmative vote of at least seventy-five percent (75%) of the shares entitled to vote is required to alter, amend, repeal, or adopt any provisions which are inconsistent with the provisions contained in Article NINTH. Futura shareholders generally can amend, alter or change Futura’s Amended and Restated Articles of Incorporation or Code of Regulations by the affirmative vote of a majority of the shareholders entitled to vote, provided, however, that the Code of Regulations requires that at least 75% of the outstanding shares must approve an amendment of the provisions dealing with (1) the number of directors, (2) classification, election and term of office of directors and (3) removal of directors.
Number and class of directorsThe First Citizens Board of Directors, which must consist of no fewer than five (5) nor more thantwenty-five (25) directors, currently consists of twelve (12) directors. Following the merger, three current members of the Futura Board will be appointed by First Citizens to serve on the First Citizens Board, which will result in an increase in the number of directors of First Citizens to fifteen (15). Members of the Board of Directors shall be elected each year at the annual meeting of shareholders to a one-year term. No member of the First Citizens Board of Directors shall have attained the age of seventy-five (75) on the date of his or her election or appointment to the Board, excluding directors who were serving on the First Citizens Board as of April 14, 1997.
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In connection with the merger, the First Citizens Board of Directors will select three members of the Futura Board of Directors and take all necessary action to appoint those directors to fill vacancies existing on the First Citizens Board of Directors at the effective time of the merger and to nominate and recommend those directors for election to the First Citizens Board of Directors at the three annual meetings of shareholders following the merger (subject to certain conditions and limitations).
The Futura Board of Directors, which must consist of no fewer than six (6) nor more than twelve (12) directors, currently consists of nine (9) directors. The directors of Futura are divided into two classes of approximately equal number, with each class being elected for staggered two-year terms.
Under First Citizens’ Amended and Restated Code of Regulations, either the First Citizens Board of Directors or any shareholder entitled to vote in the election of directors may nominate a candidate for election to the First Citizens Board of Directors. To be timely, a shareholder’s notice must be delivered to First Citizens not less than 14 days nor more than 50 days prior to the meeting; provided, however, that in the event that less than 21 days’ notice of the date of the meeting is given to shareholders, notice by the shareholder must be delivered to First Citizens no later than the close of business on the seventh day prior to the shareholder meeting. A shareholder’s notice must set forth:
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Comunibanc Corp. | • | the name, age, business address and residence addressCivista Bancshares, Inc. |
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| Authorized Capital Stock |
Authorized Capital. Comunibanc’s current Amended Articles of Incorporation authorizes Comunibanc to issue up to 2,000,000 shares of common stock, no par value per share. As of the proposed nominee;record date, there were 828,504 common shares outstanding. | | Authorized Capital. Civista’s current Second Amended and Restated Articles of Incorporation authorizes Civista to issue up to (i) 200,000 shares of preferred stock, without par value, and (ii) 40,000,000 shares of common stock, without par value. As of , there were preferred shares outstanding, and there were common shares outstanding. |
Dividends: Subject to the limitations of OGCL Section 1701.33, the directors may declare dividends and distributions on outstanding shares of the corporation from the surplus of the corporation. |
| | • | Dividends: Civista may, subject to the principal occupationdiscretion of its board of directors or employmenta duly appointed committee of the proposed nominee; |
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| • | the class and numberthat board, generally pay dividends to holders of sharesSeries B Preferred Shares out of First Citizens beneficially owned by the proposed nominee; |
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| • | the name and record address of the notifying shareholder; and |
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| • | the class and number of shares of First Citizens beneficially owned by the shareholder.net income, retained earnings or surplus related to other Tier 1 capital |
Under Futura’s Code of Regulations, nominations of persons for election as directors of Futura may be made at a meeting of shareholders by or at the direction of the directors, any nominating committee or person appointed by the directors or any shareholder entitled to vote for the election of directors at the meeting. To be timely, a shareholder’s notice must be delivered to Futura not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 75 days’ notice of the date of the meeting is given to shareholders, notice by the shareholder must be delivered to Futura no later than the close of business on the fifteenth day prior to the shareholder meeting. A shareholder’s notice must be accompanied by the written consent of the proposed nominee to serve as a director of Futura, if elected, and must set forth:
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| • | instruments, and subject to the name, age, business addressrights of any holder of Senior Shares. Holders of Civista common shares are entitled to receive dividends when, as and residence addressif declared by its board of the proposed nominee;directors from funds legally available therefor. |
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| • | the principal occupation or employmentBoard of the proposed nominee;Directors |
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| • | Number of Directors. According to OGCL Section 1701.56(A)(2), the number of sharesdirectors of Futura beneficially ownedComunibanc may be fixed or changed to a number not less than one at a meeting of the shareholders called for the purpose of electing directors at which a quorum is present, by the proposed nominee;affirmative vote of the holders of a majority of the shares which are represented at the meeting and entitled to vote on the proposal. The number of directors of Comunibanc is currently fixed at 7. |
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| | • | any other information relatingNumber of Directors. According to the proposed nominee that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; |
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| • | the nameCivista’s Amended and record address of the notifying shareholder; and |
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| • | Restated Regulations, the number of sharesdirectors shall not be less than five and not more than twenty-five. The number of Futura beneficially owneddirectors of Civista is currently fixed at fifteen.The exact number of directors will be determined from time to time by resolution adopted by affirmative vote of a majority of the whole Board of Directors. The Board of Directors may fill any director’s office that is created by an increase in the number of directors, but cannot increase the number of directors to more than twenty-five or reduce the number of directors to less than five. Under Civista’s Regulations, the board of director must consist of no fewer than 5 and no more than 25 directors, and the exact number of directors shall be determined by affirmative vote of the board of directors. Members of the board of directors shall be elected each year at the annual meeting of shareholders to a one-year term. No member of the board of directors shall have attained the age of 75 on the date of his or her election or appointment to the board, excluding directors who were serving on Civista’s board as of April 14, 1997. |
Classification of Directors. OGCL Section 1701.57 provides for one class of Comunibanc directors. | | Classification of Directors. Civista’s Amended and Restated Regulations provides for one class of directors. |
Removal of Directors. OGCL Section 1701.58 provides that the directors may remove any director: (i) by order of the court; (ii) if within sixty days from the date of election, the director does not accept election or act at a meeting; or (iii) by a majority of shareholder voting power. | | Removal of Directors. Civista’s Amended and Restated Regulations provides that any director or the entire Board of Directors may be removed with or without cause by the shareholder.affirmative vote of a majority of the shares then entitled to vote at the election of directors. However, in the event of any proposed business combination transaction, the affirmative vote of eighty percent (80%) shall be required to remove any or the entire Board of Directors. |
Cumulative Voting: OGCL Section 1701.55(C) provides that, by default, each shareholder has the right to vote cumulatively if notice in writing is given by any shareholder to the president, a vice-president, or the | | Cumulative Voting: No holder of Civista common shares is entitled to the right of cumulative voting in the election of directors. |
Directors of First Citizens generally may be removed by a majority of the votes cast by First Citizens shareholders qualified to vote in the election of directors, subject to two qualifications. First, in the event of a proposed business combination, the removal of a First Citizens director by the First Citizens shareholders requires the affirmative vote of not less than 80% of the First Citizens common shares entitled to vote with respect to such removal. Second, an individual First Citizens director may only be removed by the First
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Citizens shareholders if the votes cast against his or her removal would not be enough to elect one director under the cumulative voting scheme.
Directors of Futura generally may be removed by the affirmative vote of at least seventy-five percent (75%) of the votes cast by Futura shareholders, present in person or represented by proxy, entitled to vote in the election of directors.
Indemnification and liability of directors and officersPursuant to Article EIGHTH of First Citizens’ Articles of Incorporation, First Citizens has the power to indemnify its present and past directors, officers, employees and agents to the fullest extent permitted under the Ohio Revised Code. Article VIII of First Citizens’ Amended and Restated Code of Regulations provides that First Citizens will indemnify, to the fullest extent permitted or authorized by applicable law, any person made or threatened to be made a party to any suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer or employee of First Citizens, or is or was serving at the request of First Citizens as a director, trustee, officer, or employee of a bank, or other corporation, partnership, joint venture, trust or other enterprise. In order to receive indemnification, the person must have acted in good faith and in a manner that he or she reasonably believed to be in and not opposed to the best interest of First Citizens. With regard to any criminal action or proceeding, First Citizens will indemnify the person if he or she had no reasonable cause to believe his or her conduct was unlawful. First Citizens will not indemnify a person with respect to such person’s willful misconduct.
As a condition precedent to First Citizens providing such indemnification, the person to be indemnified must (i) promptly notify First Citizens of any actual or potential action, suit or proceeding, (ii) except with respect to a criminal proceeding, authorize and permit First Citizens, in its sole discretion, to choose any legal counsel to defend and otherwise handle the action, suit or proceeding and related matters, (iii) except with respect to a criminal proceeding, permit First Citizens to assume total, complete and exclusive control of the action, suit or proceedings and all related proceedings and matters, and (iv) in all respects, cooperate with First Citizens and its counsel in the defenseand/or settlement of the action, suit or proceeding and in the prosecutionand/or settlement of any counterclaims, cross-claims and defenses. The indemnification provided by First Citizens’ Amended and Restated Code of Regulations is not exclusive of any other rights to which any person seeking indemnification may be entitled, both as to action in his or her official capacity and as to action in another capacity while holding such office. In addition, such indemnification will continue as to a person who has ceased to be a director, trustee, officer or employee and will inure to the benefit of such person’s heirs, executors and administrators.
Additionally, First Citizens’ Articles of Incorporation provide that First Citizens, upon the vote of a majority of its Board of Directors, may purchase and maintain insurance for the purpose of indemnifying its directors, officers, employees and agents to the extent that such indemnification is allowed under the Articles of Incorporation. First Citizens has purchased and maintains insurance policies that insure its 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 and controlling persons of First Citizens, pursuant to the foregoing provisions, or otherwise, First Citizens has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment of expenses incurred or paid by a director, officer or controlling person of First Citizens 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, First Citizens 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 and will be governed by the final adjudication of such issue.
Futura has the power to indemnify any current or past Futura directors, officers, and trustees against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement, actually and reasonably
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incurred by him or her by reason of the fact that he or she is or was such director, officer or trustee in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by applicable law. The indemnification permitted by Futura’s Code of Regulations does not restrict the power of the Futura to also (i) indemnify its employees, agents and others to the extent not prohibited by law, (ii) purchase and maintain insurance or furnish similar protection on behalf of or for such person who is or was serving at the request of Futura against any and all liabilities asserted against or incurred by them in such capacities, and (iii) enter into indemnification agreements with such persons indemnifying them against any and all liabilities asserted against or incurred by them in such capacities.
Under Ohio law, a director of an Ohio corporation will not be found to have violated his or her fiduciary duties to the corporation or its shareholders unless there is proof by clear and convincing evidence that the director has not acted in good faith, in a manner he or she reasonably believes to be in or not opposed to the best interests of the corporation, or with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, under Ohio law, a director is liable in damages for any action or failure to act as a director only if it is proved by clear and convincing evidence that such act or omission was undertaken either with deliberate intent to cause injury to the corporation or with reckless disregard for the best interests of the corporation, unless the corporation’s articles of incorporation or regulations make this provision inapplicable by specific reference. Neither the Articles of Incorporation or Amended and Restated of Code of Regulations of First Citizens nor the Amended and Restated Articles of Incorporation or Code of Regulations of Futura make this provision inapplicable.
At the time First Citizens’ Articles of Incorporation were adopted, Ohio law stated that shareholders had pre-emptive rights unless the corporation’s articles of incorporation provided otherwise. Because First Citizens’ Articles of Incorporation do not address this issue, First Citizens shareholders are afforded certain pre-emptive rights to purchase or subscribe for any securities of any class of First Citizens in proportion to their respective holdings of securities of such class under the circumstances authorized by Section 1701.15 of the Ohio Revised Code.
Futura’s Amended and Restated Articles of Incorporation provide that no holder of any class of shares of Futura shall have any pre-emptive or preferential right to purchase or subscribe to any shares of any class of securities of Futura, or to purchase any obligations convertible into shares of any class of securities of Futura.
Anti-Takeover Statutes Applicable to First Citizens and FuturaCertain state laws make a change in control of an Ohio corporation more difficult, even if desired by the holders of a majority of the corporation’s shares. Provided below is a summary of the Ohio anti-takeover statutes.
Ohio Control Share Acquisition Statute. Section 1701.831 of the Ohio Revised Code, known as the “Ohio Control Share Acquisition Statute,” provides that specified notice and informational filings and special shareholder meetings and voting procedures must occur before consummation of a proposed “control share acquisition.” A control share acquisition is defined as any acquisition of shares of an “issuing public corporation” that would entitle the acquirer, directly or indirectly, alone or with others, to exercise or direct the voting power of the issuing public corporation in the election of directors within any of the following ranges:
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| • | one-fifth or more, butsecretary of a corporation, not less than one-third,forty-eight hours before the time fixed for holding a meeting of the shareholders for the purpose of electing directors if notice of the meeting has been given at least ten days before the meeting, and, if the ten days’ notice has not been given, not less than twenty-four hours before the meeting time, that the shareholder desires that the voting at such election shall be cumulative, provided that an announcement of the giving of that notice is made upon the convening of the meeting by the chairperson or secretary or by or on behalf of the shareholder giving the notice. | | |
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| Voting |
Required Vote to Pass Certain Actions. Comunibanc’s current Amended Articles of Incorporation set an 80% voting threshold of the voting power; |
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| • | one-thirdpower of outstanding shares in order to approve: (i) any plan of merger; (ii) any plan of exchange; (iii) any sale, lease, transfer or more, but less than a majority,other disposition of all or substantially all of the voting power; or |
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| • | a majority or morecorporation’s property and assets, including its goodwill, not in the usual right and regular course of its business; (iv) any dissolution of the voting power. |
An “issuing public corporation” is an Ohio corporation with 50 or more shareholders that has its principal place of business, principal executive offices, or substantial assets within the State of Ohio, and as to which no
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close corporation agreement exists. Assuming compliance with the notice and informational filing requirements prescribed by the Ohio Control Share Acquisition Statute, the proposed control share acquisition may take place only if, at a duly convened special meeting of shareholders, the acquisition is approved by both:
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| • | corporation; and (v) any amendment to Article VII, which sets the 80% threshold. However, if the Board of Directors adopts a resolution approving one of the enumerated matters, other than the dissolution or an Amendment to alter the dissolution vote, and the Board of Directors has determined to recommend the matter for approval by the holders of shares entitled to vote, then the required vote will be the affirmative vote of the holders of at least a majority of the voting power of the corporation represented in person or by proxy at the meeting; andoutstanding shares. |
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| | • | Required Vote to Pass Certain Actions. In most instances, matters submitted to the Civista shareholders are decided by a majority of votes cast with respect to such matters. Unless otherwise provided in a company’s Articles of Incorporation under the default provisions of the Ohio Revised Code, certain extraordinary corporate actions, including mergers and other business combinations, must be approved by the affirmative vote of the holders of common shares entitling them to exercise at least 2/3 of the voting power of Civista. Civista’s Articles of Incorporation provide, however, that all such matters may be approved by the affirmative vote of the holders of a majority of the voting power at the meeting exercised by shareholders, excluding: |
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| • | officersof Civista. In addition, Civista’ Articles of Incorporation requires an 80% affirmative vote of the corporation electedshareholders to approve any business combination in which a related person has an interest. This 80% voting requirement, however, is not applicable if (i) the continuing directors have approved the business combination by at least a two-thirds vote or appointed(ii) certain conditions relating to the fairness of the transaction have been satisfied.Civista’ Articles of Incorporation may be amended by the directorsaffirmative vote of the corporation, |
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| • | employees of the corporation who are also directors of the corporation, and |
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| • | persons who acquire specified amounts of shares after the first public disclosure of the proposed control share acquisition. |
The provisions of the Ohio Control Share Acquisition Statute are applicable to First Citizens. By contrast, Futura has elected to opt out of the provisions of the Ohio Control Share Acquisition Statute by virtue of Article SEVENTH of its Amended and Restated Articles of Incorporation. However, Article SIXTH of Futura’s Amended and Restated Articles of Incorporation contains a provision that is substantially similar to the Ohio Control Share Acquisition Statute as currently in effect.
Ohio Merger Moratorium Statute. Chapter 1704 of the Ohio Revised Code, known as the “Ohio Merger Moratorium Statute,” prohibits specified business combinations and transactions between an issuing public corporation and a beneficial owner of shares representing 10% or more of the voting power of the corporation in the election of directors (an “interested shareholder”) for at least three years after the interested shareholder became such, unless the board of directors of the issuing public corporation approves either (1) the transaction or (2) the acquisition of the corporation’s shares that resulted in the person becoming an interested shareholder, in each case before the interested shareholder became such.
For three years after a person becomes an interested shareholder, the following transactions between the corporation and the interested shareholder (or persons related to the interested shareholder) are prohibited:
| | |
| • | the sale or acquisition of an interest in assets meeting thresholds specified in the statute; |
|
| • | mergers and similar transactions; |
|
| • | a voluntary dissolution; |
|
| • | the issuance or transfer of shares or any rights to acquire shares having a fair market value at least equal to 5% of the aggregate fair market value of the corporation’s outstanding shares; |
|
| • | a transaction that increases the interested shareholder’s proportionate ownership of the corporation; and |
|
| • | any other benefit that is not shared proportionately by all shareholders. |
After the three-year period, transactions between the corporation and the interested shareholder are permitted if:
| | |
| • | the transaction is approved by the holders of shares with at least two-thirdsentitling them to exercise a majority of the voting power of the corporation in the election of directors (or a different proportion specified in the corporation’s articles of incorporation), includingCivista; provided, however, that an 80% affirmative vote is required for shareholder amendments to Article SIXTH unless such amendment has been proposed and authorized by at leasta two-thirds vote of the continuing directors.Civista’s Regulations may be amended or repealed at any meeting of shareholders called for that purpose by the affirmative vote of the holders of record of shares entitling them to exercise a majority of the outstanding shares after excluding shares controlledvoting power on such proposal or, without a meeting, by the interested shareholder; or |
|
| • | the business combination results in shareholders, other than the interested shareholder, receiving a “fair market value” for their shares determined by the method described in the statute. |
A corporation may elect not to be covered by the provisions of the Ohio Merger Moratorium Statute by the adoption of an appropriate amendment to its articles of incorporation. Neither First Citizens nor Futura has elected not to be covered by the provisions of the Ohio Merger Moratorium Statute.
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Change in Control of Ohio Banks and Bank Holding Companies. Section 1115.06 of the Ohio Revised Code and the regulations promulgated thereunder contain change-of-control provisions which prohibit any person, acting directly or indirectly or in concert with one or more persons, from acquiring control of any Ohio bank or any bank holding company that has control of any Ohio bank unless the person has given the Ohio Superintendent of Financial Institutions 60 days prior written notice and the Superintendent has not disapproved the acquisition. Control, as defined in Section 1115.06, means the power, directly or indirectly, to direct the management or policies of a state bank or bank holding company or to vote 25% or more of any class of voting securities of a state bank or bank holding company. Pursuant to the regulations promulgated under Section 1115.06, it is presumed, subject to rebuttal, that a person controls an Ohio bank or bank holding company if the person owns or has the power to vote 10% or more of any class of voting securities and either the bank or bank holding company has a class of securities registered under Section 12 of the Securities Exchange Act of 1934 or no other person owns or has the power to vote a greater percentage of that class of voting securities.
Pro Forma Financial InformationThe following unaudited pro forma condensed consolidated balance sheet as of June 30, 2007, and the unaudited pro forma condensed consolidated statement of income for the six months ended June 30, 2007, and for the year ended December 31, 2006, have been prepared to reflect the merger of Futura with and into First Citizens as if the merger had occurred on June 30, 2007, with respect to the balance sheet, and as of January 1, 2006 and January 1, 2007, with respect to each of the statements of income, in each case giving effect to the pro forma adjustments described in the accompanying notes. The pro forma adjustments are based on estimates made for the purpose of preparing these pro forma financial statements. The actual adjustments to the accounts of First Citizens will be made based on the underlying historical financial data at the time the transaction is consummated. First Citizens’ management believes that the estimates used in these pro forma financial statements are reasonable under the circumstances.
The unaudited pro forma condensed consolidated financial information has been prepared based on the purchase method of accounting assuming 2,455,249 First Citizens common shares will be issued, and consideration of $14.6 million will be paid, in the merger and that no First Citizens or Futura shareholders will perfect dissenters’ rights with respect to the merger. This information will vary if any First Citizens or Futura shareholders perfect dissenters’ rights. For a discussion of the purchase method of accounting, see “The Proposed Merger — Accounting treatment” beginning on page of this prospectus/proxy statement.
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2007 is not necessarily indicative of the combined financial position had the merger been effective at that date. The unaudited pro forma condensed consolidated statements of income are not necessarily indicative of the results of operations that would have occurred had the merger been effective at the beginning of the periods indicated, or of the future results of operations of First Citizens. These pro forma financial statements should be read in conjunction with the historical financial statements and the related notes incorporated elsewhere in this prospectus/proxy statement.
These pro forma financial statements do not include the effects of any potential cost savings which management believes will result from operating the Futura banking business as branches and combining certain operating procedures.
68
First Citizens Banc Corp
Futura Banc Corp.
Pro Forma Condensed Combined Consolidated Balance Sheet
At June 30, 2007
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Pro Forma
| | | | | | | |
| | | Historical
| | | Historical
| | | Adjustments
| | | Footnote
| | | Pro Forma
| |
| | | FCBC | | | FBC | | | Debit/(Credit) | | | Reference | | | Combined | |
| | | (Unaudited) | |
| | | (In thousands except per share data) | |
| |
ASSETS | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 17,565 | | | $ | 5,997 | | | $ | (5,997 | ) | | | (8 | ) | | $ | 17,565 | |
| Federal funds sold | | | — | | | | 12,346 | | | | (12,346 | ) | | | (1 | ) | | | — | |
| Securities available for sale | | | 103,146 | | | | 29,663 | | | | — | | | | | | | | 132,809 | |
| Securities held to maturity | | | 2 | | | | — | | | | — | | | | | | | | 2 | |
| Bank stocks | | | 11,147 | | | | 3,412 | | | | — | | | | | | | | 14,559 | |
| Loans, net | | | 579,481 | | | | 212,572 | | | | (3,489 | ) | | | (2 | )(3) | | | 788,564 | |
| Premises and equipment | | | 11,596 | | | | 9,376 | | | | 92 | | | | (4 | ) | | | 21,064 | |
| Goodwill | | | 26,093 | | | | 165 | | | | 37,658 | | | | (5 | ) | | | 63,916 | |
| Other identified intangible assets | | | 2,970 | | | | — | | | | 6,865 | | | | (6 | ) | | | 9,835 | |
| Bank owned life insurance | | | 10,620 | | | | — | | | | — | | | | | | | | 10,620 | |
| Accrued interest and other assets | | | 12,120 | | | | 2,951 | | | | — | | | | | | | | 15,071 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Assets | | $ | 774,740 | | | $ | 276,482 | | | $ | 22,783 | | | | | | | $ | 1,074,005 | |
| | | | | | | | | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | |
| Deposits | | $ | 550,229 | | | $ | 230,674 | | | $ | 998 | | | | (7 | ) | | $ | 781,901 | |
| Securities sold under repurchase agreements | | | | | | | | | | | 18,998 | | | | — | | | | 18,998 | |
| FHLB borrowings | | | 86,777 | | | | 14,543 | | | | (12,346 | ) | | | (1 | ) | | | 88,974 | |
| Other borrowings | | | 32,801 | | | | 4,648 | | | | 8,549 | | | | (8 | )(9) | | | 45,998 | |
| Accrued expenses and other liabilities | | | 9,774 | | | | 2,019 | | | | 2,057 | | | | (10 | ) | | | 13,850 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities | | | 698,579 | | | | 251,884 | | | | (742 | ) | | | | | | | 949,721 | |
| Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | |
| Common stock | | | 68,430 | | | | 20,044 | | | | 28,079 | | | | (11 | ) | | | 116,553 | |
| Retained earnings | | | 27,246 | | | | 4,901 | | | | (4,901 | ) | | | (11 | ) | | | 27,246 | |
| Treasury stock | | | (16,842 | ) | | | (271 | ) | | | 271 | | | | (11 | ) | | | (16,842 | ) |
| Accumulated other comprehensive income | | | (2,673 | ) | | | (76 | ) | | | 76 | | | | (11 | ) | | | (2,673 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total Shareholders’ Equity | | | 76,161 | | | | 24,598 | | | | 23,525 | | | | | | | | 124,284 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities and Shareholders’ Equity | | $ | 774,740 | | | $ | 276,482 | | | $ | 22,783 | | | | | | | $ | 1,074,005 | |
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First Citizens Banc Corp
Futura Banc Corp.
Pro Forma Condensed Combined Consolidated Statement of Income
For the Six Months Ended June 30, 2007
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Pro Forma
| | | | | | | |
| | | Historical
| | | Historical
| | | Adjustments
| | | Footnote
| | | Pro Forma
| |
| | | FCBC | | | FBC | | | Debit/(Credit) | | | Reference | | | Combined | |
| | | (Unaudited) | |
| | | (In thousands except per share data) | |
| |
| Interest income | | $ | 24,101 | | | $ | 9,401 | | | $ | 79 | | | | (2 | )(12) | | $ | 33,581 | |
| Interest expense | | | 9,587 | | | | 4,100 | | | | 385 | | | | (7 | )(8) | | | 14,072 | |
| Net interest income | | | 14,514 | | | | 5,301 | | | | (306 | ) | | | | | | | 19,509 | |
| Provision for loan losses | | | 451 | | | | 598 | | | | | | | | | | | | 1,049 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income after provision | | | 14,063 | | | | 4,703 | | | | (306 | ) | | | | | | | 18,460 | |
| Non-interest income | | | 3,630 | | | | 1,155 | | | | — | | | | | | | | 4,785 | |
| Non-interest expense | | | 13,155 | | | | 4,895 | | | | 450 | | | | (4 | )(6)(9) | | | 18,500 | |
| Income (loss) before income taxes | | | 4,538 | | | | 963 | | | | (756 | ) | | | | | | | 4,745 | |
| Provision for income taxes (benefit) | | | 1,309 | | | | 138 | | | | (265 | ) | | | (13 | ) | | | 1,182 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Income (loss) | | $ | 3,229 | | | $ | 825 | | | $ | (491 | ) | | | | | | $ | 3,563 | |
| Earnings per share: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.59 | | | $ | 0.31 | | | | | | | | | | | | | |
| Diluted | | $ | 0.59 | | | $ | 0.31 | | | | | | | | | | | | | |
| Pro forma earnings per share | | | | | | | | | | | | | | | | | | | | |
| Basic | | | | | | | | | | | | | | | (14 | ) | | $ | 0.45 | |
| Diluted | | | | | | | | | | | | | | | (14 | ) | | $ | 0.45 | |
70
First Citizens Banc Corp
Futura Banc Corp.
Pro Forma Condensed Combined Consolidated Statement of Income
For the Twelve Months Ended December 31, 2006
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Pro Forma
| | | | | | | |
| | | Historical
| | | Historical
| | | Adjustments
| | | Footnote
| | | Pro Forma
| |
| | | FCBC | | | FBC | | | Debit/(Credit) | | | Reference | | | Combined | |
| | | (Unaudited) | |
| | | (In thousands except per share data) | |
| |
| Interest income | | $ | 45,876 | | | $ | 18,132 | | | $ | 158 | | | | (2 | )(12) | | $ | 64,164 | |
| Interest expense | | | 15,615 | | | | 6,820 | | | | 770 | | | | (7 | )(8) | | | 23,205 | |
| Net interest income | | | 30,261 | | | | 11,312 | | | | (612 | ) | | | | | | | 40,961 | |
| Provision for loan losses | | | 1,128 | | | | — | | | | | | | | | | | | 1,128 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income after provision | | | 29,133 | | | | 11,312 | | | | (612 | ) | | | | | | | 39,833 | |
| Non-interest income | | | 6,670 | | | | 3,101 | | | | — | | | | | | | | 9,771 | |
| Non-interest expense | | | 26,977 | | | | 10,253 | | | | 900 | | | | (4 | )(6)(9) | | | 38,130 | |
| Income (loss) before income taxes | | | 8,826 | | | | 4,160 | | | | (1,512 | ) | | | | | | | 11,474 | |
| Provision for income taxes (benefit) | | | 2,666 | | | | 1,260 | | | | (529 | ) | | | (13 | ) | | | 3,397 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Income (loss) | | $ | 6,160 | | | $ | 2,900 | | | $ | (983 | ) | | | | | | $ | 8,077 | |
| Earnings per share: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 1.12 | | | $ | 1.09 | | | | | | | | | | | | | |
| Diluted | | $ | 1.12 | | | $ | 1.07 | | | | | | | | | | | | | |
| Pro forma earnings per share | | | | | | | | | | | | | | | | | | | | |
| Basic | | | | | | | | | | | | | | | (15 | ) | | $ | 1.01 | |
| Diluted | | | | | | | | | | | | | | | (15 | ) | | $ | 1.01 | |
Notes:
| | |
(1) | | To reflect the planned use of Futura’s overnight funds sold to reduce First Citizens’ overnight funds purchased. |
|
(2) | | Represents the estimated fair market value adjustment related to the average yield on the loan portfolio of $1,216 and is assumed to amortize into interest income on a level yield basis over the estimated period to maturity or repricingwritten consent of the portfolio, which averages 71/2 years. |
|
(3) | | Represents the estimated fair value adjustmentsholders of $2,273 relatedrecord of shares entitling them to loans for which First Citizens’ plans for resolution and disposition of collateral differ from Futura’s current work-out plans. |
|
(4) | | Represents the estimated fair market value adjustment related to the office properties and is assumed to amortize on a straight line basis over the estimated life of 39 years. |
|
(5) | | Represents the estimateexercise 2/3 of the excess of the purchase price plus direct acquisition costs over the estimated fair value of the net assets acquired. |
|
(6) | | Represents the establishment of the estimated core deposit intangible and deposit customer relationship intangible of $6,054 and loan customer relationship intangible of $811. The deposit and loan intangibles are assumed to amortize into non-interest expense over 10 years and 71/2 years, respectively, using accelerated methods. |
|
(7) | | Represents the estimated fair market value adjustment related to deposits and is assumed to amortize into interest expensevoting power on a level yield basis over the estimated remaining maturity of the deposits which averages 11 months for certificates of deposits and 13 months for IRAs.such proposal. |
71
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF COMUNIBANC
| | |
(8) | | Represents the estimated amount of cash consideration to be paid totalling $14,632, of which $5,997 is expected to be provided through existing cash and cash equivalents and $8,635 will be borrowed. The borrowing is expected to be variable at 3 month LIBOR plus 1.25%. |
| | |
(9) | | Represents the estimated fair market value adjustment related to subordinated debentures of $86 and is assumed to amortize over the remaining life to the call date (3 years). |
| | |
(10) | | Represents accrual of certain estimated acquisition costs of $1,162 and deferred taxes related to estimated purchase accounting adjustments of $895. |
| | |
(11) | | Represents the elimination of Futura equity on a historical basis and the issuance of an estimated 2,455,549 common shares of First Citizens based on the exchange ratio of 1.1726. |
|
(12) | | Represents amortization of fair value adjustment related to investment securities on a level yield basis over their estimated remaining lives, which average 36 months. |
|
(13) | | Represents the income tax effect of the estimated purchase accounting adjustments using an effective tax rate of 35%. |
|
(14) | | Basic and diluted pro forma earnings per share for the six months ended June 30, 2007 have been computed based on 7,898,157 weighted average shares outstanding. |
|
(15) | | Basic and diluted pro forma earnings per share for the year ended December 31, 2006 have been computed based on 7,975,941 weighted average shares outstanding. |
72
Information With Respect to FuturaDescription of Futura’s businessFutura Banc Corp., an Ohio corporation, is a bank holding company which provides a full complement of community-based financial services through its subsidiaries, Champaign National Bank (“Champaign Bank”) and Champaign Investment Company. Substantially all of Futura’s assets, revenue and income come in the form of dividends from Champaign Bank. Futura’s principal office is located in Urbana, Ohio, and Champaign Bank offers financial services primarily in five Ohio counties, including Champaign, Logan, Franklin, Madison and Summit counties.
Champaign Bank was founded in 1851 and became the first national bank in Champaign County. The bank has always served the farm and agribusiness industry. During the past 15 years, the bank has expanded its operations and established offices in suburban markets of Columbus, Ohio. In 1999, the bank opened an office in the Fairlawn/Akron area of Summit County. These expansions have allowed the bank to capitalize on economic growth opportunities and to diversify its agricultural loan concentration. Champaign Bank currently has eight branch offices that offer financial services including business lending and cash management, personal banking, mortgage and consumer loans and trust services.
Champaign Investment Company, an Ohio corporation, is a registered broker dealer and registered investment advisory firm under the Investment Advisors Act of 1940, as amended. Champaign Investment Company provides investment management, investment advisory and brokerage services, financial planning, retirement planning and selective insurance products to its clients.
Market price of and dividends on Futura common sharesPublic markets
Futura common shares trade over the counter and trading is limited. Quotations for Futura’s common shares appear on the OTC Bulletin Board under the symbol “FUBK.” As of, 2007, there were 2,617,314 Futura common shares outstanding, which were held by approximately 435 holders of record. The number of shareholders does not reflect the number of individuals holding common shares in nominee name through banks, brokerage firms and others. Upon completion of the merger, Futura’s common shares will be delisted from the OTC Bulletin Board. The newly issued First Citizens common shares issuable pursuant to the merger agreement will be listed on the Nasdaq Capital Market.
Market price and dividend information
The following table shows, for the indicated periods, the high and low sales prices for Futura’s common share as reported on the OTC Bulletin Board and the cash dividends declared per Futura common share.
| | | | | | | | | | | | | |
| | | Futura Common Shares | |
| | | High
| | | Low
| | | Cash Dividend
| |
| | | Price | | | Price | | | Declared per Share | |
| |
2005 | | | | | | | | | | | | |
| First Quarter | | $ | 21.00 | | | $ | 20.00 | | | $ | .10 | |
| Second Quarter | | | 20.50 | | | | 16.00 | | | | .10 | |
| Third Quarter | | | 18.25 | | | | 17.00 | | | | .11 | |
| Fourth Quarter | | | 18.50 | | | | 17.35 | | | | .11 | |
2006 | | | | | | | | | | | | |
| First Quarter | | $ | 19.50 | | | $ | 17.45 | | | $ | .11 | |
| Second Quarter | | | 18.73 | | | | 17.00 | | | | .11 | |
| Third Quarter | | | 17.75 | | | | 16.65 | | | | .13 | |
| Fourth Quarter | | | 17.35 | | | | 16.50 | | | | .15 | |
2007 | | | | | | | | | | | | |
| First Quarter | | $ | 16.70 | | | $ | 15.95 | | | $ | .15 | |
| Second Quarter | | | 20.90 | | | | 15.40 | | | | .15 | |
| Third Quarter (Through ) | | | | | | | | | | | | |
73
The last trade in Futura’s common shares reported on the OTC Bulletin Board before announcement of the proposed merger occurred on June 6, 2007. On that date and on , 2007, the latest practicable trading day before the filing of this document, the high, low and closing sales prices for Futura common shares were as follows:
| | | | | | | | | | | | | |
| | | Futura Common Shares | |
| | | Low | | | High | | | Closing | |
| |
| June 6, 2007 | | $ | 15.46 | | | $ | 15.55 | | | $ | 15.46 | |
| , 2007 | | | | | | | | | | | | |
Futura management’s discussion and analysis of financial condition and results of operations as of June 30, 2007(Dollars in thousands, except per share data)
Introduction
The following paragraphs discuss the significant highlights, changes and trends as they relate to Futura’s financial condition at June 30, 2007, compared to December 31, 2006, and the results of operations for the three-month and six-month periods ended June 30, 2007, compared to the same periods in 2006. This discussion also includes information regarding our financial condition, results of operations, liquidity and capital resources for the three years ended December 31, 2006. This discussion should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements, which are included elsewhere in this proxy statement/prospectus.
Forward-Looking Statements
This discussion includes forward-looking statements relating to such matters as anticipated operating results, business line results, credit quality expectations, prospects for new lines of business, economic trends (including interest rates) and similar matters. These statements are based on the current beliefs and expectations of our management and are subject to risks and uncertainties. While we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate, and accordingly, actual results and experience could differ materially from the anticipated results or other expectations expressed in our forward-looking statements. Factors that could cause actual results or experience to differ from results discussed in the forward-looking statements include, but are not limited to, our merger with First Citizens; regional and national economic conditions; volatility and direction of market interest rates; credit risks of lending activities; governmental legislation and regulation, including changes in accounting regulation or standards; material unforeseen changes in the financial condition or results of operations of our clients; and other risks identified from time to time.
We do not undertake, and specifically disclaim, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements, and the purpose of this section is to secure the use of the safe harbor provisions.
Overview
We are a bank holding company incorporated under the laws of the State of Ohio and own all of the issued and outstanding common shares of Champaign Bank, a bank chartered under the laws of the United States of America. Our activities have been limited primarily to holding the common shares of Champaign Bank and the shares of Champaign Investment Company. Champaign Bank’s business involves attracting deposits from businesses and individual customers and using those deposits to originate commercial, mortgage and consumer loans in its market area, consisting primarily of Champaign, Logan, Franklin, Summit, Madison, Union and contiguous counties in Ohio. Champaign Bank’s primary deposit products are checking, savings and term certificate of deposit accounts, and its primary lending products are commercial and agricultural loans and residential mortgage loans. Champaign Investment Company provides financial planning and investment advisory services.
74
During the first half of 2007, our management’s efforts were focused on executing our 2007 strategies to grow core deposits and business loans, as well as increase noninterest income, especially in the areas of investment and trust management fees, and gains on the sale of government guaranteed business loans. In addition, a significant amount of time and resources were spent evaluating our strategic options and finally negotiating and signing a definitive merger agreement with First Citizens.
In the first half of 2007, we began to feel the impact of certain decisions we made during 2006. The 2006 year-end consolidations of our Lakeview office into our Russells Point office and our operation center into our main office and Dublin facilities had a positive impact on our operating expenses during the first six months of 2007. We believe these savings will continue beyond 2007. Net income declined in the first half of 2007, mainly due to a larger provision for loan losses and accrued interest reversal recorded in connection with loans to a farm customer.
Critical Accounting Policies
We follow financial accounting and reporting policies that are in accordance with U.S. generally accepted accounting principles and conform to general practices within the banking industry. These policies are presented in Note 1 to our audited consolidated financial statements. Some of these accounting policies are considered to be critical accounting policies, which are those policies that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Application of assumptions different from those used by management could result in material changes in our financial position or results of operations. We believe that the judgments, estimates and assumptions used in the preparation of the consolidated financial statements are appropriate given the factual circumstances at the time.
We have identified accounting policies that are critical, and an understanding of these critical accounting policies is necessary to understand our financial statements. One critical accounting policy relates to determining the adequacy of the allowance for loan losses. Futura’s Allowance for Loan Losses Policy is based on a process that incorporates management’s current judgments about the credit quality of the loan portfolio into the determination of the allowance for loan losses in accordance with generally accepted accounting principles and supervisory guidance. Management estimates the appropriate allowance balance by evaluating past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations, estimated value of collateral, economic conditions, and other factors. We believe that an adequate allowance for loan losses has been established. Additional information regarding this Policy is included in Notes 1 and 3 to our audited consolidated financial statements.
Financial Condition
Consolidated assets totaled $276,482 at June 30, 2007, as compared to $269,668 at year-end 2006. This 2.5% growth in assets was funded by increases in interest-bearing deposits and Federal Home Loan Bank advances. Loans declined slightly as new loan growth was offset by approximately $5,000 of unscheduled loan payoffs and by successfully moving several “watch list” credits out of Champaign Bank. As a result, excess cash from the above-noted funding sources was invested primarily in federal funds sold. We believe federal funds remain an attractive investment in the current interest rate environment, because the yield curve does not provide a sufficient incentive to extend interest rate risk. In addition, our management anticipates the need to utilize a portion of these short-term investments in order to fund loan growth in the second half of 2007.
Our allowance for loan losses increased $772 during the first half of 2007 as compared to the year ended December 31, 2006. This increase occurred as a result of actions we took to place $3,300 of loans made to a farm customer on non-accrual status and to record an additional $525 provision for loan losses associated primarily with these loans during the second quarter. Management is working with this customer to liquidate our loan collateral and to pay off these loans. In addition, approximately $127 of accrued interest from 2007 was reversed out of interest income, as its collectability is uncertain. The remaining portion of the increase is a result of net loan loss recoveries of approximately $175 and our normal provision for loan losses.
Growth in interest-bearing deposits occurred both in our business and consumer interest-bearing products and in our money market products. Interest-bearing business accounts increased $1,697, or 27%; consumer
75
accounts increased $587, or 2%; and Money Market deposit accounts increased $3,080, or 9%, compared to the year ended December 31, 2006.
Shareholders’ equity declined .03% from $24,605 at year end 2006 to $24,598 at June 30, 2007. The change is primarily attributable to six months earnings of $825, net of the $.30 per share cash dividends paid during the first half of 2007. Approximately $80 of stock was purchased and retired during the first quarter and $106 of stock was issued to the participants in our 401(k) plan.
Results of Operations
Three Months Ended June 30, 2007 and 2006
Net income for the second quarter of 2007 totaled $85, or $.03 per share. This was substantially below net income of $823, or $.30 per share, for the three months ended June 30, 2006. The reduction is primarily attributed to an increase in the provision for loan losses in 2007 of $617, and the $127 reversal of accrued interest on the loans to the farm customer noted above and a decrease of $475 in net interest income. Non-interest income and non-interest expenses both declined by comparable amounts.
Six Months Ended June 30, 2007 and 2006
Net income of $825, or $.31 diluted earnings per share, for the first six months of 2007 was 38% lower than for the first half of 2006. This decline in earnings was caused primarily by the larger provision for loan losses and accrued interest reversal recorded on the loans to the farm customer noted above and a decrease of $489 in net interest income. Other items impacting earnings were a $73 decrease in service charges, a $101 increase in investment and trust management fees, a net reduction of $135 in noninterest expense and a reduction in income tax expense associated with a $108 tax benefit recorded in the first quarter resulting from our charitable donation of our former operating center to a local university.
Years Ended December 31, 2006, 2005 and 2004
We experienced significant improvement in our operating results in 2006. Net income in 2006 totaled $2,900, compared to a net loss of $55 in 2005. During 2006, the rising interest rate environment and inverted yield curve had a significant impact on net interest income. The net growth in earning assets during 2006 was sufficient to offset the rising cost of funds. Noninterest income increased by $598 in 2006, compared to 2005. This increase resulted from a $126 increase in investment and trust management fees and the recognition of a $626 deferred gain on the 2005 sale of our former Dublin, Ohio office.
These items of noninterest income were partially offset by increases in noninterest expense attributable to incentive compensation payments to employees in recognition of our 2006 earnings performance and $300 of nonrecurring occupancy and furniture, equipment and data processing expenses. This nonrecurring expense resulted from:
| | |
| • | the closing and donation of our downtown operations center to Urbana University; |
|
| • | consolidation of our leased Lakeview facility into our Russells Point office; and |
|
| • | the transition of our check processing system to remote image capture technology, allowing the elimination of certain equipment and the implementation of full image capture at the branch level and remote deposits by customers using scanning technology. |
While these actions increased our noninterest expenses in 2006, we expect that they will result in cost savings for us in 2007 and beyond.
In addition to the improvements noted above, our asset quality improved during 2006, compared to 2005, allowing a reduction in the provision for loan losses from $4,740 in 2005 to $0 in 2006.
Our operating results in 2005 were impacted negatively by a $4,379 loan loss that we incurred in the first quarter of 2005 when a borrower in Akron defaulted on its loans without notice and ceased operations. During the remainder of 2005, we successfully brought in a new management team in Akron, issued $4,648 of subordinated debentures as part of a pool of trust preferred securities to supplement our regulatory capital and consolidated our two existing Dublin area offices into a new facility.
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We started 2004 with great optimism. Loan growth exceeded 9% for the year and core earnings remained strong. We completed our main office expansion project in Urbana, opened our new office in Hilliard and moved to our new business and retail banking facility in Akron. In November of 2004, Champaign Bank resolved litigation in which we had vigorously defended ourselves for three and one-half years. The settlement resulted in a $4,381 expense to Champaign Bank and reduced 2004 net income by approximately $2,891. Our Board of Directors believed that eliminating the distraction of this litigation through settlement was in the best interests of our shareholders as the settlement avoided any further diversion of our resources and potentially substantial defense costs. As a result of the expense related to settling the lawsuit, net income was $391 for 2004.
Financial Condition
Total assets grew 1.4% in 2006 to $269,668 at year end. The most significant balance sheet change from 2005 to 2006 was a $9,339 increase in total loans. This growth occurred in both our residential and commercial real estate portfolios. Residential real estate loans grew by $4,207, or 8%, while commercial real estate loans grew by $6,395, almost a 7% increase. This loan growth and a reduction in Federal Home Loan Bank advances were funded from interest-bearing deposits and cash and cash equivalents. The interest-bearing deposit growth occurred in three categories: interest bearing demand accounts, which grew by $4,608 to $45,972; money market accounts in denominations greater than $100, which grew by $3,408, a 28% increase; and time deposit accounts of $100 or more, which grew to $50,079, an increase of $9,671. The increase in interest-bearing deposits in 2006 was partially offset by a $2,805 decrease in noninterest-bearing deposits.
As previously discussed, 2005 was a staff rebuilding year. As such, total assets shrank by $19,734 to $265,965, and aggregate loans shrank by $26,356 to $206,202. Commercial loans declined by $11,539, commercial real estate loans declined by $6,572, and construction loans declined by $4,982. Investments, interest bearing time deposits and federal funds grew by $5,429. Interest-bearing deposit balances decreased by $23,821 to $182,779. We also issued $4,648 in subordinated debentures in 2005.
Shareholders’ equity increased 4.4% to $24,605 in 2006 after a $1,718 decline during 2005. The decline in 2005 occurred as a result of the net loss of $55, a reduction in accumulated comprehensive income of $206, the distribution of cash dividends totaling $1,121 and the repurchase and retirement of $385 of our common shares. The increase in shareholders’ equity during 2006 occurred as a result of earnings of $2,900 net of cash dividends totaling $1,325, and the repurchase and retirement of our shares aggregating $768. This increase was partially offset by the issuance of $233 of common shares from the exercise of stock options.
Cash dividends declared totaled $.40, $.42 and $.50 in 2004, 2005 and 2006, respectively. Shareholders’ equity was 8.85%, 8.86% and 9.12% of total assets as of year end 2004, 2005 and 2006. During 2006, Champaign Bank exceeded all capital requirements to be “well capitalized” under the prompt corrective action regulations.
Banking regulations set certain limitations on Champaign Bank’s ability to make capital distributions. Generally, capital distributions are limited to the undistributed net income for the current and immediately preceding two years. For 2007, Champaign Bank must obtain regulatory approval to pay dividends to Futura until 2007 net income exceeds $1,677. This limitation is not expected to have a negative impact on our ability to pay normal cash dividends or operate in the ordinary course of business, as Futura had $3,208 of cash and cash equivalents at December 31, 2006.
Results of Operations
Net income totaled $2,900, or $1.07 diluted earnings per share, for 2006. This represented a return on average equity of 11.96% and a return on average assets of 1.09%. Our 2006 net income compares favorably to the net loss of $55 in 2005 and the net income of $391 in 2004, each of which occurred primarily as the result of the two separate and nonrecurring events discussed above. As disclosed in the Five Year Summary of Selected Data, Futura earned $3,326 in 2003 and $3,644 in 2002.
Our principal source of income is net interest income, and the major determining factors of income in any given year are our net interest income and the quality of our loan portfolio. Net interest income was $11,312 in 2006, $11,235 in 2005 and $11,865 in 2004. In 2006 interest income increased 12.66% and interest
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expense jumped 40.35% as a result of the inverted yield curve and the relatively short duration of our highest-cost funding sources. Our net interest margin increased from 4.40% in 2005 to 4.69% in 2006 which caused the slight increase in net interest income despite a decrease in average earning assets. The decline in 2005 net interest income as compared to 2004 was primarily the result of the level of nonperforming loans, a decline in loan balances caused from the movement of problem loans out of Champaign Bank and normal loan repayment activity that was not replaced with new business as a result of the management time and effort spent addressing the large loan loss in Akron.
The provision for loan losses was $0 in 2006, $4,740 in 2005 and $985 in 2004. The allowance for loan losses balance is analyzed on a quarterly basis and an appropriate provision is recorded to provide an adequate allowance based on the known and inherent risks in the loan portfolio as well as other factors such as delinquency trends and local economic conditions. The allowance was $2,238 and $1,680 at year end 2005 and 2006, respectively. Net charge-offs were $737 in 2004, $5,168 in 2005 and $558 in 2006. Nonperforming loans as a percentage of total loans were 1.85%, 0.94% and .18% at year end 2004, 2005 and 2006, respectively.
Noninterest income was $3,101 in 2006, $2,503 in 2005 and $2,456 in 2004. Service charges on deposit accounts have trended downward over the past three years as customers have opted for accounts that do not charge service fees. In response, we have modified our new checking accounts to be free of service charges, although interest is not paid on low balances and interest rates are tiered. Accordingly, some of the service charge income that has been lost is recovered as interest expense savings. We have made solid progress in growing investment and trust management fees over that past three years. This annual growth of $126 in 2006 and $36 in 2005 is substantially all attributable to trust division revenue growth. Net gains on loan sales were consistent in all three years, ranging from a high of $208 to a low of $186. Based on residential mortgage market conditions and competitive factors, Champaign Bank plans to focus more emphasis on the origination and sale of government guaranteed business loans in 2007. Champaign Bank has not originated loans that are considered “sub-prime.” Accordingly, recent regulatory guidance and government initiatives involving this type of lending will not have an impact on our current business.
As discussed above, the most significant change in noninterest income in the three-year period and the cause of the large jump in noninterest income in 2006 compared to 2005 was the gain on the sale of our former Dublin office. This building was sold in 2005 in conjunction with consolidation of two Champaign Bank offices into a new 12,000 square foot regional financial center. We deferred the gain from the sale in 2005 based on accounting guidance involving the amount of the purchase price financed by Champaign Bank. The accounting income recognition requirements were satisfied in 2006 and we recorded a gain of $626.
Growth in noninterest income will continue to play an important part in our profitability and net income growth. Growth in trust and wealth management fee income, loan fee and business loan sale gains and realization of deposit service fee income to the extent market factors will allow those fees to be charged will remain a focus. As demonstrated by our consolidation of offices, elimination of an outdated operations center and the updates we have made to our technology, we believe we have reduced those related expenses on a going forward basis. In addition, we believe that profitable branches in the future will need to serve a larger number of loan and deposit customers than have been historically served. Therefore, we are utilizing technology to improve service delivery channels and focusing on growing our current offices rather than opening new offices. We believe our growth will continue to be dependent on our community banking principles, the levels of economic growth within our markets and the expertise we have in serving the business banking needs of key segments such as agribusiness and commercial real estate.
The audited financial statements and accompanying footnotes as well as the supplementary financial schedules, included elsewhere in this prospectus/proxy statement, provide additional information about Futura and its consolidated financial condition and operating results.
Liquidity
We actively manage our cash position on a daily basis to ensure adequate liquidity and the investment of all available funds. Cash needs are closely monitored utilizing information on scheduled loan repayments and the maturities of both loans and time deposits. Pipeline reports are utilized to monitor cash needs for new
78
loans approved, committed and scheduled to close. In addition, senior management is actively involved in the annual budgeting process as well as the quarterly forecasting and asset/liability modeling activities. These activities are carried out under the quarterly oversight of the ALCO committee of our Board of Directors.
Quantitative and qualitative disclosures about market riskFutura considers its primary market exposure to be interest rate risk. Liquidity risk is considered to a lesser extent due to Futura’s access to funds, relatively stable core deposit base and liquid investments. All of Futura’s transactions are denominated in U.S. dollars so Futura has no foreign exchange exposure.
Interest rate risk is monitored closely by senior management, with quarterly oversight by the Asset/Liability Committee (“ALCO”) of the Futura Board of Directors. Important considerations in asset/liability management are liquidity, the balance between interest rate sensitive assets and liabilities and adequate levels of capital. Liquidity management involves meeting the cash flow needs of the company primarily as a result of customer loan and deposit transactions. The management of interest rate sensitivity focuses on the structure, maturity and repricing characteristics of earning assets and interest bearing liabilities. The goal of balancing interest rate sensitive assets and liabilities is to maintain stability in the net interest margin through periods of changing interest rates.
Simulation analysis is used to monitor Futura’s exposure to changes in interest rates and the impact of changing interest rates on net interest income. The following table shows the effect on net interest income and the net present value of equity in the event of a sudden and sustained 200 basis point increase or decrease in market interest rates. This simulation assumes that both short- and long-term interest rates change in the same direction and by the same magnitude.
| | | | | | | | | | | | | | | | | |
Changes in Interest Rate
| | 1st Quarter
| | | 2006
| | | 2005
| | | ALCO
| |
(Basis Points) | | 2007 Results | | | Result | | | Result | | | Guidelines | |
| |
| Net Interest Income Change | | | | | | | | | | | | | | | | |
| +200 | | | (2.72 | )% | | | (2.97 | )% | | | 1.78 | % | | | (10.00 | )% |
| -200 | | | (0.03 | )% | | | (0.45 | )% | | | (4.63 | )% | | | (10.00 | )% |
| Net Present Value of Equity Change | | | | | | | | | | | | | | | | |
| +200 | | | (10.94 | )% | | | (12.05 | )% | | | (1.92 | )% | | | (20.00 | )% |
| -200 | | | 1.01 | % | | | 1.02 | % | | | (2.92 | )% | | | (20.00 | )% |
At the end of the first quarter of 2007 and at year-end 2006, Futura’s net interest income was projected to remain stable in a 200 basis point declining rate environment and decline approximately 3% in a 200 basis point rising rate environment. Short-term interest rates increased in 2006 and long-term rates did not. Generally, this caused interest expense on Futura’s funding sources to increase faster than the rates earned on loans and investments. This trend continued in the first quarter of 2007.
The results of this analysis comply with the guidelines established by the ALCO committee of the Futura Board of Directors, which are monitored quarterly.
The largest amount of interest sensitive assets and liabilities mature or reprice within twelve months. Prepayments on loans, loan delinquencies, early withdrawal of time deposits or reduction in demand deposit balances as a result of cash needs of business customers can impact net interest income as changes in rate sensitive assets and liabilities may not be equal.
Interest rate sensitivity management provides some degree of protection against volatility in net interest income. It is not possible or necessarily desirable to eliminate risk completely by matching interest sensitive assets and liabilities. Other factors, such as loan demand, interest rate outlook, economic conditions, regulatory considerations and strategic planning have an effect on balance sheet structure.
Futura has no market risk sensitive instruments held for trading purposes, nor does it hold derivative financial instruments. It has no intention of purchasing such instruments.
Security ownership of certain beneficial owners and management of FuturaThe following table sets forth as of , 2007, (i)information with respect to the total number and percentage of FuturaComunibanc common shares beneficially owned by each Futura director each Futuraof Comunibanc, by certain executive officerofficers of Comunibanc and eachby persons known to us who may be beneficial
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owner owners of more than 5% of Futura’s voting securities and allComunibanc common shares. The table also shows the number of shares owned by the directors and executive officers of Futura as a group and (ii) after consummationas of March 25, 2022. Except as otherwise indicated, each person shown in the merger, the total number and percentage of First Citizens’ common shares beneficially owned by those same persons. Each beneficial owner, except as noted,table has sole or shared voting and investment power with respect to the common shares indicated. The business address of Futura listed as owned by such person. Aseach director and executive officer of , 2007, there were 2,617,314 Futura common shares outstanding.
| | | | | | | | | | | | | | | | | |
| | | Amount and
| | | | | | Post-Merger
| | | | |
| | | Nature of
| | | | | | Amount and Nature
| | | Post-Merger
| |
Name and Address of
| | Beneficial
| | | Percentage of
| | | of Beneficial
| | | Percentage of
| |
Beneficial Owner(1) | | Ownership | | | Ownership(2) | | | Ownership(3) | | | Ownership(4) | |
| |
| Gregg N. Bedell(5) | | | 15,816 | | | | * | | | | 14,321 | | | | | |
| Barry W. Boerger(6) | | | 8,794 | | | | * | | | | 7,733 | | | | | |
| Robert J. Gantzer(7) | | | 79,701 | | | | 3.0 | % | | | 37,473 | | | | | |
| Jerry L. Gecowets(8) | | | 114,936 | | | | 4.4 | % | | | 107,303 | | | | | |
| Steven A. Glock(9) | | | 22,021 | | | | * | | | | 2,078 | | | | | |
| Lilli A. Johnson(10) | | | 113,055 | | | | 4.3 | % | | | 101,982 | | | | | |
| Michael J. Lamping(11) | | | 197,141 | | | | 7.2 | % | | | 82,236 | | | | | |
| Allen R. Maurice(12) | | | 99,087 | | | | 3.8 | % | | | 83,827 | | | | | |
| David A. Shiffer(13) | | | 45,768 | | | | 1.7 | % | | | 42,418 | | | | | |
| Richard A. Weidrick(14) | | | 5,097 | | | | * | | | | 4,266 | | | | | |
All directors and officers as a group (31 persons) (15) | | | 836,974 | | | | 29.3 | % | | | 556,697 | | | | | |
| | | | | | | | |
Name and Position(s)
of Director or Executive Officer | | Number of
Shares of
Common Stock
Beneficially
Owned (1) | | | Percent of
Common shares
Outstanding | |
Directors and Executive Officers | | | | | | | | |
William L. Wendt Director and President/Chairman | | | 55,082 | (2) | | | 6.65 | % |
Anthony Grieser Director and Treasurer | | | 340 | | | | * | |
Paul K. Chamberlin Director and Secretary | | | 700 | | | | * | |
Richard A. Fisher Director | | | 600 | | | | * | |
Jacob A. Freppel Director | | | 0 | | | | * | |
Rick L. Fruth Director | | | 1,160 | | | | * | |
Nathan E. Weaks Director | | | 1,500 | | | | * | |
Directors and Executive Officers as a Group ( 7 persons) | | | 59,382 | | | | 7.17 | % |
Beneficial Owners of More than 5% | | | | | | | | |
William L. Wendt c/o Henry County Bank 122 E. Washington Street Napoleon, Ohio 43545 | | | 55,082 | | | | 6.65 | % |
| * | | |
* | | DenotesIndicates less than 1% of ownership.the shares of Comunibanc Common shares Outstanding. |
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(1)1 | | The address for eachinformation contained in this column is based upon information furnished to the Company by the named individuals and the shareholder records of the individual directors and executives of Futura isc/o Futura Banc Corp., 601 Scioto Street, Urbana, Ohio 43078. |
|
(2) | | Calculated based onCompany. Except where otherwise indicated, this column represents the number of common shares of Futura outstanding on , 2007 plus the number of options that arebeneficially owned, which includes shares as to which a person has sole or could be exercisable within 60 days of , 2007 for that person.shared voting and/or investment power. |
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(3)2 | | Calculated based on assumption that each directorMr. Wendt owns 35,989 shares directly or officer elects to receive the merger consideration in 20% cashjointly with a spouse and 80% stockbeneficially owns 18,442 and receives cash for any exercisable option. |
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(4) | | Calculated based on the number of common shares of First Citizens outstanding on , 2007. |
|
(5) | | Includes options to purchase 550 shares. |
|
(6) | | Includes options to purchase 550 shares. |
|
(7) | | Includes options to purchase 39,755 shares and 23, 642 shares held in Futura’s 401(k) Plan. |
|
(8) | | Includes options to purchase 550 shares and 20,763742 shares held by Gosiger, Inc., over which Mr. Gecowets has control. |
|
(9) | | Includes options to purchase 19,806 shares. |
|
(10) | | Includes options to purchase 4,341 shareshis spouse and 54,164 shares held in trust. |
|
(11) | | Includes options to purchase 109,476 shares and 4,524 shares held indirectly through Mr. Lamping’s children. |
|
(12) | | Includes options to purchase 9,727 shares and 1,344 shares held indirectly through Mr. Maurice’s children. |
|
(13) | | Includes options to purchase 550 shares. |
|
(14) | | Includes options to purchase 550 shares. |
|
(15) | | Includes options to purchase a total of 243,532 shares.as custodian for his grandchildren, respectively. |
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EXPERTS
Civista
5% or Greater Shareholder
| | | | | | | | | | | | | | | | | |
| | | | | | | Post-Merger
| | |
| | | | | | | Amount and
| | |
| | | | | | | Nature of
| | Post-Merger
|
Name and Address of
| | Amount and Nature of
| | Percentage of
| | Beneficial
| | Percentage of
|
Beneficial Owner | | Beneficial Ownership | | Ownership(1) | | Ownership(2) | | Ownership(3) |
| |
Joseph Cimino
5869 Heritage Lakes Dr. | | | | | | | | | | | | | | | | |
Hilliard, Ohio43026-7617 | | | 138,760 | (4) | | | 5.3 | % | | | 130,168 | | | | | |
| | |
(1) | | Calculated based on the number of common shares of Futura outstanding on , 2007 (in total, 2,617,314). |
|
(2) | | Calculated based on assumption that shareholder elects to receive the merger consideration in 20% cash and 80% stock. |
|
(3) | | Calculated based on the number of common shares of First Citizens outstanding on , 2007. |
| | |
(4) | | Amount owned as of June 19, 2007, according to Futura records. |
First Citizens has selected the following current directors of Futura to serve on the First Citizens Board of Directors following the completion of the merger. These directors will be appointed to the Board of Directors in accordance with the terms of the merger agreement and will serve until the next annual shareholders meeting of First Citizens, at which time they will be nominated for election as directors, subject to certain conditions.
Barry W. Boerger, age 57, has served as a director of both Futura and Champaign Bank since 2003. Mr. Boerger is a self-employed farmer operating a grain farming business in Milford Center, Ohio.
Allen R. Maurice, age 63, has served as a director of Futura since 1994 and as a director of Champaign Bank since 1977. Mr. Maurice is a partner in the law firm of Wagner, Maurice, Davidson & Gilbert Co., L.P.A. and served as general counsel to Champaign Bank.
Richard A. Weidrick, age 43, has served as a director of both Futura and Champaign Bank since 2003. Mr. Weidrick is a certified public accountant and an owner of Weidrick, Livesay, Mitchell & Burge, LLC (“WLMB”) in Akron, Ohio. WLMB is a full service accounting firm founded in 1997 and specializing in family owned businesses and health care practices.
Information With Respect to First CitizensDescription of First Citizens’ businessFirst Citizens is a financial holding company organized and existing under the laws of the State of Ohio and is a registered financial holding company under the Gramm-Leach-Bliley Act of 1999, as amended. Through its wholly-owned banking subsidiary, Citizens Bank, First Citizens is primarily engaged in the business of community banking, which accounts for substantially all of its revenue, operating income and assets. At June 30, 2007, First Citizens had total consolidated assets of approximately $774.7 million and total shareholders’ equity of approximately $76.2 million.
Citizens Bank, a commercial bank organized and existing under the laws of the State of Ohio, maintains its main office at 100 East Water Street, Sandusky, Ohio 44870. Citizens Bank conducts a general banking business that involves collecting customer deposits, making loans, purchasing securities and offering trust services. Citizens Bank operates two branch banking offices in Perkins Township (Sandusky, Ohio), two branch banking offices in Norwalk, Ohio, one branch banking office in Berlin Heights, Ohio, one branch banking office in Huron, Ohio, one branch banking office in Castalia, Ohio and one loan production office in Port Clinton, Ohio. In addition, Citizens has offices located in New Washington, Shelby, Willard, Crestline and the villages of Chatfield, Tiro, Richwood, Green Camp, Greenwich, Plymouth and Shiloh, all in Ohio, and also has a loan production office in Marion, Ohio.
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First Citizens also has three wholly-owned non-bank subsidiaries that provide services related to its primary banking business: (1) SCC Resources, Inc., a data processing company, provides item-processing services for financial institutions, including Citizens, and other non-related entities; (2) First Citizens Insurance Agency, Inc., an insurance agency, allows First Citizens to participate in commission revenue generated through its third party insurance agreement; and (3) Water Street Properties, Inc., was formed by First Citizens to hold properties repossessed by First Citizens’ subsidiaries. At June 30, 2007, SSC Resources, Inc., accounted for less than one percent of First Citizens’ consolidated assets, and the assets of the other two non-bank subsidiaries were not significant.
First Citizens’ common shares are listed on NASDAQ under the symbol “FCZA.”
Incorporation by referenceThe Securities and Exchange Commission allows First Citizens “incorporate by reference” into this prospectus/proxy statement. This means that First Citizens can disclose important information to you by referring you to another document separately filed with or furnished to the Securities and Exchange Commission. The information incorporated by reference is deemed to be part of this prospectus/proxy statement, except for any information superseded by information contained in this prospectus/proxy statement or in later-filed documents incorporated by reference in this prospectus/proxy statement. You should read the information relating to First Citizens contained in this prospectus/proxy statement together with the information in the documents incorporated by reference into this prospectus/proxy statement.
This prospectus/proxy statement incorporates by reference the documents listed below that First Citizens has previously filed with or furnished to the Securities and Exchange Commission and any documents filed by First Citizens with the Securities and Exchange Commission after the date of this prospectus/proxy statement and prior to the special meeting of First Citizens shareholders to be held on , 2007, under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended.
| | |
SEC Filings (File No. 000-25980)
| | Period/Date of Filing
|
|
Annual Report onForm 10-K
| | Fiscal year ended December 31, 2006 |
Quarterly Reports onForm 10-Q
| | Quarterly periods ended March 31, 2007 and June 30, 2007 |
Current Reports onForm 8-K
| | Filed/furnished on March 5, 2007, March 23, 2007, April 19, 2007, June 12, 2007, June 25, 2007 and July 3, 2007 |
Definitive Proxy Statement for the 2007 Annual Meeting of Shareholders of First Citizens | | Filed on March 19, 2007 |
This prospectus/proxy statement incorporates by reference important business and financial information that is not included or delivered with the prospectus/proxy statement. You can request a free copy of any or all of these documents, including exhibits that are specifically incorporated by reference into these documents, by writing to or calling First Citizens at:
First Citizens Banc Corp
100 East Water Street
Sandusky, Ohio 44870
Attention: James E. McGookey, Secretary
(419) 625-4121
In order to ensure timely delivery of documents before the respective special meetings, any requests for documents by First Citizens shareholders should be received by First Citizens no later than , 2007, and any requests for documents by Futura shareholders should be received by First Citizens no later than , 2007.
You may also obtain copies of the documents from the Securities and Exchange Commission through its website. See “Where You Can Find More Information” on page .
Following the merger, First Citizens will continue to be regulated by the information, reporting and proxy statement requirements of the Securities Exchange Act of 1934, as amended.
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The consolidated financial statements of First Citizens as of December 31, 2006 and 2005, and for the three years ended December 31, 2006, includedCivista appearing in First Citizens’Civista’s Annual Report onForm 10-K for the fiscal year ended December 31, 2006,2021, and First Citizens management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness ofCivista’s internal control over financial reporting as of December 31, 2006,2021 have been audited by Crowe Chizek and Company LLC,BKD, LLP, an independent registered public accounting firm, as set forth in itstheir reports dated February 28, 2007,thereon, included in such Annual Report onForm 10-Kand incorporated herein by referencereference. The consolidated financial statements of Civista, for the years ended December 31, 2020 and December 31, 2019, appearing in this prospectus/proxy statement.Civista’s Annual Report on Form 10-K for the year ended December 31, 2021 and the effectiveness of Civista’s internal control over financial reporting as of December 31, 2020 and December 31, 2019 have been audited by S.R. Snodgrass P.C., an independent registered public accounting firm, as set forth in their reports thereon, included in such Annual Report and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in this prospectus/proxy statement in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Futura as of December 31, 2006 and 2005, and for the three years ended December 31, 2006, included in this prospectus/proxy statement, have been audited by Crowe Chizek and Company LLC, an independent registered public accounting firm, as set forth in its reports on such financial statements and included in this prospectus/proxy statement. Such consolidated financial statements are included in this prospectus/proxy statement in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
Legal MattersLEGAL MATTERS
Vorys, Sater, Seymour and PeaseDinsmore & Shohl LLP has rendered an opinion that the First CitizensCivista common shares to be issued to the FuturaComunibanc shareholders in connection with the mergerMerger have been duly authorized and, if issued as contemplated by the merger agreement,Merger Agreement, will be validly issued, fully paid and non-assessable under the laws of the State of Ohio. Vorys, Sater, Seymour and Pease LLP also has rendered an opinion regarding the materialCertain U.S. federal income tax consequences ofrelating to the merger.
Merger will also be passed upon by Dinsmore & Shohl LLP. Certain U.S. federal income tax consequences relating to the Merger will also be passed upon by Shumaker, Loop & Kendrick LLP.Where You Can Find More InformationINCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
First CitizensThe SEC allows Civista to incorporate certain information into this document by reference to other information that has been filed with the SecuritiesSEC. This means that Civista can disclose important business and Exchange Commission a Registration Statement onForm S-4 underfinancial information to you by referring you to another document filed separately with the Securities Act for the First Citizens common sharesSEC. The information that Civista incorporates by reference is deemed to be issued to Futura shareholders in the merger. This prospectus/proxy statement is a part of the Registration Statement onForm S-4.this proxy statement/prospectus, except for any information that is superseded by information in this document. The rules and regulations of the Securities and Exchange Commission permit us to omit from this prospectus/proxy statement certain information, exhibits and undertakingsdocuments that are containedincorporated by reference contain important information about Civista and you should read this document together with any other documents incorporated by reference in this document. This prospectus incorporates by reference the Registration Statement ondocuments listed below that we have previously filed with the SEC, except to the extent that any information in such filings, including subsequent filings, is deemed “furnished” but not “filed” in accordance with SEC rules.
Civista
This document incorporates by reference the following documents that have previously been filed with the SEC by Civista (File Form S-4.No. 1-36192):
| • | | Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 15, 2022; |
| • | | Definitive Proxy Statement on Schedule 14A filed with the SEC on March 15, 2022; |
| • | | Our Current Reports on Form 8-K, filed on January 10, 2022,January 19, 2022,February 4, 2022 (two separate Current Reports on Form 8-K filed), February 23, 2022, March 1, 2022, and March 3, 2022 only to the extent filed and not furnished; |
| • | | The description of our common shares, which is contained in Exhibit 4 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on March 15, 2022, and as amended by any subsequent amendments and reports filed for the purpose of updating that description; and |
| • | | The descriptions of Civista’s outstanding Series B depositary shares and Civista’s series B preferred shares included in our Registration Statement on Form 8-A filed with the SEC on November 12, 2013, including all amendments and reports filed for the purpose of updating such descriptions. |
In addition, First Citizens files reports, proxy statements and other information with the Securities and Exchange CommissionCivista is incorporating by reference any documents they may file under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended. You can readamended after the date of this document and copyprior to the Registration Statement onForm S-4date of each company’s special meeting of shareholders.
Civista files annual, quarterly and its exhibits, as well as thespecial reports, proxy statements and other business and financial information filed with the SecuritiesSEC. You may obtain the information incorporated by reference and Exchange Commissionany other materials Civista files with the SEC without charge by First Citizens, atfollowing the following location:
Securities and Exchange Commission’s Public Reference Room
100 F Street, N.E.
Room 1580
Washington, D.C. 20549
Please callinstructions in the
Securities and Exchange Commission for moresection entitled “WHERE YOU CAN FIND MORE INFORMATION” in the forepart of this document.Neither Civista nor Comunibanc has authorized anyone to give any information onor make any representation about the operationMerger or its companies that is different from, or in addition to, that contained in this document or in any of the Public Reference Room at1-800-SEC-0330.
First Citizens is an electronic filer, and the Securities and Exchange Commission maintains a Web sitematerials that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission at the following website:http://www.sec.gov. Reports of First Citizens can also be found on the Internet website maintained by First Citizens athttp://www.fcza.com (this uniform resource locator, or URL, is an inactive textual reference only and is not intended to incorporate First Citizens’ websitehave been incorporated into this prospectus/proxy statement).
document. Therefore, if anyone does give you information of this sort, you should not rely on it. If you would likeare in a jurisdiction where offers to request documents from First Citizensexchange or Futura, please do sosell, or solicitations of offers to exchange or purchase, the securities offered by , 2007,this document or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in orderthis document does not extend to receive the documents prior to the First Citizens special meeting, or by , 2007,you. The information contained in order to receive the documents prior to the Futura special meeting.
83
Index to Futura Financial Information | | | | |
| | Page |
|
Financial Statements at andthis document speaks only as of June 30, 2007 (Unaudited):
| | | | |
| | | F-1 | |
| | | F-2 | |
| | | F-3 | |
| | | F-4 | |
Financial Statements at and as of December 31, 2006 and 2005 (Audited):
| | | | |
| | | F-5 | |
| | | F-6 | |
| | | F-7 | |
| | | F-8 | |
| | | F-9 | |
| | | F-10 | |
84
Futura Banc Corp.
Consolidated Balance Sheets
June 30, 2007 and December 31, 2006| | | | | | | | | |
| | | June 30,
| | | December 31,
| |
| | | 2007 | | | 2006 | |
| | | (Unaudited) | |
| |
| ASSETS |
| Cash and due from banks | | $ | 5,997,197 | | | $ | 7,269,192 | |
| Federal funds sold | | | 12,345,830 | | | | 3,292,518 | |
| | | | | | | | | |
| Cash and cash equivalents | | | 18,343,027 | | | | 10,561,710 | |
| Securities available for sale | | | 29,663,065 | | | | 30,145,316 | |
| Total loans | | | 215,022,723 | | | | 215,540,972 | |
| Allowance for loan losses | | | (2,451,676 | ) | | | (1,680,061 | ) |
| | | | | | | | | |
| Loans, net | | | 212,571,047 | | | | 213,860,911 | |
| FHLB and other stock | | | 3,411,850 | | | | 3,411,550 | |
| Premises and equipment, net | | | 9,376,535 | | | | 8,515,094 | |
| Goodwill | | | 165,185 | | | | 165,185 | |
| Other assets | | | 2,951,149 | | | | 3,008,572 | |
| | | | | | | | | |
| Total assets | | $ | 276,481,858 | | | $ | 269,668,338 | |
| | | | | | | | | |
| |
| LIABILITIES |
| Deposits | | | | | | | | |
| Noninterest-bearing | | $ | 32,566,778 | | | $ | 35,495,891 | |
| Interest-bearing | | | 198,106,862 | | | | 192,657,656 | |
| | | | | | | | | |
| Total deposits | | | 230,673,640 | | | | 228,153,547 | |
| Other short term borrowings | | | 16,256 | | | | 15,282 | |
| Federal Home Loan Bank advances | | | 14,526,758 | | | | 9,839,715 | |
| Subordinated debentures | | | 4,648,000 | | | | 4,648,000 | |
| Other liabilities | | | 2,018,919 | | | | 2,407,198 | |
| | | | | | | | | |
| Total liabilities | | | 251,883,573 | | | | 245,063,742 | |
| | | | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | | |
| Common stock, no par value; 5,000,000 shares authorized; issued 2,633,260 in 2007 and 2,628,935 in 2006 | | | 20,043,860 | | | | 19,994,725 | |
| Retained earnings | | | 4,900,923 | | | | 4,864,880 | |
| Treasury stock, at cost (2007 — 15,946 shares, 2006 — 16,500 shares) | | | (271,019 | ) | | | (279,883 | ) |
| Accumulated other comprehensive income | | | (75,479 | ) | | | 24,874 | |
| | | | | | | | | |
| Total stockholders’ equity | | | 24,598,285 | | | | 24,604,596 | |
| | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 276,481,858 | | | $ | 269,668,338 | |
| | | | | | | | | |
See accompanying notes.
F-1
Futura Banc Corp.
Consolidated Statements of Operations
June 30, 2007 and 2006| | | | | | | | | | | | | | | | | |
| | | Six Months Ending June 30, | | | Three Months Ending June 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | | | | | (Unaudited) | | | | |
| |
| Interest income | | | | | | | | | | | | | | | | |
| Loans, including fees | | $ | 8,249,278 | | | $ | 7,841,643 | | | $ | 4,046,279 | | | $ | 4,166,614 | |
| Taxable securities | | | 547,468 | | | | 492,603 | | | | 269,311 | | | | 245,269 | |
| Tax exempt securities | | | 260,249 | | | | 191,804 | | | | 133,917 | | | | 97,901 | |
| Federal funds sold and other | | | 344,049 | | | | 286,723 | | | | 239,511 | | | | 137,861 | |
| | | | | | | | | | | | | | | | | |
| | | | 9,401,044 | | | | 8,812,773 | | | | 4,689,018 | | | | 4,647,645 | |
| Interest expense | | | | | | | | | | | | | | | | |
| Deposits | | | 3,620,609 | | | | 2,541,821 | | | | 1,880,695 | | | | 1,363,275 | |
| FHLB advances | | | 322,174 | | | | 333,037 | | | | 164,909 | | | | 167,553 | |
| Subordinated debentures | | | 150,055 | | | | 141,187 | | | | 75,268 | | | | 72,825 | |
| Other short term borrowings | | | 7,609 | | | | 7,143 | | | | 2,912 | | | | 3,638 | |
| | | | | | | | | | | | | | | | | |
| | | | 4,100,447 | | | | 3,023,188 | | | | 2,123,784 | | | | 1,607,291 | |
| | | | | | | | | | | | | | | | | |
| Net interest income | | | 5,300,597 | | | | 5,789,585 | | | | 2,565,234 | | | | 3,040,354 | |
| Provision for loan losses | | | 598,000 | | | | — | | | | 568,000 | | | | (49,000 | ) |
| | | | | | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 4,702,597 | | | | 5,789,585 | | | | 1,997,234 | | | | 3,089,354 | |
| Noninterest income | | | | | | | | | | | | | | | | |
| Service charges | | | 711,710 | | | | 784,747 | | | | 365,003 | | | | 409,778 | |
| Investment and trust management fees | | | 336,270 | | | | 234,906 | | | | 158,638 | | | | 135,352 | |
| Net gains on sales of securities | | | — | | | | 5,711 | | | | — | | | | 5,711 | |
| Net gains on sales of loans | | | 84,452 | | | | 101,379 | | | | 29,488 | | | | 82,195 | |
| Gain on sale of premises and equipment | | | 2,112 | | | | 5,753 | | | | (88 | ) | | | 4,845 | |
| Other | | | 20,814 | | | | 16,192 | | | | 10,678 | | | | 6,963 | |
| | | | | | | | | | | | | | | | | |
| | | | 1,155,358 | | | | 1,148,688 | | | | 563,719 | | | | 644,844 | |
| Noninterest expense | | | | | | | | | | | | | | | | |
| Salaries and wages | | | 2,072,983 | | | | 2,155,983 | | | | 1,027,190 | | | | 1,098,557 | |
| Employee benefits | | | 372,293 | | | | 457,454 | | | | 175,195 | | | | 231,160 | |
| Occupancy | | | 413,507 | | | | 473,421 | | | | 204,603 | | | | 231,376 | |
| Furniture, equipment and data processing | | | 808,466 | | | | 878,871 | | | | 395,549 | | | | 443,966 | |
| State franchise and other taxes | | | 194,085 | | | | 198,136 | | | | 92,248 | | | | 95,031 | |
| Regulatory and professional fees | | | 336,223 | | | | 132,097 | | | | 220,571 | | | | 63,464 | |
| Other | | | 697,585 | | | | 734,008 | | | | 341,642 | | | | 394,434 | |
| | | | | | | | | | | | | | | | | |
| | | | 4,895,141 | | | | 5,029,970 | | | | 2,456,997 | | | | 2,557,988 | |
| | | | | | | | | | | | | | | | | |
| Income before income taxes | | | 962,814 | | | | 1,908,303 | | | | 103,956 | | | | 1,176,210 | |
| Income tax expense | | | 137,567 | | | | 571,000 | | | | 19,010 | | | | 353,200 | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 825,247 | | | $ | 1,337,303 | | | $ | 84,946 | | | $ | 823,010 | |
| | | | | | | | | | | | | | | | | |
| Earnings per common share | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.31 | | | $ | 0.50 | | | $ | 0.03 | | | $ | 0.30 | |
| | | | | | | | | | | | | | | | | |
| Diluted | | $ | 0.31 | | | $ | 0.49 | | | $ | 0.03 | | | $ | 0.30 | |
| | | | | | | | | | | | | | | | | |
See accompanying notes.
F-2
Futura Banc Corp.
Consolidated Statements of Changes in Stockholders’ Equity
Six Months Ended June 30, 2007 and 2006| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Accumulated
| | | | | | | |
| | | | | | | | | Other
| | | | | | Total
| |
| | | Common
| | | Retained
| | | Comprehensive
| | | Treasury
| | | Stockholders’
| |
| | | Stock | | | Earnings | | | Income | | | Stock | | | Equity | |
| | | | | | | | | (Unaudited) | | | | | | | |
| |
| Balance at January 1, 2006 | | $ | 20,463,969 | | | $ | 3,289,992 | | | $ | 23,759 | | | $ | (214,680 | ) | | $ | 23,563,040 | |
| Comprehensive income: | | | | | | | | | | | | | | | | | | | | |
| Net income | | | — | | | | 1,337,303 | | | | — | | | | — | | | | 1,337,303 | |
| Change in net unrealized gain (loss) on securities available for sale, net of reclassifications and tax effects | | | — | | | | — | | | | (187,618 | ) | | | — | | | | (187,618 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive income | | | | | | | | | | | | | | | | | | | 1,149,685 | |
| Cash dividends ($0.22 per share) | | | — | | | | (586,115 | ) | | | — | | | | — | | | | (586,115 | ) |
| Stock purchased and retired | | | (8,241 | ) | | | — | | | | — | | | | — | | | | (8,241 | ) |
| Stock purchased from 401k plan net of current year allocation | | | (58,822 | ) | | | — | | | | — | | | | — | | | | (58,822 | ) |
| Shares purchased for supplemental retirement plan | | | 61,650 | | | | — | | | | — | | | | (61,650 | ) | | | — | |
| Stock issued for exercise of stock options and stock appreciation rights | | | 153,485 | | | | — | | | | — | | | | — | | | | 153,485 | |
| Federal income tax benefit for exercise of stock options | | | 18,804 | | | | — | | | | — | | | | — | | | | 18,804 | |
| | | | | | | | | | | | | | | | | | | | | |
| Balance at June 30, 2006 | | $ | 20,630,845 | | | $ | 4,041,180 | | | $ | (163,859 | ) | | $ | (276,330 | ) | | $ | 24,231,836 | |
| | | | | | | | | | | | | | | | | | | | | |
| Balance at January 1, 2007 | | $ | 19,994,725 | | | $ | 4,864,880 | | | $ | 24,874 | | | $ | (279,883 | ) | | $ | 24,604,596 | |
| Comprehensive income: | | | | | | | | | | | | | | | | | | | | |
| Net income | | | — | | | | 825,247 | | | | — | | | | — | | | | 825,247 | |
| Change in net unrealized gain (loss) on securities available for sale, net of reclassifications and tax effects | | | — | | | | — | | | | (100,353 | ) | | | — | | | | (100,353 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive income | | | | | | | | | | | | | | | | | | | 724,894 | |
| Cash dividends ($0.30 per share) | | | — | | | | (789,204 | ) | | | — | | | | — | | | | (789,204 | ) |
| Stock purchased and retired | | | (79,563 | ) | | | — | | | | — | | | | — | | | | (79,563 | ) |
| Stock purchased from 401k plan net of current year allocation | | | — | | | | — | | | | — | | | | — | | | | — | |
| Stock issued for 401k plan | | | 106,044 | | | | — | | | | — | | | | — | | | | 106,044 | |
| Shares purchased for supplemental retirement plan | | | — | | | | — | | | | — | | | | — | | | | — | |
| Forfeiture of supplemental retirement plan shares | | | (7,104 | ) | | | — | | | | — | | | | 7,104 | | | | — | |
| Transfer supplemental retirement plan shares to participant | | | (1,760 | ) | | | — | | | | — | | | | 1,760 | | | | — | |
| Stock issued for exercise of stock options and stock appreciation rights | | | 18,157 | | | | — | | | | — | | | | — | | | | 18,157 | |
| Federal income tax benefit for exercise of stock options | | | 13,361 | | | | — | | | | — | | | | — | | | | 13,361 | |
| | | | | | | | | | | | | | | | | | | | | |
| Balance at June 30, 2007 | | $ | 20,043,860 | | | $ | 4,900,923 | | | $ | (75,479 | ) | | $ | (271,019 | ) | | $ | 24,598,285 | |
| | | | | | | | | | | | | | | | | | | | | |
See accompanying notes.
F-3
Futura Banc Corp.
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2007 and 2006| | | | | | | | | |
| | | 2007 | | | 2006 | |
| | | (Unaudited) | |
| |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
| Net income (loss) | | $ | 825,247 | | | $ | 1,337,303 | |
| Adjustments to reconcile net income (loss) to net cash from operating activities | | | | | | | | |
| Net amortization of securities | | | (6,107 | ) | | | 15,652 | |
| Depreciation | | | 436,873 | | | | 616,958 | |
| Provision for loan losses | | | 598,000 | | | | — | |
| Deferred loan fee income | | | (34,837 | ) | | | (48,678 | ) |
| Net realized gain on sale/call of securities | | | — | | | | (5,711 | ) |
| Net (gain) loss on sale or disposal of premises and equipment | | | (2,112 | ) | | | (5,753 | ) |
| Net loss on sale of other real estate owned | | | — | | | | 14,489 | |
| FHLB stock dividends | | | — | | | | (81,500 | ) |
| Supplemental retirement plan expense | | | 11,250 | | | | 27,500 | |
| Net gain on sale of loans | | | (84,452 | ) | | | (101,379 | ) |
| Loans originated for sale | | | (229,700 | ) | | | (2,101,049 | ) |
| Proceeds from sale of loans | | | 233,116 | | | | 2,591,290 | |
| Net change in: | | | | | | | | |
| Other assets | | | 110,931 | | | | 775,825 | |
| Other liabilities | | | (388,279 | ) | | | 153,907 | |
| | | | | | | | | |
| Net cash from operating activities | | | 1,469,930 | | | | 3,188,854 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
| Net change in interest-bearing deposits in other financial institutions | | | — | | | | 1,000,000 | |
| Securities available for sale: | | | | | | | | |
| Purchases | | | (1,738,202 | ) | | | (2,766,738 | ) |
| Sales | | | — | | | | — | |
| Maturities, principal payments and calls | | | 2,074,510 | | | | 2,652,107 | |
| Proceeds from sales of government guaranteed loans | | | 1,326,765 | | | | 790,200 | |
| Net change in loans | | | (519,028 | ) | | | (2,336,200 | ) |
| Purchase of FHLB and other stock | | | — | | | | — | |
| Premises and equipment expenditures, net | | | (1,298,314 | ) | | | (167,795 | ) |
| Proceeds from disposal of premises and equipment | | | 2,112 | | | | 44,514 | |
| Proceeds from sale of other real estate owned | | | — | | | | 35,478 | |
| | | | | | | | | |
| Net cash from investing activities | | | (152,157 | ) | | | (748,434 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
| Net change in deposits | | | 2,520,093 | | | | (6,635,791 | ) |
| Net change in other short term borrowings | | | 974 | | | | 6,939 | |
| Proceeds from FHLB advances | | | 5,000,000 | | | | 3,000,000 | |
| Repayment of FHLB advances | | | (312,957 | ) | | | (312,345 | ) |
| Cash dividends paid | | | (789,204 | ) | | | (586,115 | ) |
| Stock issued for benefit plans | | | 124,201 | | | | 153,485 | |
| Purchase of shares for supplemental retirement plan | | | — | | | | (61,650 | ) |
| Stock purchased and retired | | | (79,563 | ) | | | (67,063 | ) |
| | | | | | | | | |
| Net cash from financing activities | | | 6,463,544 | | | | (4,502,540 | ) |
| | | | | | | | | |
| Net change in cash and cash equivalents | | | 7,781,317 | | | | (2,062,120 | ) |
| Cash and cash equivalents at beginning of period | | | 10,561,710 | | | | 16,516,958 | |
| | | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 18,343,027 | | | $ | 14,454,838 | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | | | | | | | | |
| Interest paid | | $ | 4,044,150 | | | $ | 2,979,094 | |
| Income taxes paid | | | 110,000 | | | | 255,000 | |
See accompanying notes.
F-4
REPORT OF INDEPENDENT AUDITORSBoard of Directors and Stockholders
Futura Banc Corp.
Urbana, Ohio
We have audited the accompanying consolidated balance sheets of Futura Banc Corp. as of December 31, 2006 and 2005, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Futura Banc Corp. as of December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.
Crowe Chizek and Company LLC
Columbus, Ohio
February 20, 2007
F-5
FUTURA BANC CORP.
CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| ASSETS |
| Cash and due from financial institutions | | $ | 7,269,192 | | | $ | 10,202,631 | |
| Federal funds sold | | | 3,292,518 | | | | 6,314,327 | |
| | | | | | | | | |
| Cash and cash equivalents | | | 10,561,710 | | | | 16,516,958 | |
| Interest-bearing deposits in other financial institutions | | | — | | | | 1,000,000 | |
| Securities available for sale | | | 30,145,316 | | | | 27,497,097 | |
| Total loans | | | 215,540,972 | | | | 206,202,322 | |
| Allowance for loan losses | | | (1,680,061 | ) | | | (2,238,365 | ) |
| | | | | | | | | |
| Loans, net | | | 213,860,911 | | | | 203,963,957 | |
| FHLB and other stock, at cost | | | 3,411,550 | | | | 3,200,750 | |
| Premises and equipment, net | | | 8,515,094 | | | | 9,400,351 | |
| Receivables due from loan sales | | | — | | | | 565,733 | |
| Goodwill | | | 165,185 | | | | 165,185 | |
| Accrued interest receivable and other assets | | | 3,008,572 | | | | 3,655,097 | |
| | | | | | | | | |
| Total assets | | $ | 269,668,338 | | | $ | 265,965,128 | |
| | | | | | | | | |
| |
| LIABILITIES |
| Deposits | | | | | | | | |
| Noninterest-bearing demand deposits | | $ | 35,495,891 | | | $ | 38,301,267 | |
| Interest-bearing deposits | | | 192,657,656 | | | | 182,779,102 | |
| | | | | | | | | |
| Total deposits | | | 228,153,547 | | | | 221,080,369 | |
| Other short term borrowings | | | 15,282 | | | | 23,474 | |
| Federal Home Loan Bank advances | | | 9,839,715 | | | | 14,464,708 | |
| Subordinated debentures | | | 4,648,000 | | | | 4,648,000 | |
| Accrued interest payable and other liabilities | | | 2,407,198 | | | | 2,185,537 | |
| | | | | | | | | |
| Total liabilities | | | 245,063,742 | | | | 242,402,088 | |
| | | | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | | |
| Common stock, no par value; 5,000,000 shares authorized; 2,628,935 shares issued in 2006 and 2,657,804 shares issued in 2005 | | | 19,994,725 | | | | 20,463,969 | |
| Retained earnings | | | 4,864,880 | | | | 3,289,992 | |
| Treasury stock, at cost; 2006 — 16,500 shares, 2005 — 12,880 shares | | | (279,883 | ) | | | (214,680 | ) |
| Accumulated other comprehensive income | | | 24,874 | | | | 23,759 | |
| | | | | | | | | |
| Total stockholders’ equity | | | 24,604,596 | | | | 23,563,040 | |
| | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 269,668,338 | | | $ | 265,965,128 | |
| | | | | | | | | |
See accompanying notes to consolidated financial statements.
F-6
FUTURA BANC CORP.
CONSOLIDATED STATEMENTS OF OPERATIONSYears Ended December 31, 2006, 2005 and 2004
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Interest income | | | | | | | | | | | | |
| Loans, including fees | | $ | 16,119,822 | | | $ | 14,581,186 | | | $ | 14,533,469 | |
| Taxable securities | | | 1,046,963 | | | | 758,535 | | | | 645,603 | |
| Tax exempt securities | | | 405,057 | | | | 334,110 | | | | 354,933 | |
| Federal funds sold and other | | | 559,784 | | | | 420,420 | | | | 132,484 | |
| | | | | | | | | | | | | |
| | | | 18,131,626 | | | | 16,094,251 | | | | 15,666,489 | |
| Interest expense | | | | | | | | | | | | |
| Deposits | | | 5,934,199 | | | | 4,035,055 | | | | 3,169,999 | |
| FHLB advances | | | 574,194 | | | | 669,257 | | | | 614,553 | |
| Subordinated debentures | | | 292,800 | | | | 141,822 | | | | — | |
| Other short term borrowings | | | 18,391 | | | | 12,687 | | | | 16,936 | |
| | | | | | | | | | | | | |
| | | | 6,819,584 | | | | 4,858,821 | | | | 3,801,488 | |
| | | | | | | | | | | | | |
| Net interest income | | | 11,312,042 | | | | 11,235,430 | | | | 11,865,001 | |
| Provision for loan losses | | | — | | | | 4,740,000 | | | | 985,236 | |
| | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 11,312,042 | | | | 6,495,430 | | | | 10,879,765 | |
| Noninterest income | | | | | | | | | | | | |
| Service charges | | | 1,598,801 | | | | 1,700,568 | | | | 1,797,437 | |
| Investment and trust management fees | | | 593,343 | | | | 467,787 | | | | 431,851 | |
| Net gains on sales of securities | | | 25,711 | | | | 32,517 | | | | 10,000 | |
| Net gains on sales of loans | | | 208,448 | | | | 208,164 | | | | 186,062 | |
| Gain (loss) on sale of premises and equipment | | | 627,753 | | | | 17,301 | | | | (35,115 | ) |
| Other | | | 47,220 | | | | 76,236 | | | | 65,371 | |
| | | | | | | | | | | | | |
| | | | 3,101,276 | | | | 2,502,573 | | | | 2,455,606 | |
| Noninterest expense | | | | | | | | | | | | |
| Salaries and wages | | | 4,431,837 | | | | 3,910,707 | | | | 3,762,211 | |
| Employee benefits | | | 799,860 | | | | 696,624 | | | | 713,506 | |
| Occupancy | | | 892,401 | | | | 781,644 | | | | 677,740 | |
| Furniture, equipment and data processing | | | 1,866,008 | | | | 1,685,295 | | | | 1,469,150 | |
| State franchise and other taxes | | | 374,117 | | | | 340,447 | | | | 337,334 | |
| Regulatory and professional fees | | | 323,505 | | | | 443,165 | | | | 359,196 | |
| Litigation settlement | | | — | | | | — | | | | 4,380,781 | |
| Other | | | 1,565,014 | | | | 1,455,365 | | | | 1,274,426 | |
| | | | | | | | | | | | | |
| | | | 10,252,742 | | | | 9,313,247 | | | | 12,974,344 | |
| | | | | | | | | | | | | |
| Income (loss) before income taxes | | | 4,160,576 | | | | (315,244 | ) | | | 361,027 | |
| Income tax expense (benefit) | | | 1,260,230 | | | | (260,017 | ) | | | (30,400 | ) |
| | | | | | | | | | | | | |
| Net income (loss) | | $ | 2,900,346 | | | $ | (55,227 | ) | | $ | 391,427 | |
| | | | | | | | | | | | | |
| Earnings (loss) per common share | | | | | | | | | | | | |
| Basic | | $ | 1.09 | | | $ | (0.02 | ) | | $ | 0.15 | |
| | | | | | | | | | | | | |
| Diluted | | $ | 1.07 | | | $ | (0.02 | ) | | $ | 0.14 | |
| | | | | | | | | | | | | |
See accompanying notes to consolidated financial statements.
F-7
FUTURA BANC CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYYears Ended December 31, 2006, 2005 and 2004
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Accumulated
| | | | | | | |
| | | Number
| | | | | | | | | Other
| | | | | | Total
| |
| | | of
| | | Common
| | | Retained
| | | Comprehensive
| | | Treasury
| | | Stockholders’
| |
| | | Shares | | | Stock | | | Earnings | | | Income | | | Stock | | | Equity | |
| |
| Balance at January 1, 2004 | | | 2,246,515 | | | $ | 21,206,349 | | | $ | 5,154,286 | | | $ | 416,135 | | | $ | — | | | $ | 26,776,770 | |
| Comprehensive income: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | | — | | | | — | | | | 391,427 | | | | — | | | | — | | | | 391,427 | |
| Change in net unrealized gain (loss) on securities available for sale, net of reclassifications and tax effects | | | — | | | | — | | | | — | | | | (186,752 | ) | | | — | | | | (186,752 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive income | | | | | | | | | | | | | | | | | | | | | | | 204,675 | |
| Cash dividends ($.40 per share) | | | — | | | | — | | | | (1,077,022 | ) | | | — | | | | — | | | | (1,077,022 | ) |
| Stock purchased and retired | | | (54,717 | ) | | | (1,244,105 | ) | | | — | | | | — | | | | — | | | | (1,244,105 | ) |
| Stock issued for 401(k) plan | | | 3,504 | | | | 70,080 | | | | — | | | | — | | | | — | | | | 70,080 | |
| Stock issued for exercise of stock options and stock appreciation rights | | | 35,160 | | | | 421,326 | | | | — | | | | — | | | | — | | | | 421,326 | |
| Federal income tax benefit for exercise of stock options | | | — | | | | 129,767 | | | | — | | | | — | | | | — | | | | 129,767 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2004 | | | 2,230,462 | | | $ | 20,583,417 | | | $ | 4,468,691 | | | $ | 229,383 | | | $ | — | | | $ | 25,281,491 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2004 | | | 2,230,462 | | | $ | 20,583,417 | | | $ | 4,468,691 | | | $ | 229,383 | | | $ | — | | | $ | 25,281,491 | |
| Comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | | — | | | | — | | | | (55,227 | ) | | | — | | | | — | | | | (55,227 | ) |
| Change in net unrealized gain (loss) on securities available for sale, net of reclassifications and tax effects | | | — | | | | — | | | | — | | | | (205,624 | ) | | | — | | | | (205,624 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | (260,851 | ) |
| Cash dividends ($.42 per share) | | | — | | | | — | | | | (1,121,005 | ) | | | — | | | | — | | | | (1,121,005 | ) |
| Cash paid in lieu of fractional shares | | | — | | | | — | | | | (2,467 | ) | | | — | | | | — | | | | (2,467 | ) |
| Six-for-five stock split effected in the form of a 20% stock dividend | | | 445,311 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Stock purchased and retired | | | (16,464 | ) | | | (292,308 | ) | | | — | | | | — | | | | — | | | | (292,308 | ) |
| Stock purchased from 401(k) plan net of current year allocation | | | (4,639 | ) | | | (92,771 | ) | | | — | | | | — | | | | — | | | | (92,771 | ) |
| Shares purchased for supplemental retirement plan | | | (12,880 | ) | | | 214,680 | | | | — | | | | — | | | | (214,680 | ) | | | — | |
| Stock issued for exercise of stock options and stock appreciation rights | | | 3,134 | | | | 44,189 | | | | — | | | | — | | | | — | | | | 44,189 | |
| Intrinsic value of stock options | | | — | | | | 4,679 | | | | — | | | | — | | | | — | | | | 4,679 | |
| Federal income tax benefit for exercise of stock options | | | — | | | | 2,083 | | | | — | | | | — | | | | — | | | | 2,083 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2005 | | | 2,644,924 | | | $ | 20,463,969 | | | $ | 3,289,992 | | | $ | 23,759 | | | $ | (214,680 | ) | | $ | 23,563,040 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2005 | | | 2,644,924 | | | $ | 20,463,969 | | | $ | 3,289,992 | | | $ | 23,759 | | | $ | (214,680 | ) | | $ | 23,563,040 | |
| Comprehensive income: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | | — | | | | — | | | | 2,900,346 | | | | — | | | | — | | | | 2,900,346 | |
| Change in net unrealized gain (loss) on securities available for sale, net of reclassifications and tax effects | | | | | | | | | | | | | | | 1,115 | | | | — | | | | 1,115 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive income | | | | | | | | | | | | | | | | | | | | | | | 2,901,461 | |
| Cash dividends ($.50 per share) | | | | | | | | | | | (1,325,458 | ) | | | — | | | | — | | | | (1,325,458 | ) |
| Stock purchased and retired | | | (41,830 | ) | | | (709,105 | ) | | | — | | | | — | | | | — | | | | (709,105 | ) |
| Stock purchased from 401(k) plan net of current year allocation | | | (3,795 | ) | | | (58,822 | ) | | | — | | | | — | | | | — | | | | (58,822 | ) |
| Shares purchased for supplemental retirement plan | | | (3,620 | ) | | | 65,203 | | | | — | | | | — | | | | (65,203 | ) | | | — | |
| Stock issued for exercise of stock options and stock appreciation rights | | | 16,756 | | | | 214,676 | | | | — | | | | — | | | | — | | | | 214,676 | |
| Federal income tax benefit for exercise of stock options | | | — | | | | 18,804 | | | | — | | | | — | | | | — | | | | 18,804 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2006 | | | 2,612,435 | | | $ | 19,994,725 | | | $ | 4,864,880 | | | $ | 24,874 | | | $ | (279,883 | ) | | $ | 24,604,596 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to consolidated financial statements.
F-8
FUTURA BANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWSYears Ended December 31, 2006, 2005 and 2004
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Cash flows from operating activities | | | | | | | | | | | | |
| Net income (loss) | | $ | 2,900,346 | | | $ | (55,227 | ) | | $ | 391,427 | |
| Adjustments to reconcile net income (loss) to net cash from operating activities | | | | | | | | | | | | |
| Net amortization of securities | | | 24,238 | | | | 35,862 | | | | 30,601 | |
| Depreciation | | | 1,316,397 | | | | 1,112,964 | | | | 997,897 | |
| Provision for loan losses | | | — | | | | 4,740,000 | | | | 985,236 | |
| Deferred loan fee income | | | (17,069 | ) | | | (26,551 | ) | | | 61,676 | |
| Deferred income taxes | | | 424,236 | | | | 301,116 | | | | 278,169 | |
| Net realized gain on sale/call of securities | | | (25,711 | ) | | | (32,517 | ) | | | (10,000 | ) |
| Net (gain) loss on sale or disposal of premises and equipment | | | (627,753 | ) | | | (17,301 | ) | | | 35,115 | |
| Donated property | | | 48,899 | | | | — | | | | — | |
| Net loss on sale of other real estate owned | | | 56,878 | | | | 12,965 | | | | — | |
| FHLB stock dividends | | | (169,900 | ) | | | (126,800 | ) | | | (106,900 | ) |
| Intrinsic value of stock options | | | — | | | | 4,679 | | | | — | |
| Supplemental retirement plan expense | | | 55,000 | | | | 40,000 | | | | 40,000 | |
| Net gain on sale of loans | | | (208,448 | ) | | | (208,164 | ) | | | (186,062 | ) |
| Loans originated for sale | | | (4,098,120 | ) | | | (6,750,925 | ) | | | (18,764,839 | ) |
| Proceeds from sale of loans | | | 4,716,962 | | | | 7,058,379 | | | | 18,390,755 | |
| Net change in: | | | | | | | | | | | | |
| Other assets | | | 11,072 | | | | 395,512 | | | | (1,772,183 | ) |
| Other liabilities | | | 858,368 | | | | 232,657 | | | | (362,786 | ) |
| | | | | | | | | | | | | |
| Net cash from operating activities | | | 5,265,395 | | | | 6,716,649 | | | | 8,106 | |
| Cash flows from investing activities | | | | | | | | | | | | |
| Net change in interest-bearing deposits in other financial institutions | | | 1,000,000 | | | | (1,000,000 | ) | | | — | |
| Securities available for sale: | | | | | | | | | | | | |
| Purchases | | | (10,500,313 | ) | | | (14,142,771 | ) | | | (7,503,700 | ) |
| Sales | | | — | | | | 3,719,846 | | | | — | |
| Maturities, principal payments and calls | | | 7,855,256 | | | | 3,582,341 | | | | 9,850,824 | |
| Securities held to maturity: | | | | | | | | | | | | |
| Maturities and calls | | | — | | | | — | | | | 190,000 | |
| Proceeds from sale of government guaranteed loans | | | 1,742,406 | | | | 1,777,069 | | | | — | |
| Net change in loans | | | (12,190,537 | ) | | | 19,089,628 | | | | (20,578,082 | ) |
| Purchase of FHLB and other stock | | | — | | | | (75,000 | ) | | | (30,000 | ) |
| Premises and equipment expenditures, net | | | (480,612 | ) | | | (4,521,233 | ) | | | (2,880,246 | ) |
| Proceeds from disposal of premises and equipment | | | 1,822 | | | | 1,923,508 | | | | 201,074 | |
| Proceeds from sale of other real estate owned | | | 855,254 | | | | 275,824 | | | | — | |
| | | | | | | | | | | | | |
| Net cash from investing activities | | | (11,716,724 | ) | | | 10,629,212 | | | | (20,750,130 | ) |
| Cash flows from financing activities | | | | | | | | | | | | |
| Net change in deposits | | $ | 7,073,178 | | | $ | (24,180,215 | ) | | $ | 15,083,204 | |
| Net change in other short term borrowings | | | (8,192 | ) | | | (143,519 | ) | | | (996,327 | ) |
| Proceeds from FHLB advances | | | — | | | | 1,000,000 | | | | 3,000,000 | |
| Repayment of FHLB advances | | | (4,624,993 | ) | | | (23,812 | ) | | | (11,480 | ) |
| Proceeds from issue of subordinated debentures | | | — | | | | 4,648,000 | | | | — | |
| Cash dividends paid | | | (1,325,458 | ) | | | (1,121,005 | ) | | | (1,077,022 | ) |
| Cash paid in lieu of fractional shares in stock dividend | | | — | | | | (2,467 | ) | | | — | |
| Stock issued for benefit plans | | | 214,676 | | | | 44,189 | | | | 491,406 | |
| Purchase of shares for supplemental retirement plan | | | (65,203 | ) | | | (214,680 | ) | | | — | |
| Stock purchased and retired | | | (767,927 | ) | | | (385,079 | ) | | | (1,244,105 | ) |
| | | | | | | | | | | | | |
| Net cash from financing activities | | | 496,081 | | | | (20,378,588 | ) | | | 15,245,676 | |
| | | | | | | | | | | | | |
| Net change in cash and cash equivalents | | | (5,955,248 | ) | | | (3,032,727 | ) | | | (5,496,348 | ) |
| Cash and cash equivalents at beginning of year | | | 16,516,958 | | | | 19,549,685 | | | | 25,046,033 | |
| | | | | | | | | | | | | |
| Cash and cash equivalents at end of year | | $ | 10,561,710 | | | $ | 16,516,958 | | | $ | 19,549,685 | |
| | | | | | | | | | | | | |
| Supplemental disclosures of cash flow information | | | | | | | | | | | | |
| Interest paid | | $ | 6,661,895 | | | $ | 4,826,323 | | | $ | 3,878,441 | |
| Income taxes paid | | | 1,180,000 | | | | — | | | | 1,135,000 | |
| Supplemental noncash disclosures | | | | | | | | | | | | |
| Transfer from loans to other real estate owned | | | 723,585 | | | | 477,336 | | | | — | |
See accompanying notes to consolidated financial statements.
F-9
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2006, 2005 and 2005
| |
NOTE 1 — | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The following is a summary of significant accounting policies followed by Futura Banc Corp. in the preparation of the consolidated financial statements.
Principles of Consolidation: The consolidated financial statements include the accounts of Futura Banc Corp. (Futura) and its wholly owned subsidiaries, Champaign National Bank (Bank), Champaign Investment Company (CIC), 6400 Perimeter Drive Dublin Investments Ltd. (InvLtd), and 6400 Perimeter Drive Dublin Special Assets Ltd. (SpecialLtd), together referred to as the Corporation. Intercompany transactions and balances are eliminated in consolidation.
Nature of Operations: The Corporation operates eight banking locations located in Urbana, Plain City, West Liberty, Russells Point, Akron, Dublin and Hilliard, Ohio, providing a full range of deposit, loan, trust and asset management services. Its primary deposit products are checking, savings and term certificate accounts and its primary lending products are commercial and residential mortgage loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and real estate. Commercial loans are expected to be repaid from cash flows from operations of businesses. Real estate loans are secured by both residential and commercial real estate. Other financial instruments, which potentially represent concentrations of credit risk, include deposit accounts in other financial institutions and federal funds sold. CIC provides financial planning and investment advisory services and is licensed as a fully disclosed introducing broker and dealer in securities. InvLtd and SpecialLtd hold title to other real estate acquired in lieu of loan foreclosure. These companies held no real estate at year end 2006. The business segments that could be separated from the Corporation’s primary business of community banking are not material based on revenue, net income or total assets.
Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and disclosures provided, and actual results could differ. The allowance for loan losses, fair values of financial instruments, and status of contingencies are particularly subject to change.
Cash Flow Reporting: Cash and cash equivalents include cash on hand, deposits with financial institutions and federal funds sold. Net cash flows are reported for customer loan and deposit transactions, interest-bearing time deposits with financial institutions, and borrowings with an original maturity of 90 days or less.
Interest-Bearing Deposits in Other Financial Institutions: Interest-bearing deposits in other financial institutions mature within one year and are carried at cost.
Securities: Securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.
Interest income includes amortization and accretion of purchased premiums and discounts. Premiums and discounts on securities are amortized on the level-yield method. Gains and losses on sales are recorded on the trade date and determined based on amortized cost of the specific securities sold.
Declines in the fair value of securities below their cost that are other than temporary are reflected as realized losses. In estimating other-than-temporary losses, management considers the length of time and extent that fair value has been less than cost, the financial condition and near term prospects of the issuer, and the Corporation’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value.
F-10
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs and an allowance for loan losses. Loans held for sale are reported at the lower of cost or market, on an aggregate basis. Servicing is not retained on residential loans sold in the secondary market. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.
Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Consumer loans are typically charged-off no later than 120 days. Past due status is based upon the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.
All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.
The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors.
A loan is impaired when full payment under the loan terms is not expected. Commercial and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.
Federal Home Loan Bank (FHLB) and other stock: The Bank is a member of the FHLB and Federal Reserve Bank (FRB) systems. Members of the FHLB system are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB and FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.
Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed over the assets’ useful lives using both straight-line and accelerated methods. These assets are reviewed for impairment when events indicate the carrying amount may not be recoverable. Maintenance and repairs are expensed and major improvements are capitalized.
Receivables Due from Loan Sales: Receivables due from loan sales are amounts owed to the Corporation for loans which have been originated, closed and sold to investors but for which proceeds from the investor have not yet been received.
Foreclosed Assets: Assets acquired through or instead of loan foreclosure are initially recorded at fair value when acquired, establishing a new cost basis. If fair value declines, a valuation allowance is recorded through expense. Costs after acquisition are expensed. No assets were held in real estate owned at
F-11
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
December 31, 2006. The Corporation held $189,000 in real estate owned which is included in other assets in the consolidated balance sheet at December 31, 2005.
Goodwill: Goodwill results from prior business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment will be recognized in the period identified.
Stock Compensation: Effective January 1, 2006, the Corporation adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-based Payment, using the prospective transition method. Because the Corporation used the minimum value method to measure the fair value of stock options granted prior to December 31, 2005 for its pro forma disclosures as allowed under SFAS No. 123, SFAS No. 123(R) is applied prospectively to new awards and awards modified, repurchased or cancelled after January 1, 2006. The Corporation will continue to account for any portion of awards outstanding at January 1, 2006 using the accounting principles originally applied to these awards.
Prior to January 1, 2006, employee compensation expense under stock option plans was reported using the intrinsic value method.
Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer-financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.
Earnings and Dividends per Common Share: Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options. Earnings and dividends per share are restated for all stock splits and dividends through the date of issue ofthis document unless the financial statements.
Equity: Stock dividends of less than 20% are reported by transferring the estimated fair market value of the stock issued from retained earnings to common stock. Fractional share amounts are paid in cash with a reduction to retained earnings. Stock dividends of 20% or more result only in an increase of the number of shares outstanding. On May 17, 2005, the Board of Directors declared a six-for-five stock split effected in the form of a 20% stock dividend payable on June 17, 2005.
Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale, which are also recognized as a separate component of stockholders’ equity.
Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such mattersinformation specifically indicates that will have a material effect on the financial statements.
Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank of $286,000 and $3,851,000 was required to meet regulatory reserve and clearing requirements at year-end 2006 and 2005. These balances do not earn interest.
Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to Futura or by Futura to stockholders.
F-12another date applies.
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Fair Values of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.
Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.
The fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:
| | | | | | | | | | | | | |
| | | Estimated
| | | Gross
| | | Gross
| |
| | | Fair
| | | Unrealized
| | | Unrealized
| |
| | | Value | | | Gains | | | Losses | |
| |
| 2006 | | | | | | | | | | | | |
| U.S. agencies | | $ | 18,363,316 | | | $ | 45,172 | | | $ | (87,807 | ) |
| Obligations of states and political subdivisions | | | 11,237,746 | | | | 110,303 | | | | (29,515 | ) |
| Mortgage-backed | | | 23,670 | | | | 140 | | | | — | |
| Collateralized mortgage obligations | | | 520,584 | | | | 483 | | | | (1,088 | ) |
| | | | | | | | | | | | | |
| | | $ | 30,145,316 | | | $ | 156,098 | | | $ | (118,410 | ) |
| | | | | | | | | | | | | |
| 2005 | | | | | | | | | | | | |
| U.S. Treasury and agencies | | $ | 19,313,498 | | | $ | 2,870 | | | $ | (172,772 | ) |
| Obligations of states and political subdivisions | | | 8,069,173 | | | | 217,912 | | | | (16,076 | ) |
| Mortgage-backed | | | 45,755 | | | | 942 | | | | — | |
| Collateralized mortgage obligations | | | 68,671 | | | | 3,123 | | | | — | |
| | | | | | | | | | | | | |
| | | $ | 27,497,097 | | | $ | 224,847 | | | $ | (188,848 | ) |
| | | | | | | | | | | | | |
The fair value of debt securities by contractual maturity at year-end 2006 were as follows. Securities not due at a single maturity date, primarily mortgage-backed and collateralized mortgage obligations are shown separately.
| | | | | |
| | | Available
| |
| | | for Sale
| |
| | | Fair Value | |
| |
| Due in one year or less | | $ | 681,632 | |
| Due after one year through five years | | | 17,612,285 | |
| Due after five years through ten years | | | 9,838,399 | |
| Due after ten years | | | 1,468,746 | |
| Mortgage-backed | | | 23,670 | |
| Collateralized mortgage obligations | | | 520,584 | |
| | | | | |
| | | $ | 30,145,316 | |
| | | | | |
F-13
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Sales of securities available for sale and the gross realized gains and losses were as follows:
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Proceeds from sales | | $ | — | | | $ | 3,719,846 | | | $ | — | |
| Gross gains | | | — | | | | 33,779 | | | | — | |
| Gross losses | | | — | | | | (1,262 | ) | | | — | |
| Gross gains from calls | | | 25,711 | | | | — | | | | 10,000 | |
Securities pledged at year-end 2006 and 2005 had a carrying amount of $17,061,000 and $17,479,000, and were pledged to secure public deposits, borrowings and for other purposes as required or permitted by law. At year-end 2006 and 2005, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.
Securities with unrealized losses at year-end 2006 and 2005, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Less than 12 Months | | | 12 Months or More | | | Total | |
| | | Fair
| | | Unrealized
| | | Fair
| | | Unrealized
| | | Fair
| | | Unrealized
| |
| | | Value | | | Loss | | | Value | | | Loss | | | Value | | | Loss | |
| |
| 2006 | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. agencies | | $ | 1,031,442 | | | $ | (3,558 | ) | | $ | 10,361,702 | | | $ | (84,249 | ) | | $ | 11,393,144 | | | $ | (87,807 | ) |
| Obligations of states and political subdivisions | | | 2,539,685 | | | | (8,505 | ) | | | 2,167,618 | | | | (21,010 | ) | | | 4,707,303 | | | | (29,515 | ) |
| Collateralized mortgage obligations | | | 476,197 | | | | (1,088 | ) | | | — | | | | — | | | | 476,197 | | | | (1,088 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 4,047,324 | | | $ | (13,151 | ) | | $ | 12,529,320 | | | $ | (105,259 | ) | | $ | 16,576,644 | | | $ | (118,410 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 2005 | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury and agencies | | $ | 9,956,097 | | | $ | (81,422 | ) | | $ | 6,373,650 | | | $ | (91,350 | ) | | $ | 16,329,747 | | | $ | (172,772 | ) |
| Obligations of states and political subdivisions | | | 2,179,689 | | | | (16,076 | ) | | | — | | | | — | | | | 2,179,689 | | | | (16,076 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 12,135,786 | | | $ | (97,498 | ) | | $ | 6,373,650 | | | $ | (91,350 | ) | | $ | 18,509,436 | | | $ | (188,848 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Unrealized losses on securities at both December 31, 2006 and 2005 have not been recognized into income because management has the intent and ability to hold for the foreseeable future, and the decline in fair value is largely due to changes in market interest rates. The fair value is expected to recover as the bonds approach their maturity date.
F-14
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Loans at year-end were as follows:
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| Commercial | | $ | 45,851,233 | | | $ | 46,478,005 | |
| Real estate: | | | | | | | | |
| Residential | | | 56,415,689 | | | | 52,208,832 | |
| Commercial | | | 98,973,820 | | | | 92,578,796 | |
| Construction | | | 11,548,649 | | | | 11,260,188 | |
| Consumer | | | 2,951,974 | | | | 3,893,963 | |
| | | | | | | | | |
| | | | 215,741,365 | | | | 206,419,784 | |
| Deferred loan fees and costs, net | | | (200,393 | ) | | | (217,462 | ) |
| | | | | | | | | |
| | | $ | 215,540,972 | | | $ | 206,202,322 | |
| | | | | | | | | |
Loans to principal officers, directors and their affiliates during 2006 were as follows:
| | | | | |
| Beginning balance | | $ | 4,124,965 | |
| New loans | | | 551,864 | |
| Repayments | | | (1,373,634 | ) |
| | | | | |
| Ending balance | | $ | 3,303,195 | |
| | | | | |
No loans were held for sale at December 31, 2006 and 2005.
| |
NOTE 4 — | ALLOWANCE FOR LOAN LOSSES |
Activity in the allowance for loan losses for the year was as follows:
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Beginning balance | | $ | 2,238,365 | | | $ | 2,666,260 | | | $ | 2,418,116 | |
| Provision for loan losses | | | — | | | | 4,740,000 | | | | 985,236 | |
| Loans charged-off | | | (1,483,978 | ) | | | (5,783,657 | ) | | | (920,438 | ) |
| Recoveries | | | 925,674 | | | | 615,762 | | | | 183,346 | |
| | | | | | | | | | | | | |
| Ending balance | | $ | 1,680,061 | | | $ | 2,238,365 | | | $ | 2,666,260 | |
| | | | | | | | | | | | | |
The increased 2005 provision for loan losses was necessary as the result of a loan loss involving a leasing company customer in our Akron Office. This company, which we have had as a customer since 1999, defaulted on its loan and ceased operations.
Information regarding impaired loans for the year was as follows:
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Average investment in impaired loans | | $ | 3,435,059 | | | $ | 4,199,785 | | | $ | 2,868,838 | |
| Interest income recognized during impairment | | | 132,286 | | | | 56,618 | | | | 61,133 | |
| Cash basis interest income recognized | | | 118,125 | | | | 45,770 | | | | 60,733 | |
F-15
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Information regarding impaired loans at year-end was as follows:
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| Impaired loans with no allocated allowance for loan losses | | $ | 464,796 | | | $ | — | |
| Impaired loans with allocated allowance for loan losses | | | 1,768,680 | | | | 2,333,523 | |
| | | | | | | | | |
| | | $ | 2,233,476 | | | $ | 2,333,523 | |
| | | | | | | | | |
| Amount of allowance for loan losses allocated | | $ | 176,867 | | | $ | 732,251 | |
Nonperforming loans were as follows:
| | | | | | | | | |
| Loans past due over 90 days still on accrual | | $ | 5,000 | | | $ | 189,000 | |
| Nonaccrual loans | | | 389,000 | | | | 1,749,000 | |
Nonperforming loans includes both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.
| |
NOTE 5 — | PREMISES AND EQUIPMENT |
Year-end premises and equipment were as follows:
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| Land | | $ | 2,598,661 | | | $ | 2,610,994 | |
| Buildings and improvements | | | 5,150,032 | | | | 5,570,503 | |
| Furniture and equipment | | | 5,946,633 | | | | 7,041,934 | |
| Construction in progress | | | 282,728 | | | | 17,838 | |
| | | | | | | | | |
| | | | 13,978,054 | | | | 15,241,269 | |
| Accumulated depreciation | | | (5,462,960 | ) | | | (5,840,918 | ) |
| | | | | | | | | |
| | | $ | 8,515,094 | | | $ | 9,400,351 | |
| | | | | | | | | |
During 2005, the Bank sold its Parkcenter facility in Dublin, Ohio and provided financing to the buyer. Under current accounting guidance, a large portion of the gain was deferred and being recognized into income using the installment method. The Corporation recognized a gain of $34,800 during 2005 and recorded $626,504 as deferred revenue which was included with other liabilities in the Consolidated Balance Sheet at December 31, 2005. In 2006, a participating interest in the loan was sold which resulted in the remaining gain of $626,504 being recognized as revenue.
Additionally in 2005, the Corporation purchased a 15 acre tract of land in Plain City for a total of $1,329,752. The Corporation retained approximately an acre of the property for a branch site and will sell the remaining parcel.
The Bank has entered into leasing arrangements for three branch facilities. The leases expire at various dates through 2014, and provide options for renewal. At December 31, 2006, the total future minimum lease commitments under the leases are summarized as follows:
| | | | | |
| 2007 | | $ | 160,488 | |
| 2008 | | | 161,688 | |
| 2009 | | | 159,288 | |
| 2010 | | | 153,888 | |
| 2011 | | | 155,088 | |
| Thereafter | | | 474,968 | |
| | | | | |
| | | $ | 1,265,408 | |
| | | | | |
F-16
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Rental expense from the leasing arrangements totaled $172,138, $223,659, and $180,449 for 2006, 2005 and 2004.
| |
NOTE 6 — | INTEREST-BEARING DEPOSITS |
At year-end, total interest-bearing deposits were as follows:
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| Interest-bearing demand | | $ | 45,971,775 | | | $ | 41,363,533 | |
| Money market | | | | | | | | |
| In denominations under $100,000 | | | 2,515,319 | | | | 3,840,123 | |
| In denominations of $100,000 or more | | | 15,461,524 | | | | 12,052,832 | |
| Savings | | | 37,356,203 | | | | 39,713,451 | |
| Time | | | | | | | | |
| Denominations under $100,000 | | | 41,273,556 | | | | 45,400,668 | |
| Denominations of $100,000 or more | | | 50,079,279 | | | | 40,408,495 | |
| | | | | | | | | |
| | | $ | 192,657,656 | | | $ | 182,779,102 | |
| | | | | | | | | |
Stated maturities of time deposits for the next five years were as follows:
| | | | | |
| 2007 | | $ | 64,576,988 | |
| 2008 | | | 15,107,683 | |
| 2009 | | | 9,559,494 | |
| 2010 | | | 1,479,765 | |
| 2011 | | | 490,243 | |
| Thereafter | | | 138,662 | |
| | | | | |
| | | $ | 91,352,835 | |
| | | | | |
Deposits from principal officers, directors, and their affiliates at year-end 2006 and 2005 were $7,086,573 and $3,974,795.
| |
NOTE 7 — | EMPLOYEE BENEFIT PLANS |
The Corporation sponsors a 401(k) profit sharing plan covering its eligible employees. The annual expense of the plan is equal to the sum of employer nonmatching contributions and employer matching contributions and costs to administer the plan. Employer nonmatching contributions are made at the discretion of the Board of Directors in the amount of 3.5% of compensation. Employer nonmatching contributions are allocated based on proportionate compensation, except for participants with compensation more than the social security wage base. These employees receive an additional allocation on excess compensation equal to the lesser of 5.7% of compensation or the lowest nonmatching contribution allocated to any other eligible participant expressed as a percentage of compensation. Employer matching contributions are based on the Corporation’s return on equity (ROE) and range from 0% to 100% of employee 401(k) contributions. The 2006 matching contribution was 25%. Based on ROE, there was no 2005 matching contribution. The Board of Directors approved a discretionary match for 2005 of 25% of employee contributions up to 6.5% of a participant’s compensation. Employee 401(k) contributions exceeding 6.5% of a participant’s compensation are not eligible for employer matching contributions. Employee 401(k) contributions are vested at all times. Employer nonmatching contributions are vested after five years of service. Matching contributions are vested after three years. The 2006, 2005 and 2004 expense related to this plan was $135,978, $105,000 and $121,519.
F-17
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
A supplemental retirement plan is in place for selected officers of the Corporation. Contributions to the plan are made at the discretion of the Board of Directors and invested in Corporation stock. These shares are recorded as treasury stock. Contributions vest over five years. The 2006, 2005 and 2004 expense related to this plan was $55,000, $40,000 and $40,000, respectively.
Options to buy stock have been granted to directors, officers and employees under various stock option and stock appreciation rights plans. The Board of Directors and stockholders have approved The Futura Banc Corp. 1994 and 1998 Stock Option and Stock Appreciation Rights Plans and The Futura Banc Corp. 1997 and 2001 Directors’ Stock Option and Stock Appreciation Rights Plans. Options expire ten years after the date of grant and are issued at an option price no less than the market price of the Corporation’s stock on the date of grant. Options and appreciation rights granted to directors vest over a two-year period. Options and appreciation rights granted to officers and employees are exercisable based on a five-year vesting schedule. On December 16, 2005, the Corporation opted to accelerate the vesting of all unvested options granted during 2003 and 2004.
F-18
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
A summary of the activity of the Corporation’s stock option plans and stock appreciation rights is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| | | | | | Weighted-
| | | | | | Weighted-
| | | | | | Weighted-
| |
| | | | | | Average
| | | | | | Average
| | | | | | Average
| |
| | | | | | Exercise
| | | | | | Exercise
| | | | | | Exercise
| |
| | | Shares | | | Price | | | Shares | | | Price | | | Shares | | | Price | |
| |
| Options outstanding at beginning of year | | | 312,297 | | | $ | 14.39 | | | | 333,843 | | | $ | 14.03 | | | | 338,507 | | | $ | 13.00 | |
| Granted | | | — | | | | — | | | | 37,650 | | | | 16.25 | | | | 49,140 | | | | 17.92 | |
| Exercised | | | (16,270 | ) | | | 12.66 | | | | (3,726 | ) | | | 11.86 | | | | (42,193 | ) | | | 9.99 | |
| Forfeited | | | (3,658 | ) | | | 10.30 | | | | (55,470 | ) | | | 13.66 | | | | (11,611 | ) | | | 15.38 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Options outstanding at end of year | | | 292,369 | | | | 14.53 | | | | 312,297 | | | | 14.39 | | | | 333,843 | | | | 14.03 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock appreciation rights outstanding at beginning of year | | | 34,471 | | | | 14.95 | | | | 25,471 | | | | 14.49 | | | | 30,613 | | | | 11.63 | |
| Granted | | | — | | | | — | | | | 9,000 | | | | 16.25 | | | | 9,000 | | | | 17.92 | |
| Exercised | | | (3,472 | ) | | | 12.47 | | | | — | | | | — | | | | (14,142 | ) | | | 10.49 | |
| Forfeited | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock appreciation rights outstanding at end of year | | | 30,999 | | | | 15.23 | | | | 34,471 | | | | 14.95 | | | | 25,471 | | | | 14.49 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Remaining shares available for option grants to employees at year-end | | | 65,037 | | | | | | | | 63,437 | | | | | | | | 47,232 | | | | | |
| Remaining employee stock appreciation rights at year-end | | | 45,888 | | | | | | | | 45,888 | | | | | | | | 54,888 | | | | | |
| Employee stock appreciation rights exercisable at year-end | | | 13,994 | | | | | | | | 12,194 | | | | | | | | 3,194 | | | | | |
| Remaining shares available for option grants and stock appreciation rights at year-end under director plan | | | 108,242 | | | | | | | | 108,242 | | | | | | | | 108,242 | | | | | |
| Director stock appreciation rights exercisable at year-end | | | 9,805 | | | | | | | | 13,277 | | | | | | | | 12,275 | | | | | |
Information related to the stock option plan during each year follows:
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Intrinsic value of options exercised | | $ | 77,547 | | | $ | 19,714 | | | $ | 392,901 | |
| Cash received from option exercises | | | 205,991 | | | | 44,189 | | | | 421,326 | |
| Tax benefit realized from option exercises | | | 18,804 | | | | 2,083 | | | | 129,767 | |
At December 31, 2006, the aggregate intrinsic value of outstanding stock options was $698,030 and the aggregate intrinsic value of exercisable stock options was $660,385.
F-19
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes information about stock options outstanding at December 31, 2006:
| | | | | | | | | | | | | | | |
| | | | | | | Weighted
| | Weighted
| | | | Weighted
|
| | | | Number
| | | Average
| | Average
| | Number
| | Average
|
Range of
| | | Outstanding
| | | Remaining
| | Exercise
| | Exercisable
| | Exercise
|
Exercise Prices | | | at 12/31/06 | | | Contractual Life | | Price | | at 12/31/06 | | Price |
| |
| $ | 5.97 - 7.95 | | | | 2,803 | | | 0.5 years | | $6.49 | | 2,803 | | $6.49 |
| | 7.96 - 9.94 | | | | 10,571 | | | 1.5 | | 9.40 | | 10,571 | | 9.40 |
| | 9.95 - 11.93 | | | | 40,840 | | | 2.7 | | 11.59 | | 40,840 | | 11.59 |
| | 11.94 - 13.92 | | | | 114,345 | | | 4.7 | | 13.12 | | 105,871 | | 13.15 |
| | 15.90 - 16.89 | | | | 33,150 | | | 8.4 | | 16.25 | | 6,630 | | 16.25 |
| | 16.90 - 17.89 | | | | 45,870 | | | 6.4 | | 17.58 | | 45,870 | | 17.58 |
| | 17.90 - 19.88 | | | | 44,790 | | | 7.5 | | 18.14 | | 44,790 | | 18.14 |
| | | | | | | | | | | | | | | |
| | | | | | 292,369 | | | | | 14.53 | | 257,375 | | 14.41 |
| | | | | | | | | | | | | | | |
| |
NOTE 8 — | FEDERAL HOME LOAN BANK ADVANCES |
FHLB advances at year-end were as follows:
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| Fixed rate advances, maturing May 2006 through March 2009 at rates from 2.28% to 3.82% | | $ | 4,400,000 | | | $ | 5,000,000 | |
| Amortizing fixed rate advance, final maturity June 2014 at 4.85% | | | 439,715 | | | | 464,708 | |
| Convertible fixed rate advances, maturing January 2008 through September 2008 at rates from 5.29% to 5.57% | | | 5,000,000 | | | | 9,000,000 | |
| | | | | | | | | |
| | | $ | 9,839,715 | | | $ | 14,464,708 | |
| | | | | | | | | |
Mortgage loans, home equity lines of credit, farm real estate loans, multifamily loans and all shares of FHLB stock owned by the Bank were pledged as collateral for the FHLB advances and letters of credit in the amounts shown below:
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| One-to-four family residential mortgage loans | | $ | 26,348,000 | | | $ | 25,621,000 | |
| Home equity lines of credit | | | 6,656,000 | | | | 6,649,000 | |
| Farm real estate loans | | | 8,110,000 | | | | 6,726,000 | |
| Multi-family loans | | | 1,804,000 | | | | 122,000 | |
| FHLB stock | | | 3,039,400 | | | | 2,828,600 | |
The Bank has approval through September 14, 2007 to borrow up to $10,000,000 with the Federal Home Loan Bank through the Cash Management Advance Program. No borrowings were outstanding from the Advance Program at December 31, 2006 or 2005. The convertible fixed rate advances have fixed interest rates for the first three or five years. After the fixed interest rate term expires, the advances are convertible to variable interest rate based upon LIBOR at the option of the FHLB. If the advance is converted, the Bank may prepay the advance without penalty.
F-20
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Stated maturities of FHLB advances for the next five years were as follows:
| | | | | |
| 2007 | | $ | 628,475 | |
| 2008 | | | 6,327,644 | |
| 2009 | | | 2,529,015 | |
| 2010 | | | 30,454 | |
| 2011 | | | 31,964 | |
| Thereafter | | | 292,163 | |
| | | | | |
| | | $ | 9,839,715 | |
| | | | | |
| |
NOTE 9 — | SUBORDINATED DEBENTURES |
In June 2005, Futura TPF Trust I and Futura TPF Trust II, trusts formed by the Corporation, closed a pooled private offering of 2,500 and 2,000 trust preferred securities, respectively, with a liquidation amount of $1,000 per security. The Corporation issued subordinated debentures to the trusts in exchange for ownership of all of the common security of the trusts and the proceeds of the preferred securities sold by the trusts. The Corporation may redeem the subordinated debentures, in whole or in part, in a principal amount with integral multiples of $1,000, on or after June 15, 2010 at 100% of the principal amount, plus accrued and unpaid interest. The subordinated debentures mature on June 15, 2035. The subordinated debentures are also redeemable in whole or in part from time to time, upon the occurrence of specific events defined within the trust indenture. The Corporation has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.
The $4,500,000 in trust preferred securities may be included in Tier I capital (with certain limitations applicable) under current regulatory guidelines and interpretations. The Corporation’s investment in the common stock of the trusts was $148,000 and is included in other assets.
Subordinated debentures at year-end were as follows:
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| Subordinated debenture at a variable rate of 7.02% and 6.15% | | $ | 2,578,000 | | | $ | 2,578,000 | |
| Subordinated debenture at a fixed rate of 5.71% | | | 2,070,000 | | | | 2,070,000 | |
| | | | | | | | | |
| | | $ | 4,648,000 | | | $ | 4,648,000 | |
| | | | | | | | | |
Income tax expense (benefit) was as follows:
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Current | | $ | 817,190 | | | $ | (563,216 | ) | | $ | (438,336 | ) |
| Tax effect from exercise of nonqualified stock options | | | 18,804 | | | | 2,083 | | | | 129,767 | |
| Deferred | | | 424,236 | | | | 301,116 | | | | 278,169 | |
| | | | | | | | | | | | | |
| | | $ | 1,260,230 | | | $ | (260,017 | ) | | $ | (30,400 | ) |
| | | | | | | | | | | | | |
F-21
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The difference between the financial statement income tax expense (benefit) and amounts computed by applying the statutory federal income tax rate of 34% to income (loss) before taxes was as follows:
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Income taxes computed at the statutory federal income tax rate | | $ | 1,414,596 | | | $ | (107,183 | ) | | $ | 122,749 | |
| Tax exempt security and loan income | | | (176,647 | ) | | | (159,811 | ) | | | (163,076 | ) |
| Nondeductible expenses | | | 8,481 | | | | 7,464 | | | | 5,498 | |
| Other | | | 13,800 | | | | (487 | ) | | | 4,429 | |
| | | | | | | | | | | | | |
| | | $ | 1,260,230 | | | $ | (260,017 | ) | | $ | (30,400 | ) |
| | | | | | | | | | | | | |
| Effective tax rate | | | 30.3 | % | | | (82.5 | )% | | | (8.4 | )% |
| | | | | | | | | | | | | |
Year-end deferred tax assets and liabilities were due to the following:
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| Deferred tax assets | | | | | | | | |
| Allowance for loan losses | | $ | 143,111 | | | $ | 333,813 | |
| Deferred compensation | | | 179,046 | | | | 163,561 | |
| Deferred loan fees | | | 87,701 | | | | 99,198 | |
| Intangible assets | | | 6,662 | | | | 16,471 | |
| Nonaccrual loan interest income | | | 11,434 | | | | 68,026 | |
| Accrued stock appreciation rights | | | 24,345 | | | | 33,914 | |
| Deferred gain on sale of building | | | — | | | | 35,491 | |
| Other | | | — | | | | 33,569 | |
| | | | | | | | | |
| | | | 452,299 | | | | 784,043 | |
| | | | | | | | | |
| Deferred tax liabilities | | | | | | | | |
| Unrealized gain on securities available for sale | | | (12,814 | ) | | | (12,240 | ) |
| Security accretion | | | (10,918 | ) | | | (5,294 | ) |
| Accumulated depreciation | | | (172,424 | ) | | | (151,572 | ) |
| FHLB stock dividends | | | (559,751 | ) | | | (501,883 | ) |
| Deferred loan costs | | | (14,566 | ) | | | (6,418 | ) |
| | | | | | | | | |
| | | | (770,473 | ) | | | (677,407 | ) |
| | | | | | | | | |
| Net deferred tax asset (liability) | | $ | (318,174 | ) | | $ | 106,636 | |
| | | | | | | | | |
| |
NOTE 11 — | LOAN COMMITMENTS AND OTHER RELATED ACTIVITIES |
Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer-financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.
F-22
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The contractual amounts of financial instruments with off-balance-sheet risk were as follows at year-end:
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| Commitments to extend credit | | $ | 2,023,000 | | | $ | 3,722,000 | |
| Unused home equity lines — variable rate | | | 6,505,000 | | | | 7,560,000 | |
| Unused commercial lines of credit — variable rate | | | 28,670,000 | | | | 31,036,000 | |
| Overdraft protection | | | 2,826,000 | | | | 2,843,000 | |
| Standby letters of credit | | | 777,000 | | | | 691,000 | |
Commitments to make loans are generally made for 30 days or less. Outstanding commitments to extend credit at December 31, 2006 included fixed rate commitments in the amount of $527,000 and variable rate commitments in the amount of $1,496,000. The fixed rate loan commitments have interest rates ranging from 7.25% to 8.25% and maturities ranging from twelve to sixty-one months. Outstanding commitments to extend credit at December 31, 2005 included a fixed rate commitment in the amount of $400,000 and variable rate commitments in the amount of $3,322,000. The fixed rate loan commitment had an interest rate of 4.72% and a maturity of five years.
In 2004, the Bank secured private deposit insurance to secure public deposits in the amount of $11,000,000. This insurance remained in place throughout 2005 and 2006.
During 2001, the Bank and its CEO were named in a legal action brought by a group of plaintiffs that included current and former customers of the Bank. This litigation was settled in 2004 and the amount paid net of insurance proceeds is shown as a separate line item in noninterest expense.
| |
NOTE 12 — | REGULATORY MATTERS |
Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective-action regulations involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Effective March 30, 2006, the Board of Governors of the Federal Reserve System adopted a final rule which increases the asset size threshold from $150 million to $500 million in consolidated assets for determining whether a bank holding company is exempted from the consolidated capital requirements.
Prompt corrective-action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans for capital restoration are required.
At year-end 2006 and 2005, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category. Actual and required capital amounts and ratios are presented below at year-end.
F-23
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | To be Well
| |
| | | | | | | | | Capitalized Under
| |
| | | | | | For Capital
| | | Prompt Corrective
| |
| | | Actual | | | Adequacy Purposes | | | Action Provisions | |
| | | Amount | | | Ratio | | | Amount | | | Ratio | | | Amount | | | Ratio | |
| | | (Dollars in thousands) | |
| |
2006 | | | | | | | | | | | | | | | | | | | | | | | | |
| Total capital to risk weighted assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Bank | | $ | 26,626 | | | | 12.45 | % | | $ | 17,110 | | | | 8.00 | % | | $ | 21,387 | | | | 10.00 | % |
| Tier 1 (core) capital to risk weighted assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Bank | | | 24,946 | | | | 11.66 | | | | 8,555 | | | | 4.00 | | | | 12,832 | | | | 6.00 | |
| Tier 1 (core) capital to average assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Bank | | | 24,946 | | | | 9.21 | | | | 10,834 | | | | 4.00 | | | | 13,543 | | | | 5.00 | |
2005 | | | | | | | | | | | | | | | | | | | | | | | | |
| Total capital to risk weighted assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated | | $ | 30,113 | | | | 14.12 | % | | $ | 17,057 | | | | 8.00 | % | | | N/A | | | | | |
| Bank | | | 28,406 | | | | 13.41 | | | | 16,944 | | | | 8.00 | | | $ | 21,180 | | | | 10.00 | % |
| Tier 1 (core) capital to risk weighted assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated | | | 27,875 | | | | 13.07 | | | | 8,528 | | | | 4.00 | | | | N/A | | | | | |
| Bank | | | 26,168 | | | | 12.35 | | | | 8,472 | | | | 4.00 | | | | 12,708 | | | | 6.00 | |
| Tier 1 (core) capital to average assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated | | | 27,875 | | | | 10.35 | | | | 10,777 | | | | 4.00 | | | | N/A | | | | | |
| Bank | | | 26,168 | | | | 9.71 | | | | 10,784 | | | | 4.00 | | | | 13,479 | | | | 5.00 | |
Banking regulations limit capital distributions by banks. Generally, capital distributions are limited to the undistributed net income for the current and prior two years, subject to the capital requirements described above. During 2007, the Bank must obtain regulatory approval to pay dividends to Futura until 2007 net income exceeds $1,677,111.
F-24
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| |
NOTE 13 — | FAIR VALUES OF FINANCIAL INSTRUMENTS |
Carrying amount and estimated fair value of financial instruments were as follows at year-end:
| | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2005 | |
| | | Carrying
| | | Estimated
| | | Carrying
| | | Estimated
| |
| | | Amount | | | Fair Value | | | Amount | | | Fair Value | |
| |
Financial Assets | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 10,561,710 | | | $ | 10,561,710 | | | $ | 16,516,958 | | | $ | 16,516,958 | |
| Interest-bearing deposits in other financial institutions | | | — | | | | — | | | | 1,000,000 | | | | 998,377 | |
| Securities available for sale | | | 30,145,316 | | | | 30,145,316 | | | | 27,497,097 | | | | 27,497,097 | |
| Loans, net | | | 213,860,911 | | | | 212,639,799 | | | | 203,963,957 | | | | 202,441,926 | |
| FHLB and other stock | | | 3,411,550 | | | | 3,411,550 | | | | 3,200,750 | | | | 3,200,750 | |
| Receivables due from loan sales | | | — | | | | — | | | | 565,733 | | | | 565,733 | |
| Accrued interest receivable | | | 2,075,675 | | | | 2,075,675 | | | | 1,903,506 | | | | 1,903,506 | |
Financial Liabilities | | | | | | | | | | | | | | | | |
| Demand and savings deposits | | $ | (136,800,712 | ) | | $ | (136,800,712 | ) | | $ | (135,271,206 | ) | | $ | (135,271,206 | ) |
| Time deposits | | | (91,352,835 | ) | | | (91,488,311 | ) | | | (85,809,163 | ) | | | (85,704,147 | ) |
| Other short term borrowings | | | (15,282 | ) | | | (15,282 | ) | | | (23,474 | ) | | | (23,474 | ) |
| FHLB advances | | | (9,839,715 | ) | | | (9,708,887 | ) | | | (14,464,708 | ) | | | (14,359,246 | ) |
| Subordinated debentures | | | (4,648,000 | ) | | | (4,683,643 | ) | | | (4,648,000 | ) | | | (4,712,030 | ) |
| Accrued interest payable | | | (497,523 | ) | | | (497,523 | ) | | | (339,834 | ) | | | (339,834 | ) |
The estimated fair value approximates carrying amount for all items except those described below. Estimated fair value for securities is based on quoted market values for individual securities or for equivalent securities. For interest-bearing deposits in other financial institutions, fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair values for impaired loans are estimated using discounted cash flow analysis or underlying collateral values. Fair value of FHLB advances and subordinated debentures is based on current rates for similar financing. Fair values of off-balance-sheet items are based on the current fee or cost that would be charged to enter into or terminate such agreements, which are not material.
F-25
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| |
NOTE 14 — | PARENT COMPANY FINANCIAL STATEMENTS |
The following are condensed parent company only financial statements for Futura:
CONDENSED PARENT COMPANY BALANCE SHEETS
December 31, 2006 and 2005
| | | | | | | | | |
| | | 2006 | | | 2005 | |
| |
| ASSETS |
| Cash and cash equivalents with subsidiary | | $ | 3,207,617 | | | $ | 445,365 | |
| Investment in bank subsidiary | | | 24,971,965 | | | | 26,192,377 | |
| Investment in nonbank subsidiaries | | | 437,176 | | | | 513,041 | |
| Land | | | 829,752 | | | | 1,104,752 | |
| Other assets | | | 110,179 | | | | 71,992 | |
| | | | | | | | | |
| Total assets | | $ | 29,556,689 | | | $ | 28,327,527 | |
| | | | | | | | | |
| |
| LIABILITIES |
| Other liabilities | | $ | 124,093 | | | $ | 116,487 | |
| Note payable | | | 180,000 | | | | — | |
| Subordinated debentures | | | 4,648,000 | | | | 4,648,000 | |
| | | | | | | | | |
| Total liabilities | | | 4,952,093 | | | | 4,764,487 | |
| | | | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | | |
| Common stock | | | 19,994,725 | | | | 20,463,969 | |
| Treasury stock | | | (279,883 | ) | | | (214,680 | ) |
| Retained earnings | | | 4,864,880 | | | | 3,289,992 | |
| Accumulated other comprehensive income | | | 24,874 | | | | 23,759 | |
| | | | | | | | | |
| Total stockholders’ equity | | | 24,604,596 | | | | 23,563,040 | |
| | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 29,556,689 | | | $ | 28,327,527 | |
| | | | | | | | | |
F-26
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED PARENT COMPANY STATEMENTS OF OPERATIONS
Years Ended December 31, 2006, 2005 and 2004
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Income | | | | | | | | | | | | |
| Dividends from bank subsidiary | | $ | 4,420,000 | | | $ | 500,000 | | | $ | 1,500,000 | |
| Interest and dividends | | | 34,574 | | | | 43,993 | | | | 17,841 | |
| Gain (loss) on sale of securities | | | — | | | | 31,060 | | | | — | |
| | | | | | | | | | | | | |
| Total income | | | 4,454,574 | | | | 575,053 | | | | 1,517,841 | |
| Expenses | | | | | | | | | | | | |
| Interest | | | 297,003 | | | | 141,822 | | | | — | |
| Other | | | 44,802 | | | | 7,616 | | | | 4,663 | |
| | | | | | | | | | | | | |
| Total expenses | | | 341,805 | | | | 149,438 | | | | 4,663 | |
| | | | | | | | | | | | | |
| Income before income taxes and equity in undistributed net income of subsidiaries | | | 4,112,769 | | | | 425,615 | | | | 1,513,178 | |
| Income tax benefit | | | (105,000 | ) | | | (28,300 | ) | | | — | |
| | | | | | | | | | | | | |
| Income before equity in undistributed net income of subsidiaries | | | 4,217,769 | | | | 453,915 | | | | 1,513,178 | |
| Undistributed net income of bank subsidiary | | | (1,221,527 | ) | | | (455,584 | ) | | | (1,023,871 | ) |
| Undistributed net income of nonbank subsidiaries | | | (95,896 | ) | | | (53,558 | ) | | | (97,880 | ) |
| | | | | | | | | | | | | |
| Net income (loss) | | $ | 2,900,346 | | | $ | (55,227 | ) | | $ | 391,427 | |
| | | | | | | | | | | | | |
F-27
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED PARENT COMPANY STATEMENTS OF CASH FLOWS
Years Ended December 31, 2006, 2005 and 2004
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Cash flows from operating activities | | | | | | | | | | | | |
| Net income (loss) | | $ | 2,900,346 | | | $ | (55,227 | ) | | $ | 391,427 | |
| Adjustments to reconcile net income to net cash from operating activities | | | | | | | | | | | | |
| Undistributed net income of subsidiaries | | | 1,317,422 | | | | 509,142 | | | | 1,121,751 | |
| Net gain on sale of securities available for sale | | | — | | | | (31,060 | ) | | | — | |
| Net change in other assets and liabilities | | | (11,807 | ) | | | (27,398 | ) | | | (71,367 | ) |
| | | | | | | | | | | | | |
| Net cash from operating activities | | | 4,205,961 | | | | 395,457 | | | | 1,441,811 | |
| Cash flows from investing activities | | | | | | | | | | | | |
| Capital contribution to bank subsidiary | | | — | | | | (2,500,000 | ) | | | (1,000,000 | ) |
| Capital contribution to nonbank subsidiaries | | | (20,000 | ) | | | (248,000 | ) | | | (50,000 | ) |
| Purchase of land, net | | | — | | | | (1,104,752 | ) | | | — | |
| Proceeds from sale of land to bank | | | 275,000 | | | | — | | | | — | |
| Proceeds from sale of securities available for sale | | | — | | | | 251,060 | | | | — | |
| | | | | | | | | | | | | |
| Net cash from investing activities | | | 255,000 | | | | (3,601,692 | ) | | | (1,050,000 | ) |
| Cash flows from financing activities | | | | | | | | | | | | |
| Subordinated debentures issued | | | — | | | | 4,648,000 | | | | — | |
| Proceeds from note payable | | | 300,000 | | | | — | | | | — | |
| Repayment of note payable | | | (120,000 | ) | | | — | | | | — | |
| Cash dividends and fractional shares | | | | | | | | | | | | |
| paid to stockholders | | | (1,325,458 | ) | | | (1,123,472 | ) | | | (1,077,022 | ) |
| Stock purchased and retired | | | (767,927 | ) | | | (385,079 | ) | | | (1,244,105 | ) |
| Stock issued for benefit plans | | | 214,676 | | | | 44,189 | | | | 491,406 | |
| | | | | | | | | | | | | |
| Net cash from financing activities | | | (1,698,709 | ) | | | 3,183,638 | | | | (1,829,721 | ) |
| | | | | | | | | | | | | |
| Net change in cash and cash equivalents | | | 2,762,252 | | | | (22,597 | ) | | | (1,437,910 | ) |
| Cash and cash equivalents beginning of year | | | 445,365 | | | | 467,962 | | | | 1,905,872 | |
| | | | | | | | | | | | | |
| Cash and cash equivalents end of year | | $ | 3,207,617 | | | $ | 445,365 | | | $ | 467,962 | |
| | | | | | | | | | | | | |
F-28
FUTURA BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| |
NOTE 15 — | EARNINGS (LOSS) PER COMMON SHARE |
The factors used in the earnings (loss) per share computation follow. All share and per share amounts have been restated for the stock dividends.
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2003 | |
| |
Basic | | | | | | | | | | | | |
| Net income (loss) | | $ | 2,900,346 | | | $ | (55,227 | ) | | $ | 391,427 | |
| | | | | | | | | | | | | |
| Weighted average common shares outstanding | | | 2,655,334 | | | | 2,669,518 | | | | 2,692,081 | |
| | | | | | | | | | | | | |
| Basic earnings (loss) per common share | | $ | 1.09 | | | $ | (0.02 | ) | | $ | 0.15 | |
| | | | | | | | | | | | | |
Diluted | | | | | | | | | | | | |
| Net income (loss) | | $ | 2,900,346 | | | $ | (55,227 | ) | | $ | 391,427 | |
| | | | | | | | | | | | | |
| Weighted average common shares outstanding for basic earnings (loss) per common share | | | 2,655,334 | | | | 2,669,518 | | | | 2,692,081 | |
| Add: Dilutive effects of assumed exercises of stock options | | | 48,659 | | | | — | | | | 70,476 | |
| | | | | | | | | | | | | |
| Average shares and dilutive potential common shares | | | 2,703,993 | | | | 2,669,518 | | | | 2,762,557 | |
| | | | | | | | | | | | | |
| Diluted earnings (loss) per common share | | $ | 1.07 | | | $ | (0.02 | ) | | $ | 0.14 | |
| | | | | | | | | | | | | |
Stock options for 90,660, 312,297, and 4,122 shares of common stock were antidilutive and not considered in computing diluted earnings (loss) per common share for 2006, 2005 and 2004 because either the Corporation had a loss from continuing operations or the exercise price of the stock options was greater than the average stock price for the periods.
| |
NOTE 16 — | OTHER COMPREHENSIVE INCOME (LOSS) |
Other comprehensive income (loss) components and related taxes were as follows:
| | | | | | | | | | | | | |
| | | 2006 | | | 2005 | | | 2004 | |
| |
| Unrealized holding gains (losses) on available for sale securities | | $ | 27,400 | | | $ | (279,034 | ) | | $ | (272,956 | ) |
| Reclassification adjustments for (gains) and losses later recognized in income | | | (25,711 | ) | | | (32,517 | ) | | | (10,000 | ) |
| | | | | | | | | | | | | |
| Net unrealized gains (losses) | | | 1,689 | | | | (311,551 | ) | | | (282,956 | ) |
| Tax effect | | | (574 | ) | | | 105,927 | | | | 96,204 | |
| | | | | | | | | | | | | |
| Other comprehensive income (loss) | | $ | 1,115 | | | $ | (205,624 | ) | | $ | (186,752 | ) |
| | | | | | | | | | | | | |
F-29
AGREEMENT AND PLAN OF MERGER
June 7, 2007
January 10, 2022
by and between
FIRST CITIZENS BANC CORP
CIVISTA BANCSHARES, INC.
and
FUTURA BANCCOMUNIBANC CORP.
TABLE OF CONTENTS
| | | | | | |
| | | | | Page |
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RECITALSARTICLE I—CERTAIN DEFINITIONS | | | A-1 | |
| | | | A-1 | |
ARTICLE I — CERTAIN DEFINITIONS
| | | A-1 | |
1.01 | | Certain Definitions | | | A-1 | |
| |
ARTICLE II—THE MERGER | | | | A-8 | |
ARTICLE II — THE MERGER
| | | A-5 | |
2.01 | | The Parent Merger | | | A-5A-8 | |
2.02 | | The Subsidiary Merger | | | A-5 | |
2.03 | | Effectiveness of Parent Merger | | | A-5A-8 | |
2.042.03 | | Effective Date and Effective Time | | | A-5A-8 | |
2.04 | | Closing | | | A-9 | |
2.05 | | The Subsidiary Merger | | |
ARTICLE III — CONSIDERATION; EXCHANGE PROCEDURES
A-9 | |
| A-5 | |
3.01ARTICLE III—MERGER CONSIDERATION | | Merger Consideration | | | A-5 | |
3.02 | | Rights as Shareholders; Share Transfers | | | A-8 | |
3.03 | | Fractional Shares | | | A-9 | |
3.04 | | Exchange Procedures | | | A-9 | |
3.053.01 | | Conversion of FuturaComunibanc Common Stock Options | | | A-9 | |
3.063.02 | | Disposition of Stock Appreciation RightsExchange and Payment Procedures | | | A-10 | |
3.07 | | Anti-Dilution Provisions and Other Adjustments | | | A-10 | |
3.08 | | Lost Certificates | | | A-10 | |
3.09 | | Dissenting Shares | | | A-10 | |
3.103.03 | | Tax ConsequencesConsequences/Tax Opinions | | | A-11 | |
| | | | A-12 | |
| |
ARTICLE IV — IV—ACTIONS PENDING CONSUMMATION OF MERGER | | | A-11A-13 | |
4.01 | | Forbearances of FuturaComunibanc | | | A-11A-13 | |
4.02 | | Forbearances of First CitizensCivista | | | A-13 | |
| | | A-16 | |
| |
ARTICLE V—REPRESENTATIONS AND WARRANTIES | | |
ARTICLE V — REPRESENTATIONS AND WARRANTIES
A-17 | | | A-14 | |
5.01 | | Disclosure Schedules | | | A-14 | |
5.02 | | Standard | | | A-14 | |
5.03 | | Representations and Warranties of FuturaComunibanc | | | A-14A-17 | |
5.045.02 | | Representations and Warranties of First CitizensCivista | | | A-23 | |
| | | A-32 | |
| |
ARTICLE VI—COVENANTS | | | A-35 | |
ARTICLE VI — COVENANTS
6.01 | | | A-26 | |
6.01 | | Commercially Reasonable Best Efforts | | | A-26A-35 | |
6.02 | | Shareholder Approvals | | | A-26A-36 | |
6.03 | | Registration StatementStatement; Proxy Statement/Prospectus | | | A-27A-36 | |
6.04 | | Press ReleasesPublic Announcements | | | A-28A-37 | |
6.05 | | Access; Information | | | A-28A-37 | |
6.06 | | Acquisition Proposals; Break Up FeeProposal | | | A-28A-38 | |
6.07 | | Affiliate Agreements | | | A-29 | |
6.08 | | Takeover Laws | | | A-29A-40 | |
6.096.08 | | Certain Policies | | | A-29A-40 | |
6.10 | | NASDAQ Listing | | | A-29 | |
6.116.09 | | Regulatory Applications | | | A-29A-40 | |
6.126.10 | | Employment Matters; Employee Benefits | | | A-30 | |
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| | | | | A-41 | |
| | | | Page |
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6.136.11 | | Notification of Certain MattersMatters; Disclosure Supplements | | | A-31A-43 | |
6.146.12 | | [Reserved]Data Conversion | | | A-31A-43 | |
6.15 | | Accounting and Tax Treatment | | | A-31 | |
6.16 | | No Breaches of Representations and Warranties | | | A-31 | |
6.176.13 | | Consents | | | A-31A-43 | |
6.186.14 | | Insurance Coverage | | | A-31A-43 | |
6.196.15 | | Correction of InformationDividends | | | A-31A-43 | |
6.206.16 | | Confidentiality | | | A-31A-44 | |
6.21 | | Supplemental Assurances | | | A-32 | |
6.226.17 | | Regulatory Matters | | | A-32A-44 | |
6.236.18 | | First Citizens Board of Directors Structure Following the Parent MergerIndemnification | | | A-32 | |
6.24 | | Establishment of Bank Community Board | | | A-32 | |
6.25 | | Bank Name and Signage | | | A-32 | |
6.26 | | Indemnification; Directors’ and Officers’ Liability Insurance | | | A-33 | |
| | | A-44 | |
6.19 | | Environmental Assessments | | | A-44 | |
| | Litigation and Claims | | | A-45 | |
6.21 | | NASDAQ Listing | | | A-45 | |
6.22 | | Absence of Control | | | A-45 | |
6.23 | | Representation on Civista Board | | | A-45 | |
| |
ARTICLE VII — VII—CONDITIONS TO CONSUMMATION OF THE MERGERMERGER; CLOSING | | | A-33A-45 | |
7.01 | | Conditions to Each Party’s Obligation to Effect the Merger | | | A-33A-45 | |
7.02 | | Conditions to Obligation of FuturaComunibanc | | | A-34A-46 | |
7.03 | | Conditions to Obligation of First CitizensCivista | | | A-34 | |
| | | A-46 | |
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| | | | | | |
| |
ARTICLE VIII—TERMINATION | | |
ARTICLE VIII — TERMINATION
A-47 | | | A-35 | |
8.01 | | Termination | | | A-35A-47 | |
8.02 | | Effect of Termination and Abandonment,Abandonment; Enforcement of Agreement | | | A-36A-49 | |
| |
ARTICLE IX—MISCELLANEOUS | | | A-50 | |
9.01 | | No Survival | | | A-50 | |
ARTICLE IX — MISCELLANEOUS
9.02 | | | A-36 | |
9.01 | | Survival | | | A-36 | |
9.02 | | Waiver; Amendment | | | A-36A-50 | |
9.03 | | Extension; Waiver | | | A-51 | |
9.04 | | Counterparts | | | A-36A-51 | |
9.049.05 | | Confidential Supervisory Information | | | A-51 | |
9.06 | | Governing LawLaw; Jurisdiction | | | A-37A-51 | |
9.05 | | Expenses | | | A-37 | |
9.06 | | Notices | | | A-37 | |
9.07 | | Entire Understanding; No Third Party Beneficiaries | | | A-37 | |
9.08 | | Interpretation; Effect | | | A-38 | |
9.09 | | Waiver of Jury Trial | | | A-38A-51 | |
9.08 | | Expenses | | | A-51 | |
9.09 | | Notices | | | A-52 | |
9.10 | | Entire Understanding | | | A-52 | |
9.11 | | Assignment; Third-Party Beneficiaries | | | A-52 | |
9.12 | | Interpretation | | | A-52 | |
9.13 | | Specific Performance | | | A-53 | |
9.14 | | Severability | | | A-53 | |
9.15 | | Delivery by Electronic Transmission | | | A-53 | |
| | |
EXHIBIT A | | Form of VotingSupport Agreement | | | A-55 | |
EXHIBIT B | | |
EXHIBIT B Form of Futura AffiliateSubsidiary Merger Agreement | | | A-64 | | |
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EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of
June 7, 2007 (hereinafter referred to as this “Agreement”January 10, 2022 (this “Agreement”), by and between
First Citizens Banc Corp, an Ohio corporation (hereinafter referred to as “First Citizens”), and Futura Banc Corp.CIVISTA BANCSHARES, INC., an Ohio corporation
(hereinafter referred to(“Civista”), and COMUNIBANC CORP., an Ohio corporation (“Comunibanc”).WITNESSETH
WHEREAS, Civista is a registered financial holding company under the Banking Holding Company Act of 1956, as “Futura”amended (“BHCA”) and owns all of the outstanding shares of Civista Bank, an Ohio chartered commercial bank (“Civista Bank”);
WHEREAS, First Citizens, Comunibanc is a registered bank holding company under the BHCA and owns all of the outstanding shares of The Citizens Banking Company,Henry County Bank, an Ohio bank (hereinafter referred to as “Citizens Bank”);
WHEREAS, Futura is a registered bank holding company and owns all of the outstanding shares of Champaign National Bank, a national bank (hereinafter referred to as “Champaign Bank”);
WHEREAS, Futura also owns all of the outstanding shares of Champaign Investment Company, an Ohiobanking corporation (“Champaign Investment Company”Henry County Bank”);
WHEREAS, the Boards of Directors of First Citizens, Futura, Citizens BankCivista and Champaign BankComunibanc believe that the merger of FuturaComunibanc with and into First Citizens,Civista, followed by the subsidiary bank merger of ChampaignHenry County Bank with and into CitizensCivista Bank, each in accordance with the terms and subject to the conditions of this Agreement, would be in the best interests of the shareholders of First CitizensCivista and Futura; and
Comunibanc;WHEREAS, the Boards of Directors of First Citizens, Futura, Citizens BankCivista and Champaign BankComunibanc have each unanimously approved this Agreement and the transactions contemplated hereby;
WHEREAS the parties intend this merger to qualify as a “reorganization” within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement is intended to be and is adopted as a “plan of reorganization” for purposes of Sections 354 and 361 of the Code;
WHEREAS, as an inducement for Civista to enter into this Agreement, certain directors of Comunibanc have entered into Support Agreements with Civista (the “Support Agreements”), each dated as of the date of this Agreement, in the form attached to this Agreement as Exhibit A, pursuant to which such directors have agreed, among other matters, to vote all of the shares of Comunibanc Common Stock beneficially owned by such individuals in favor of the Merger upon the terms and subject to the conditions set forth in the Support Agreement; and
WHEREAS, the parties also desire to provide in this Agreement for certain undertakings, conditions, representations, warranties and covenants in connection with the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein, First Citizens and Futura, intending to be legally bound,for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Civista and Comunibanc hereby agree as follows:
1.01 Certain Definitions.Definitions.The following terms are used in this Agreement with the meanings set forth below:
“Acceptance of Superior Proposal” has the meaning set forth in Section 6.06(d).
“Acquisition Proposal”Proposal” has the meaning set forth in Section 6.06(e)(ii).
“Acquisition Transaction” has the meaning set forth in Section 6.06(e)(iii).
“Affiliate” or “Affiliates”has the meaning set forth in Section 6.06.
“Aggregate Consideration”hasRule 12b-2 under the meaning set forth in Section 3.10(b).
Exchange Act.“Aggregate Share Consideration”has the meaning set forth in Section 3.10(b).
“Agreement”Agreement” means this Agreement, as amended or modified from time to time in accordance with Section 9.02.
9.02.“AgreementAssociate” has the meaning set forth in Rule 12b-2 under the Exchange Act.
“BHCA” has the meaning set forth in the Recitals to Merge”this Agreement.
“CARES Act Modified Loan” has the meaning set forth in Section 5.01(t)(vii).
“CARES Act” has the meaning set forth in Section 5.01(t)(vii).
“Chosen Courts” has the meaning set forth in Section 9.06.
“Civista” has the meaning set forth in the Preamble to this Agreement.
“Civista Articles” means the Articles of Incorporation of Civista, as amended.
“Civista Bank” has the meaning set forth in the Recitals to this Agreement.
“Civista Board” means the Board of Directors of Civista.
“Civista Board Deferred Compensation Plan” means the Civista Bancshares, Inc. and Affiliates Nonqualified Deferred Compensation Plan for Directors of Civista and its Subsidiaries, as amended.
“Civista Common Shares” means shares of common stock, without par value, of Civista.
“Civista Common Share Closing Price” has the meaning set forth in Section 3.02(b)(v).
“Civista Disclosure Schedule” has the meaning set forth in Section 5.02.
“Civista Market Price” has the meaning set forth in Section 8.01(g).
“Civista Market Value” has the meaning set forth in Section 8.01(g).
“Civista Regulations” means the regulations of Civista, as amended.
“Civista SEC Reports” has the meaning set forth in Section 5.02(f)(ii).
“Closing” has the meaning set forth in Section 2.04.
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
“Code” has the meaning set forth in the Recitals to this Agreement.
“Compensation and Benefit Plans” has the meaning set forth in Section 5.01(k)(i).
“Comunibanc” has the meaning set forth in the Preamble to this Agreement.
“Comunibanc 401(k) Plan” has the meaning set forth in Section 6.10(c).
“Comunibanc Articles” means the Amended and Restated Articles of Incorporation of Comunibanc, as amended.
“Comunibanc Board” means the Board of Directors of Comunibanc.
“Comunibanc Common Stock” has the meaning set forth in Section 5.01(b).
“Comunibanc Disclosure Schedule” has the meaning set forth in Section 5.01.
“Comunibanc ESOP” has the meaning set forth in Section 2.02.
6.10(h).“All Cash Election”Comunibanc Financial Statements” has the meaning set forth in Section 5.01(e)(i)
“Comunibanc Group” has the meaning set forth in Section 5.01(o)(vii).
“Comunibanc Meeting” has the meaning set forth in Section 5.01(d)(i).
“Comunibanc Recommendation” has the meaning set forth in in Section 6.02(b).
“Comunibanc’s Territory” means, for purposes of this Agreement, the geographic area comprising the entirety of the states of Ohio, Michigan, and Indiana.
“Consultants” has the meaning set forth in Section 3.01(c)(ii) 5.01(k)(i).
“All Share Election”Data Conversion” has the meaning set forth in Section 3.01(c)(i) 6.12.
“Average First Citizens Price”means the arithmetic mean of the closing price of First Citizens Common Shares on NASDAQ for the twenty (20) trading days immediately preceding the fifth (5th) trading day prior to the Effective Date. As to those trading days in which no sales of First Citizens Common Shares are made, the average of the bid and ask price for a First Citizens Common Share on that day shall be used.
“BHCA”means the Bank Holding Company Act of 1956, as amended.
“Cash Exchange Amount”Determination Date” has the meaning set forth in Section 3.01(a)(ii) 8.01(g).
“Champaign Bank”Determination Letter” has the meaning set forth in the preamble to this Agreement.
Section 6.10(c).“Champaign Investment Company”Directors” has the meaning set forth in the preamble to this Agreement.
Section 5.01(k)(i).“Citizens Bank”Dissenting Shares” has the meaning set forth in the preamble to this Agreement.
“Code”means the Internal Revenue Code of 1986, as amended.
“Compensation and Benefit Plans”has the meaning set forth in Section 5.03(m)(i) 3.01(d).
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“Consultants”has the meaning set forth in Section 5.03(m)(i).
“Current Futura D & O Policy”has the meaning set forth in Section 6.26(b).
“Directors”has the meaning set forth in Section 5.03(m)(i).
“Disclosure Schedule”has the meaning set forth in Section 5.01.
“Dissenting Shares”means any Futura Common Shares held by a holder who properly demands and perfects appraisal rights with respect to such shares in accordance with applicable provisions of the OGCL.
“Effective Date”Date” means the date on which the Effective Time occurs.
“Effective Time”Time” means the effective time of the Parent Merger, as provided for in Section 2.03.
2.03.“Election”Employees” has the meaning set forth in Section 3.01(e) 5.01(k)(i).
“Election Deadline”has the meaning set forth in Section 3.01(e).
“Election Form”has the meaning set forth in Section 3.01(f).
“Election Period”has the meaning set forth in Section 3.01(f).
“Employees”has the meaning set forth in Section 5.03(m)(i).
“Environmental Laws”Laws” means all applicable local, state and federal environmental, health and safety laws and regulations, including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Federal Clean Air Act, and the Occupational Safety and Health Act, each as amended, regulations promulgated thereunder, and state counterparts.
“ERISA”ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate”Affiliate” has the meaning set forth in Section 5.03(m) 5.01(k)(iii).
“ERISA Affiliate Plan” has the meaning set forth in Section 5.01(k)(iii).
“ESOP Trustee” means Park National Bank.
“ESOP Vote” has the meaning set forth in Section 6.10(d).
“Exchange Act”Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Exchange Agent”Agent” has the meaning set forth in Section 3.04(a) 3.02(a).
“Exchange Fund”Fund” has the meaning set forth in Section 3.04(a) 3.02(a).
“FDIC”Exchange Ratio” shall mean 1.1888.
“FDIC” means the Federal Deposit Insurance Corporation.
“FFIEC”FRB” means the Board of Governors of the Federal Financial Institutions Examination Counsel.
Reserve System.“First Citizens”Final Index Price” has the meaning set forth in the preamble to this Agreement.
Section 8.01(g).“First Citizens Articles”GAAP” means the Articles of Incorporation of First Citizens, as amended.
“First Citizens Board”means the Board of Directors of First Citizens.
“First Citizens Code”means the Code of Regulations of First Citizens, as amended.
“First Citizens Common Shares”means the common shares, without par value, of First Citizens.
“First Citizens Meeting”has the meaning set forth in Section 6.02.
“First Citizens Offer”shall have the meaning set forth in Section 8.01(f).
“First Citizens SEC Documents”has the meaning set forth in Section 5.04(h)(i).
“First Citizens Shareholder Adoption”has the meaning set forth in Section 5.04(f).
“First Citizens Shares”means the First Citizens Common Shares.
“Futura”has the meaning set forthgenerally accepted accounting principles in the preamble to this Agreement.
“Futura 401(k) Plan”has the meaning set forth in Section 6.12(b).
“Futura Affiliate”has the meaning set forth in Section 6.07.
“Futura Articles”means the Amended and Restated Articles of Incorporation of Futura, as amended.
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“Futura Board”means the Board of Directors of Futura.
“Futura Code”means the Code of Regulations of Futura.
“Futura Common Shares”means the common shares, without par value, of Futura.
“Futura’s Financial Statements” has the meaning set forth in Section 5.03(g)(i).
“Futura Governing Documents”means the Futura Articles and the Futura Code.
“Futura Meeting”has the meaning set forth in Section 6.02.
“Futura Option Plans”has the meaning set forth in Section 3.05(a).
“Futura Shareholder Adoption” has the meaning set forth in Section 5.03(d).
“Governmental Authority”Authority” means any court, arbitration panel, administrative agency or commission or other federal, state or local governmental authority or instrumentality.
instrumentality (including, without limitation, any Regulatory Authority).“IRS”Group” has the meaning set forth in Section 5.03(m)13(d) under the Exchange Act.
“Hazardous Materials” means, collectively, (a) any “hazardous substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act, as amended, and regulations promulgated thereunder, (b) any “hazardous waste” as defined by the Resource Conservation and Recovery Act, as amended through the date hereof, or regulations promulgated thereunder, and (c) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any applicable federal, state or local law relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material.
“Henry County Bank” has the meaning set forth in the Recitals to this Agreement
“Index” has the meaning set forth in Section 8.01(g).
“Index Ratio” has the meaning set forth in Section 8.01(g).
“Information” has the meaning set forth in Section 6.16.
“Initial Index Price” has the meaning set forth in Section 8.01(g).
“IRS” has the meaning set forth in Section 5.01(k)(ii).
“Knowledge”Knowledge” means, with respect to First Citizens,Civista, the actual knowledgeKnowledge of any officer of First CitizensCivista with the title of not less than a senior vice presidentChief Executive Officer, President or Controller, and, with respect to Futura,Comunibanc, the actual knowledgeKnowledge of Michael J. Lamping, Robert J. Gantzer, Steven A. Glock and Patricia A. Cromwell, in each case after reasonable inquiry byany officer of Comunibanc or Henry County Bank with the title of Chairman, Chief Executive Officer, President, Chief Financial Officer, Operations Officer, Bank Secrecy Act Officer, Chief Lending Officer, or Compliance Officer. An officer of Civista or Comunibanc shall be deemed to have “Knowledge” of a
particular fact or matter if such personsofficer is actually aware of the employeessuch fact or matter or a prudent individual would be reasonably expected to discover or otherwise become aware of First Citizenssuch fact or Futura, as applicable, whose duties would,matter in the ordinary course of business, result inconducting a reasonably comprehensive investigation concerning the existence of such employees having knowledge concerning such matters.
fact or matter.“Lien”Lien” means any charge, mortgage, pledge, security interest, restriction, claim, lien, or encumbrance.
“Loan” or “Loans” means any loans, loan commitments, letters of credit, credit facility, credit enhancements or any other extensions of credit (including any amendments, renewals, extensions or modifications thereto).
“Material Adverse Effect”Effect” means, with respect to First CitizensCivista, or Futura,Comunibanc, as the context may require, any effect, change, event, circumstance, condition, occurrence or development that, either individually or in the aggregate (i) is materiallyhas been or would reasonably be likely to be (a) material and adverse to the financial position,business, properties, assets, liabilities, results of operations or businessfinancial condition of First CitizensCivista and its Subsidiaries, taken as a whole, or Futura(b) material and adverse to the business, properties, assets, liabilities, results of operations or financial condition of Comunibanc and its Subsidiaries, taken as a whole, respectively, or (ii) would reasonably be likely to materially impairsimpair the ability of either First CitizensCivista or FuturaComunibanc to perform its obligations under this Agreement or to consummateotherwise materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement; provided, however, that Material Adverse Effect shall not be deemed to include the impact of (a)(A) changes, after the date hereof, in banking and similarGAAP or applicable bank regulatory accounting requirements; (B) changes, after the date hereof, in laws, rules or regulations (including the Pandemic Measures) of general applicability to companies in the industries in which the party and its Subsidiaries operate, or interpretations thereof by courts or Governmental AuthoritiesAuthorities; (C) changes, after the date hereof, in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally and not specifically relating to the party or its Subsidiaries (including any such changes arising out of the Pandemic or any Pandemic Measures); (D) changes, after the date hereof, resulting from hurricanes, earthquakes, tornados, floods or other changes affecting depository institutions generally, including changes in general economic conditions and changes in prevailing interest and deposit rates, (b)natural disasters or from any change in generally accepted accounting principlesoutbreak of any disease or in regulatory accounting requirements applicable to banks or holding companies generally, (c) changes resulting from expenses (such as legal, accounting and investment bankers’ fees) incurred in connection withother public health event (including the Pandemic); (E) public disclosure of the execution of this Agreement or consummation of the transactions contemplated herein,hereby (including any effect on a party’s relationships with its customers or (d)employees); (F) actions expressly required by this Agreement in contemplation of the transactions contemplated hereby; and (G) the occurrence of any natural or omissionsman-made disaster; except, with respect to subclauses (A), (B), (C), (D), and (G) to the extent that the effects of the change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition of the party and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which the party which have been waivedand its Subsidiaries operate).
“Material Contracts” has the meaning set forth in accordance with Section 9.02 hereof.
5.01(i)(ii).“Merger”Merger” collectively refers to the Parent Merger and the Subsidiary Merger, as set forth in Section 2.02.
Sections 2.01 and 2.05.“Merger Consideration”has the meaning set forth in Section 3.01(a).
“Mixed Election”has the meaning set forth in Section 3.01(c)(iii).
“NASDAQ”means the Capital Securities tier of The NASDAQ Stock Market LLC.
“New Certificates”has the meaning set forth in Section 3.04(a).
“New Directors”has the meaning set forth in Section 6.23.
“Non-401(k) Shares”means the issued and outstanding Futura Common Shares at the Effective Time, excluding the Futura Common Shares held in the Futura 401(k) Plan.
“OCC”means The Office of the Comptroller of the Currency.
“OGCL”means the Ohio General Corporation Law.
“Old CertificateConsideration” has the meaning set forth in Section 3.04(a) 3.01(a).
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“Outstanding Options”Notifying Party” has the meaning set forth in
Section 3.05. 6.11(a).“NASDAQ” has the meaning set forth in Section 3.02(b)(v).
“New Certificate” has the meaning set forth in Section 3.02(a).
“Notice Period” has the meaning set forth in Section 6.06(d)(ii).
“OSS”ODFI” means the Ohio Division of Financial Institutions.
“OGCL” means the Ohio General Corporation Law.
“Old Certificates” has the meaning set forth in Section 3.01(b).
“OSS” means the Office of the Secretary of State of the State of Ohio.
“Pandemic” means any outbreaks, epidemics or pandemics relating to SARS-CoV-2 or COVID-19, or any evolutions, variants or mutations thereof, or any other viruses (including influenza), and the governmental and other responses thereto.
“Pandemic Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, reduced capacity, social distancing, shut down, closure, sequester or other directives, guidelines, executive orders, mandates or recommendations promulgated by any Governmental Authority, including, but not limited to, the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to the Pandemic.
“Parent Merger” has the meaning set forth in Section 2.01(a).
“Parent Merger”Merger Certificate” has the meaning set forth in Section 2.01.
2.2.“PBGC”PBGC” means the Pension Benefit Guaranty Corporation.
“Person”means any individual, bank, corporation, partnership, association, joint-stock company, business trust or unincorporated organization.
“Pension Plan”Plan” has the meaning set forth in Section 5.03(m) 5.01(k)(ii).
“Previously Disclosed”by a party shall mean information set forth in its Disclosure Schedule.
Person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature.“Proxy Statement/Prospectus”Phase I” has the meaning set forth in Section 6.03.
6.19.“Registration Statement”Proxy Statement/Prospectus” has the meaning set forth in Section 6.03.
5.01(d)(i).“Regulatory Authorities”Registration Statement” has the meaning set forth in Section 5.03(i) 5.01(d)(i).
“Representatives”Regulatory Authorities” or “Regulatory Authority” has the meaning set forth in Section 5.01(g)(i).
“Regulatory Order” has the meaning set forth in Section 5.01(g)(i).
“Related Parties” has the meaning set forth in Section 5.01(aa).
“Related Party Agreements” has the meaning set forth in Section 5.01(aa).
“Representatives” means, with respect to any Person, such Person’s directors, officers, employees, legal or financial advisors or any representatives of such legal or financial advisors.
“Resulting Bank”Requisite Comunibanc Vote” has the meaning set forth in Section 2.02.
5.01(c)(i).“Rights”Rights” means, with respect to any Person, securities or obligations convertible into or exercisable or exchangeable for, or giving any personPerson any right to subscribe for or acquire, or any options, calls or commitments relating to, or any stock appreciation right or other instrument the value of which is determined in whole or in part by reference to the market price or value of, shares of capital stock of such person.Person.
“SEC”SEC” means the United States Securities and Exchange Commission.
“Securities Act”Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“SERP”means Futura’s Supplemental Executive Retirement Plan.
Subsidiary” has the meanings ascribed to it in Section 2(d) of the BHCA.“Share Exchange Ratio”Subsidiary Merger” has the meaning set forth in Section 3.01(a)(i) 2.05(a).
“Stock Appreciation Right”Subsidiary Merger Agreement” has the meaning set forth in Section 3.06.
2.05(a).“Subsidiary” and “Significant Subsidiary”have the meanings ascribed to them inRule 1-02 ofRegulation S-X of the SEC.
“Surviving Corporation”Subsidiary Merger Certificate” has the meaning set forth in Section 2.01.
2.05(b).“Takeover Laws”Superior Proposal” has the meaning set forth in Section 5.03(o) 6.06(e)(i).
“Tax”Surviving Corporation” has the meaning set forth in Section 2.01(a).
“Takeover Laws” means all “moratorium,” “control share,” “fair price,” “affiliate transaction,” “business combination” or other anti-takeover laws and “Taxes”regulations of the State of Ohio including without limitation Sections 1701.83 through 1701.85 of the OGCL.
“Tax” and “Taxes” means all federal, state, local or foreign taxes, charges, fees, levies or other assessments, however denominated, including, without limitation, all net income, gross income, commercial activity, gains, gross receipts, sales, use, ad valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability, employer health, excise, estimated, severance, stamp, occupation, property, environmental, unemployment orand all other taxes, custom duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority whether arising before, on or after the Effective Date.
Date and any transferee liability in respect of any such items.“Tax Returns”Returns” means any return, amended return, statement, form, claim for refund or other report (including elections, declarations, disclosures, schedules, estimates and information returns) with respect to any Tax, including any amendments thereof.
“Tail Policy” has the meaning set forth in Section 6.18(b).
“Termination Fee” has the meaning set forth in Section 8.02(b)(i).
“Third Party System” has the meaning set forth in Section 5.01(x).
“Treasury” means the United States Department of Treasury.
“Treasury Shares”shall mean Futura CommonShares” means Comunibanc Shares held by FuturaComunibanc or any of its Subsidiaries or First Citizens Common Shares held by First Citizens or any of its Subsidiaries, in each case other than in a fiduciary capacity or as a result of debts previously contracted in good faith.
“Voting Agreement”meansSupport Agreements” has the Voting Agreementmeaning set forth in the form attached hereto as Exhibit A entered into as of the date hereof by and among First Citizens and certain shareholders of Futura.
A-4Recitals to this Agreement.
ARTICLE II
2.01 The Parent Merger.
(a) The Parent Merger. AtUpon the terms and subject to the conditions of this Agreement, at the Effective Time, FuturaComunibanc shall merge with and into First CitizensCivista (the “Parent Merger”“Parent Merger”), First CitizensCivista shall survive the Parent Merger and continue to exist as an Ohio corporation (First Citizens,(Civista, as the surviving corporation in the Parent Merger, is sometimes referred to herein as the “Surviving Corporation”“Surviving Corporation”), and the separate corporate existence of FuturaComunibanc shall cease. At the Effective Time, the First CitizensTime:
(i) The Civista Articles, as in effect immediately prior to the Effective Time, shall be the Articlesarticles of Incorporationincorporation of the Surviving Corporation until amended in accordance with the OGCL; the First Citizens Code,
(ii) The Civista Regulations, as in effect immediately prior to the Effective Time, shall be the Code of Regulationsregulations of the Surviving Corporation until amended in accordance with the OGCL; and the individuals
(iii) Each individual serving as officers and directorsa director of First CitizensCivista immediately prior to the Effective Time shall become the officers and directorsremain a director of the Surviving Corporation for the balance of the term for which such individual was appointedelected and shall serve as such until his or elected;her successor is duly elected and qualified in the manner provided however, that three (3) members of Futura’s Board of Directors will be designated to fill vacancies existing onfor in the First Citizens Board of Directors atCivista Articles and the Civista Regulations or as otherwise provided by the OGCL or until his or her earlier death, resignation or removal in the manner provided in the Civista Articles or the Civista Regulations or as otherwise provided by the OGCL.
(iii) At and after the Effective Time, in accordance with Section 6.23. First Citizenseach share of Civista Common Shares issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall not be affected by the Parent Merger.
(b) Option to Change Method of Merger. Civista may at any time prior to the Effective Time subject to the prior written consent of Futura, which consent shall not be unreasonably withheld, 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 First CitizensCivista deems such change to be necessary, appropriate or desirable; provided, however, that no such change shall shall:
(i) alterAlter or change the amount or kind of consideration to which the holders of FuturaComunibanc Common SharesStock are entitled in accordance with the terms and subject to the conditions of this Agreement, Agreement;
(ii) adversely affect the tax treatment of Futura’s shareholders as a result of receiving the Merger Consideration; or (iii) materiallyMaterially impede or delay consummation of the transactions contemplated by this Agreement.
2.02 The Subsidiary Merger. AtAgreement; or(iii) Cause the time specified by Citizens Bank in its Certificate of Merger filed with the OSS (which shall not be earlier than the Effective Time), Champaign Bank shall merge with and into Citizens Bank (the “Subsidiary Merger”) pursuant to an agreementfail to merge (the “Agreement to Merge”) to be executed by Champaign Bank and Citizens Bank and filed with the OSS and the OCC. Upon the consummationqualify as a “reorganization” under Code Section 368(a)(1)(A) of the Subsidiary Merger, the separate corporate existence of Champaign BankCode.
Comunibanc, if requested by Civista, shall cease and Citizens Bank shall survive the Subsidiary Merger and continueenter into one or more amendments to exist as a state bank (Citizens Bank, as the resulting bankthis Agreement in the Subsidiary Merger, is sometimes referredorder to herein as the “Resulting Bank”) and the separate corporate existence of Champaign Bank shall cease. (The Parent Merger and the Subsidiary Merger are sometimes collectively be referred to as the “Merger”.)
2.03 effect any such change.2.02 Effectiveness 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 occurrencelater to occur of the filing infollowing: (i) the officefiling of the OSScertificate of a Certificate ofmerger regarding the Parent Merger in accordance(the “Parent Merger Certificate”) with Section 1701.81 of the OGCLOSS; or (ii) such later date and time as may be set forth in such filing.
2.04 the Parent Certificate of Merger. The Parent Merger shall have the effects prescribed in the OGCL.2.03 Effective Date and Effective Time. Subject to the satisfaction or waiver of the conditions set forth in Article VII of this Agreement, First CitizensCivista and FuturaComunibanc shall cause the effective date of the Parent Merger (the “Effective Date”“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) 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.“Effective Time”.
ARTICLE III
Consideration; Exchange Procedures
3.01 2.04 Merger ConsiderationClosing. .
(a) General. In accordance withSubject to the terms and
subject to the conditions of this Agreement,
the closing of the Merger (the “Closing”) will occur by electronic exchange of documents at
10:00 am, Sandusky, Ohio time, on a date which is no later than three (3) business days after the satisfaction 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 Civista may determine, Henry County Bank will merge with and into Civista Bank (the “Subsidiary Merger”). Civista Bank shall be the surviving entity in the Subsidiary Merger and, following the Subsidiary Merger, the separate corporate existence of Henry County Bank shall cease and Civista Bank shall survive and continue to exist as an Ohio-chartered commercial bank. Promptly after the date of this Agreement, Civista Bank and Henry County Bank shall enter into an agreement and plan of merger in substantially the form attached hereto as Exhibit B (the “Subsidiary Merger Agreement”).
(b) Each of Civista and Comunibanc shall approve the Subsidiary Merger Agreement and the Subsidiary Merger as the sole shareholders of each subsidiary bank, respectively. Prior to the Effective Time, automaticallyComunibanc shall cause Henry County Bank, and Civista shall cause Civista 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
3.01 Conversion of Comunibanc Common Stock.
At the Effective Time, by virtue of the Parent Merger and without any action on the part of Civista, Comunibanc, or the holder of any Person,shares of Comunibanc Common Stock:
(a) Subject to Section 3.02 and Section 3.03, and except as otherwise provided by paragraph (b) of this Section 3.01, each Futurashare of Comunibanc Common Share (excludingStock (other than Treasury Shares and Futura Common Shares held by First Citizens) issued and outstanding
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immediately prior to the Effective Time shall be converted, by virtue of the Merger and at the election of the holder thereof into either:
(i) 1.1726 First Citizens Common Shares, subject to adjustment as set forth in Sections 3.07, 3.10(b)and/or 8.01(f) (the “Share Exchange Ratio”);
(ii) Cash in the amount of $23.00 (the “Cash Exchange Amount”); or
(iii) A combination of such First Citizens Common Shares and cash.
Subject to adjustment for cash paid in lieu of fractional shares in accordance with Section 3.03 and as set forth in Section 3.01(j), it is understood and agreed that the aggregate consideration for the Merger shall be a mixture of First Citizens Common Shares and cash, with (A) 80% of the Non-401(k) Shares being exchanged for First Citizens Common Shares and 20% of the Non-401(k) Shares being exchanged for cash (including Dissenting Shares), excluding, for purposes of these calculations, cash amounts paid in connection with the termination of Outstanding Options and the conversion of Stock Appreciation Rights, and (B) the Futura Common Shares held by the Futura 401(k) Plan being exchanged for cash (the “Merger Consideration”).
(b) Conversion of Futura Common Shares held in the Futura 401(k) Plan. Notwithstanding anything to the contrary contained in this Agreement, all Futura Common Shares held in the Futura 401(k) Plan shall be converted into and become cash (payable by check) based on the Cash Exchange Amount, and no such Futura Common Shares shall be converted into First Citizens Common Shares.
(c) Election as to Non-401(k) Shares. The Futura shareholders shall have the following options in connection with the exchange of their Non-401(k) Shares in the Merger:
(i) At the election of the holder, all of such holder’s Non-401(k) Shares deposited with the Exchange Agent shall be converted into and become First Citizens Common Shares at the Share Exchange Ratio (such election, the “All Share Election”); provided, however, that:
(A) Fractional shares will not be issued and cash (payable by check) will be paid in lieu thereof as provided in Section 3.03; and
(B) Giving effect to Section 3.01(c)(i), (ii), and (iii), in no event shall more than a total of eighty percent (80%) of the Non-401(k) Shares be converted into and become First Citizens Common Shares; or
(ii) At the election of the holder, all of such holder’s Non-401(k) Shares deposited with the Exchange Agent shall be converted into and become cash (payable by check) based on the Cash Exchange Amount (such election, the “All Cash Election”); provided, however, that:
(A) Giving effect to Section 3.01(c)(i), (ii), and (iii), in no event shall more than a total of twenty percent (20%) of the Non-401(k) Shares (including Dissenting Shares) be converted into and become cash; or
(iii) At the election of the holder, eighty percent (80%) of such holder’s Non-401(k) Shares shall be converted into and become First Citizens Common Shares at the rate of the Share Exchange Ratio and twenty percent (20%) of such holder’s Non-401(k) Shares deposited with the Exchange Agent shall be converted into and become cash (payable by check) based on the Cash Exchange Amount (such election, the “Mixed Election”); provided, however, that:
(A) Fractional shares will not be issued and cash (payable by check) will be paid in lieu thereof as provided in Section 3.03;
(B) Giving effect to Section 3.01(c)(i), (ii), and (iii), in no event shall more than a total of eighty percent (80%) of the Non-401(k) Shares be converted into and become First Citizens Common Shares; and
(C) Giving effect to Section 3.01(c)(i), (ii), and (iii), in no event shall more than a total of twenty percent (20%) of the Non-401(k) Shares (including Dissenting Shares) be converted into and become cash; or
(iv) If no Election is made by the holder by the Election Deadline, all of such holder’s Non-401(k) Shares shall be converted into the right to receive First Citizens Common Shares as set forth in
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Section 3.01(c)(i), cash as set forth in Section 3.01(c)(ii), or any combination of First Citizens Common Shares and cash as determined by First Citizens, or, at First Citizens’ direction, by the Exchange Agent, at the Share Exchange Ratio and the Cash Exchange Amount, as applicable; provided, however, that fractional shares shall not be issued and cash (payable by check) will be paid in lieu thereof as provided in Section 3.03. Such Non-401(k) Shares shall be allocated by First Citizens or the Exchange Agent pro rata among non-electing holders based upon the number of Non-401(k) Shares for which an election has not been received by the Election Deadline in order to (A) achieve the overall ratio of eighty percent (80%) of Non-401(k) Shares converted into First Citizens Common Shares and twenty percent (20%) of Futura Common Shares converted into cash (including Dissenting Shares) and (B) satisfy the elections made by the Futura shareholders to the greatest extent possible subject to such overall ratio. Notice of such allocation shall be provided promptly to each shareholder whose Futura Common Shares are allocated pursuant to this Section 3.01(c)(iv).
(d) Treasury Shares. Futura Common Shares held as Treasury Shares immediately prior to the Effective Time shall be canceled and retired at the Effective Time and no consideration shall be issued in exchange therefor.
(e) Outstanding First Citizens Common Shares. Each First Citizens Common Share issued and outstanding immediately prior to the Effective Time shall
remain issuedbe converted into the right to receive, without interest, (i) a number of Civista Common Shares equal to the Exchange Ratio (the “Stock Consideration”) and
(ii) an amount of cash equal to $30.13 (the “Cash Consideration,” and together with the Stock Consideration, the “Merger Consideration”); and(b) All of the shares of Comunibanc Common Stock converted into the right to receive the Merger Consideration shall no longer be outstanding and unaffected byshall automatically be cancelled and shall cease to exist as of the Merger.
(f) Procedures for Election.
An election formEffective Time, and other appropriate transmittal materials in such form as Futura and First Citizens shall mutually agree (the “Election Form”)each certificate (each, an “Old Certificate,” it being understood that any reference herein to “Old Certificate” shall be maileddeemed to shareholders of Futura priorinclude reference to book-entry account statements relating to the Election Period (defined below). The “Election Period”ownership of shares of Comunibanc Common Stock) previously representing any such shares of Comunibanc Common Stock shall thereafter represent only the right to receive (i) the Merger Consideration, (ii) cash in lieu of a fractional share which the shares of Comunibanc 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 Comunibanc Common Stock shall be such periodexchanged for certificates or, at Civista’s option, evidence of timeshares in book entry form representing whole shares of Civista Common Shares as Futura and First Citizens shall mutually agree, within which Futura shareholders may validly elect the form of Merger Consideration set forth in Section 3.01(c) (the “Election”) that they choose to receive 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 Merger, occurringsurrender of such Old Certificates in accordance with Section 3.02, without any interest thereon. If, between (i) the
date of the mailing by Futura of the Proxy Statement for the Futura Meetingthis Agreement and (ii) five days prior to the Effective Date. The “Election Deadline” shall beTime, the time, specified by First Citizens after consultation with Futura, on the last dayoutstanding shares of the Election Period.
(g) Perfection of the Election. An Election shall be considered to have been validly made by a Futura shareholder only if (i) the Exchange Agent (as defined in Section 3.04(a)) shall have received an Election Form properly completed and executed by such shareholder, accompanied by a certificate or certificates representing the FuturaCivista Common Shares
as to which such Election is being made, duly endorsed in blank or
otherwise in form acceptable for transfer on the books of Futura, or containing an appropriate guaranty of delivery in the form customarily used in transactions of this nature from a member of a national securities exchange, a member of the NASD, or a commercial bank or trust company in the United States, and (ii) such Election Form and such certificate(s) or such guaranty of deliveryComunibanc Common Stock shall have been
receivedincreased, decreased, changed into or exchanged for a different number or kind of shares or securities, in any such case as a result of a 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 shall be made to the Exchange Ratio to give holders of Comunibanc Common Stock the same economic effect as contemplated by this Agreement prior to such event; provided, that nothing in this sentence shall be construed to permit Comunibanc to take any action with respect to its securities that is prohibited by the
Exchange Agent priorterms of this Agreement.(c) Notwithstanding anything in this Agreement to the Election Deadline.
(h) Withdrawal of Election. Any Futura shareholder may at any time prior to the Election Deadline revoke such shareholder’s Election and either (i) submit a new Election Form in accordance with the procedures in Section 3.01(g) or (ii) withdraw the Election Form and certificate(s) for Futura Common Shares deposited therewith by providing written notice that is received by the Exchange Agent by 5:00 p.m., local time for the Exchange Agent, on the business day prior to the Election Deadline. Elections will be deemed to be revoked if this Agreement is terminated in accordance with its terms.
(i) Reduction of Shares Deposited for Cash. If the total number of Non-401(k) Shares which have, at the Election Deadline, been deposited with the Exchange Agent for cash pursuant to the All Cash Election or the Mixed Election and not withdrawn pursuant to Section 3.01(h), plus the total number of Dissenting Shares, is more than twenty percent (20%) of the total number of Non-401(k) Shares issued and outstandingcontrary, at the Effective Time,
First Citizens will promptly eliminate,all shares of Comunibanc Common Stock that are owned by Comunibanc (in each case other than shares (i) held in trust accounts, managed accounts, mutual funds or
causesimilar 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
eliminated by the Exchange Agent, from the shares deposited pursuantdelivered or exchanged therefor.(d) Notwithstanding anything in this Agreement to the All Cash Election, a sufficient numbercontrary, shares of such shares so that the total number of shares remaining on deposit for cash pursuant to the All Cash ElectionComunibanc Common Stock which are issued and the Mixed Election, plus the total number of Dissenting Shares, does not exceed twenty percent (20%) of the Non-401(k) Shares. The holders of Futura Common Shares who have elected to have their shares converted pursuant to the Mixed Election shall not be required to have more than eighty percent (80%) of their Non-401(k) Shares converted
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into First Citizens Common Shares. After giving effect to Section 3.01(c)(iv), such elimination will be effected as follows:
(i) First Citizens will eliminate or cause to be eliminated by the Exchange Agent from the shares deposited pursuant to the All Cash Election, and will add or cause to be added to the shares deposited for First Citizens Common Shares pursuant to the All Stock Election, on a pro rata basis in relation to the total number of shares deposited pursuant to the All Cash Election, such whole number of Non-401(k) Shares on deposit for cash pursuant to the All Cash Election as may be necessary so that the total number of shares remaining on deposit for cash pursuant to the All Cash Election or the Mixed Election, plus the total number of Dissenting Shares, is equal, as nearly as practicable, to twenty percent (20%) of the Non-401(k) Shares;
(ii) All Non-401(k) Shares that are eliminated pursuant to Section 3.01(i)(i) from the shares deposited for cash shall be converted into First Citizens Common Shares as provided by Section 3.01(c)(i); and
(iii) Notice of such allocation shall be provided promptly to each shareholder whose Non-401(k) Shares are eliminated from the shares on deposit for cash pursuant to Section 3.01(i)(i).
(j) Increase of Shares Deposited for Cash. If the total number of Non-401(k) Shares which have, at the Election Deadline, been deposited with the Exchange Agent for cash pursuant to the All Cash Election or the Mixed Election and not withdrawn pursuant to Section 3.01(h), plus the total number of Dissenting Shares, is less than twenty percent (20%) of the total number of Non-401(k) Shares, First Citizens shall promptly add, or cause to be added by the Exchange Agent, to the shares deposited for cash, the Futura Common Shares held in the Futura 401(k) Plan or some portion thereof and, if necessary, a sufficient number of Non-401(k) Shares deposited for First Citizens Common Shares pursuant to the All Stock Election so that the total number of Non-401(k) Shares and Futura Common Shares held in the Futura 401(k) Plan on deposit for cash on the Effective Date, plus the total number of Dissenting Shares, is not less than twenty (20%) of the total number of Non-401(k) Shares. The holders of Non-401(k) Shares who have elected to have their shares converted pursuant to the Mixed Election shall not be required to have more than twenty percent (20%) of their Non-401(k) Shares converted into cash. After giving effect to Section 3.01(c)(iv), such addition will be effected as follows:
(i) First, First Citizens shall add or cause to be added to the shares deposited for cash pursuant to the All Cash Election or the Mixed Election the Futura Common Shares held in the Futura 401(k) Plan or some portion thereof so that the resulting number of shares on deposit for cash, plus the total number of Dissenting Shares, is equal, as nearly as practicable, to twenty percent (20%) of the total number of Non-401(k) Shares. If the number of Non-401(k) Shares deposited for cash pursuant to the All Cash Election or the Mixed Election, plus the total number of Dissenting Shares and the Futura Common Shares held in the Futura 401(k) Plan, is less than twenty percent (20%) of the total number of Non-401(k) Shares, then the Exchange Agent will eliminate or cause to be eliminated from the shares deposited for First Citizens Common Shares pursuant to the All Stock Election, on a pro rata basis in relation to the total number of Non-401(k) Shares deposited for First Citizens Common Shares pursuant to the All Stock Election, such whole number of Non-401(k) Shares as may be necessary so that the resulting number of shares on deposit for cash, plus the total number of Dissenting Shares, is equal, as nearly as practicable, to twenty percent (20%) of the Non-401(k) Shares;
(ii) All Futura Common Shares that are added pursuant to Section 3.01(j) to the shares deposited for cash shall be converted into cash as provided by Section 3.01(c)(ii); and
(iii) Notice of such allocation shall be provided promptly to each shareholder whose Futura Common Shares are added to the shares on deposit for cash pursuant to Section 3.01(j)(i).
3.02 Rights as Shareholders; Share Transfers. At the Effective Time, holders of Futura Common Shares shall cease to be, and shall have no rights as, shareholders of Futura, other than (a) to receive any dividend or other distribution with respect to such Futura Common Shares with a record date occurringoutstanding immediately prior to the Effective Time (b)and 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 OGCL will not be converted into the right to receive the consideration providedMerger 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 OGCL unless and until the holders fail to perfect or effectively withdraw or lose their rights to appraisal and payment under this Article III and (c) appraisal rights in the case of Dissenting Shares. AfterOGCL. If, after the Effective Time, there shallany holder fails to perfect or effectively withdraws or loses their rights referred to in the preceding sentence, the applicable holder’s shares of Comunibanc Common Stock will thereupon be no transfers ontreated as if the stock transfer books of Futura orshares had been converted at the Surviving CorporationEffective Time into the right to receive the Merger Consideration, without any interest thereon. Comunibanc will give Civista prompt notice of any Futuranotices of intent to demand payment under the OGCL received by Comunibanc with respect to shares of Comunibanc Common Shares.
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3.03 Fractional Shares. No fractional First Citizens Common Shares and no certificates or scrip therefor, or other evidence of ownership thereof, shall be issued in the Parent Merger; provided, however, that First Citizens shall pay to each holder of Futura Common Shares who would otherwise be entitled to a fractional First Citizens Common Share (after taking into account all Old Certificates delivered by such holder) an amount in cash (without interest) determined by multiplying such fractional share of First Citizens Common Shares to which the holder would be entitled by $23.
3.04 3.02 Exchange and Payment Procedures.
(a)Exchange Fund. At or prior to the Effective Time, First CitizensCivista shall deposit, or shall cause to be deposited, with IllinoisAmerican Stock Transfer & Trust Company, (in such capacity, the “Exchange Agent”LLC (the “Exchange Agent”),for the benefit of the holders of certificates formerly representing Futura Common Shares (“Old Certificates”),Certificates for exchange in accordance with this Article III, (i) certificates or, at Civista’s option, evidence in book-entry form, representing First Citizensshares of Civista Common Shares (“New Certificates”) and an estimated amountto be issued to holders of cash (such cash and Comunibanc Common Stock (collectively, referred to herein as “New Certificates”), (ii) cash in an amount sufficient to pay the aggregate Cash Consideration to be paid to holders of Comunibanc Common Stock, and (iii) 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), (ii) and (iii), together with any dividends or distributions with a record date occurring on or after the Effective Time with respect thereto (without any interest on any such cash, dividends or distributions)payable in accordance with Section 3.02(b)(ii), being hereinafter referred to as the “Exchange Fund”“Exchange Fund”) to be paid pursuant to this Article III in exchange for outstanding Futura Common Shares.
.(b)Exchange Procedures.
(i) As promptly as practicable after the Effective Time, First Citizensbut in no event later than five (5) business days thereafter, Civista shall send or cause the Exchange Agent to be sentmail to each holder of record of an Old Certificate which was not deposited with the Exchange Agent pursuant to Section 3.01(g) transmittal materials for use in exchanging such shareholder’sone or more Old Certificates for the consideration set forth in this Article III. First Citizens shall cause the New Certificates into whichrepresenting shares of a shareholder’s FuturaComunibanc Common Shares areStock immediately prior to the Effective Time that have been converted at the Effective Timeand/or into the right to receive the Merger Consideration, a letter of transmittal (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 Civista Common Shares, Cash Consideration and any checkcash in respectlieu of cashfractional shares, as applicable, which the shares of Comunibanc 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 as partpursuant 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 Merger Consideration and in respectExchange Agent, together with such properly completed letter of any fractional share intereststransmittal, duly executed, the holder of such Old Certificate or dividends or distributions which such personOld Certificates shall be entitled to receive in exchange therefor, as applicable, (A)(1) a New Certificate representing that number of whole shares of Civista Commons Shares to be delivered towhich such shareholder upon deliveryholder of Comunibanc Common Stock shall have become entitled pursuant to the Exchange Agentprovisions ofSection 3.01 and (2) a check representing the amount of (x) Cash Consideration such holder shall have become entitled pursuant to the provisions of Section 3.01, (y) 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 representing such Futura Common Shares owned by such shareholder.surrendered pursuant to the provisions of this Article III and (z) 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 any such cash to be paid in exchange for Futurathe Civista Common Shares, Cash Consideration, 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 Stock Consideration as provided for in Section 3.01, the Cash Consideration as provided for in Section 3.01, and any cash in lieu of fractional shares or in respect of dividends or distributions which any such person shall be entitled to receive pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent, nor any party hereto, shall be liable to any former holder of Futura Common Shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.
(d)as contemplated by Section 3.02(b)(ii).(ii) No dividends or other distributions declared with respect to First CitizensCivista Common Shares with a record date occurring on or after the Effective Time shall be paid to the holder of any unsurrendered Old Certificate representing Futura Common Shares converted in the Parent Merger into the right to receive shares of such First Citizens Common Shares until the holder thereof shall be entitled to receive New Certificates in exchange thereforsurrender such Old Certificate in accordance with Section 3.02(b). After the procedures set forth in this Section 3.04. After becoming so entitledsurrender of an Old Certificate in accordance with this Section 3.04, 3.02(b), the record holder thereof also shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to the whole shares of First CitizensCivista Common SharesShare which the shares of Comunibanc Common Stock represented by such holder hadOld Certificate have been converted into the right to receive upon surrender(after giving effect to Section 6.15).
(iii) In the event that any New Certificate representing shares of Civista Common Share 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 Civista Common Share in any name other than that of the registered holder of the Old Certificates.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 Comunibanc of the shares of Comunibanc Common Stock that were issued and outstanding immediately prior to the Effective Time. If, after the Effective Time, Old Certificates representing such shares are presented for transfer to the Exchange Agent, they shall be cancelled and exchanged for New Certificates representing shares of Civista Common Shares, cash in lieu of fractional shares and dividends or distributions that the holder presenting such Old Certificates is entitled to, as provided in Article III.
(v) Notwithstanding anything to the contrary contained herein, no New Certificates or scrip representing fractional shares of Civista Common Shares shall be issued upon the surrender for exchange of Old Certificates or otherwise pursuant to this Agreement, no dividend or distribution with respect Civista Common Shares shall be payable on or with respect to any fractional share, and fractional share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of Civista. In lieu of the
(e)issuance of any fractional share, Civista shall pay to each former shareholder of Comunibanc who otherwise would be entitled to receive such fractional share an amount in cash (rounded to the nearest cent) determined by multiplying (i) the average of the closing-sale prices of Civista 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 preceding the Closing Date (the “Civista Common Share Closing Price”) by (ii) the fraction of a share (rounded to the nearest one-thousandth when expressed in decimal form) of Civista Common Shares which such holder would otherwise be entitled to receive pursuant to Section 3.01(a). The parties acknowledge that payment of the cash consideration in lieu of issuing fractional shares is not separately bargained-for-consideration, but merely represents a mechanical rounding off for the purposes of avoiding the expense and inconvenience that would otherwise be caused by the issuance of fractional shares.
(vi) Any portion of the Exchange Fund that remains unclaimed by the shareholders of FuturaComunibanc for six months after the Effective Time shall be paid to First Citizens.the Surviving Corporation. Any shareholdersformer holders of FuturaComunibanc Common Stock who have not theretofore complied with this Article IIIexchanged their Old Certificates pursuant to Section 3.02 shall thereafter look only to First Citizensthe Surviving Corporation for payment of the Merger Consideration orshares of Civista Common Shares and cash in lieu of any fractional shares and any unpaid dividends and distributions on the Civista Common Stock deliverable in respect of each former share of Comunibanc Common Stock that such holder holds as determined pursuant to this Agreement, in each case, without any interest thereon.
3.05 Conversion Notwithstanding the foregoing, none of FuturaCivista, Comunibanc, the Surviving Corporation, the Exchange Agent or any other Person shall be liable to any former holder of shares of Comunibanc Common Stock Options
(a) Immediately priorfor any amount delivered in good faith to
the Effective Time, each outstanding option to purchase Futura Common Shares granteda public official pursuant to
the Futura Banc Corp. 1994applicable abandoned property, escheat or similar laws.(vii) Each of Civista and 1998 Stock Option and Stock Appreciation Rights Plans and the Futura Banc Corp. 1997 and 2001 Directors’ Stock Option and Appreciation Rights Plans (together, the “Futura Option Plans”) which has not been exercised before the Election Deadline (the “Outstanding Options”), whether or not then vested and exercisable, shall be terminated, and each grantee thereof shall be entitled to receive in consideration and exchange for such termination, an amount in cash equal to the product of (i) the difference between $23, less the exercise price of each such option, multiplied by (ii) the number of Futura Common Shares subject to each such option.
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(b) First Citizens or the Exchange Agent shall be entitled to deduct and withhold from theany consideration otherwise payable pursuant to this Section 3.05 to any holder of Outstanding Options suchAgreement all amounts as First Citizens or the Exchange Agent is required to deductbe deducted and withholdwithheld with respect to the making of suchthe consideration payment under the Code and Treasury Department regulations, or any other provision of federal, state, local or foreign Tax laws.law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by First CitizensCivista or the Exchange Agent, suchas the case may be, the withheld amounts shall(i) will be paid over by Civista 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 holder of the Outstanding OptionsPerson in respect of which suchthe deduction and withholding werewas made.
3.06 Disposition of Stock Appreciation Rights
(a) Immediately prior to(viii) In the Effective Time, each outstanding and unexercised stock appreciation right granted pursuant to the Futura Option Plans (“Stock Appreciation Right”), whetherevent any Old Certificate shall have been lost, stolen or not then vested or exercisable, shall be terminated, and each grantee thereof shall be entitled to receive in consideration and exchange for such termination, an amount in cash equal to the product of (i) the difference between $23, less the exercise price of such right, multiplied by (ii) the number of Futura Common Shares subject to such right.
(b) First Citizens or the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Section 3.06 to any holder of a Stock Appreciation Right such amounts as First Citizens or the Exchange Agent is required to deduct and withhold with respect todestroyed, upon the making of such payment underan affidavit of that fact by the Code and Treasury Department regulations, or any other provision of federal, state, local or foreign Tax laws. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by First Citizens 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 Stock Appreciation Right in respect of which such deduction and withholding were made.
3.07 Anti-Dilution Provisions and Other Adjustments.
In the event First Citizens changes (or establishes a record date for changing) the number of First Citizens Common Shares issued and outstanding between the date hereof and the Effective Time as a result of a stock split, stock dividend, recapitalization, reclassification, split up, combination, exchange of shares, readjustment or similar transaction with respect to the outstanding First Citizens Common Shares and the record date therefor shall be prior to the Effective Time, the Share Exchange Ratio shall be proportionately adjusted.
3.08 Lost Certificates.
If there shall be delivered to the Exchange Agent by any person who is unable to produce any Old Certificate for surrender to the Exchange Agent in accordance with this Article III:
(a) Evidence to the reasonable satisfaction of the Surviving Corporation thatPerson claiming such Old Certificate has beento be lost, wrongfully taken,stolen or destroyed;
(b) Adestroyed and, if required by Civista, the posting by such Person of a bond in such amount as the Surviving CorporationCivista or the Exchange Agent may determine is reasonably requestnecessary as indemnity against any claim that may be made against the Surviving Corporationand/or the Exchange Agentit with respect to such Old Certificate; and
(c) Evidence to the reasonable satisfaction of the Surviving Corporation that such person was the owner of the Futura Common Shares represented by each such Old Certificate, claimed by him or her to be lost, wrongfully taken or destroyed and that he or she is the person who would be entitled to present such Old Certificate for exchange pursuant to this Agreement;
then the Exchange Agent will issue in exchange for such lost, stolen or destroyed Old Certificate the absenceshares of actual notice to it that any FuturaCivista Common Shares, represented byand any Old Certificate has been acquired by a bona fide purchaser, shall deliver to such person the cashand/or First Citizens Common Shares (and cash in lieu of fractional First Citizens Common Share interests, if any) that such person would have been entitled to receive upon surrender of each such lost, wrongfully takenshares and dividends or destroyed Old Certificate.
3.09 Dissenting Shares.
Anything containeddistributions deliverable in this Agreement or elsewhere to the contrary notwithstanding, any holder of an outstanding Futura Common Share that seeks relief as a dissenting shareholder under Section 1701.85 of the OGCL shall thereafter have only such rights (and shall have such obligations) as are provided in
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Section 1701.85 of the OGCL, and the Surviving Corporation shall be required to deliver only such cash payments to which the Dissenting Shares are entitledrespect thereof pursuant to Section 1701.85 of the OGCL. If any holder of Dissenting Shares shall forfeit such right to payment of the fair value under Section 1701.85 of the OGCL, each holder’s Dissenting Shares shall thereupon be deemed to have been converted as of the Effective Time into the right to receive the Merger Consideration, without interest, in the form of First Citizens Common Shares or cash, as determined by the Surviving Corporation.
3.10 this Agreement.3.03 Tax ConsequencesConsequences/Tax Opinions .
(a) For federal income tax purposes, the Parent Merger is intended to constitute a reorganization within the meaning of Section 368(a) of the Code. The parties hereto hereby adopt this Agreement as a “plan of reorganization” within the meaning of Treasury Department regulation sections section 1.368-2(g) and 1.368-3(a).
(b) Notwithstanding anything in this Agreement to the contrary, to preserveif in the statusreasonable opinion of Civista the Parent Merger asmay potentially fail to satisfy the “continuity of interest” requirements under applicable federal income tax principles relating to reorganizations under Section 368(a) of the Code, then Civista shall increase the Stock Consideration per share (and cause a tax-freecorresponding decrease in the Cash Consideration per share equal to the economic value of any such increase) to the minimum extent necessary to enable, in the reasonable opinion of Civista, the Parent Merger to satisfy the “continuity of interest” requirements under applicable federal income tax principles relating to reorganizations under Section 368(a) of the Code.
(c) (i) Civista shall have obtained an opinion of Dinsmore & Shohl LLP, in form and substance reasonably acceptable to the parties, dated on or about the Effective Date, to the effect that the Merger effected pursuant to this Agreement will constitute a reorganization within the meaning of Section 368(a) of the Code, if,Code. Such opinion shall be based upon factual representations received by counsel from Comunibanc and Civista, which representations may take the closing priceform of written certifications. (ii) Comunibanc shall have received an opinion from Shumaker, Loop & Kendrick, LLP addressed to the shareholders of Comunibanc, in form and substance reasonably acceptable to the parties, dated on or about the Effective Date, to the effect that the Merger effected pursuant to this Agreement will constitute a reorganization within the meaning of Section 368(a) of the First Citizens Common Shares as reported on NASDAQ on the trading day immediately preceding the Effective Time, the aggregate value of the First Citizens Common Shares toCode. Such opinion shall be issued in connection with the Parent Merger (excluding cash issued in lieu of fractional First Citizens Common Shares pursuant to Section 3.03, the “Aggregate Share Consideration”) would be less than 40% of the Aggregate Consideration (as defined below), then First Citizens may, at its sole option, increase the Share Exchange Ratio so that the Aggregate Share Consideration, as determined based upon factual representations received by counsel from Comunibanc and Civista, which representations may take the closing priceform of the First Citizens Common Shares as reported on NASDAQ on the trading day immediately preceding the Effective Time, is equal to at least 40% of the Aggregate Consideration. As used in this Section 3.10(b), “Aggregate Consideration” means the sum of: (i) the aggregate cash consideration paid pursuant to an election to receive the Cash Exchange Amount pursuant to Section 3.01(a)(ii); (ii) cash issued in exchange for the Futura Common Shares held by the Futura 401(k) Plan pursuant to Section 3.01(b); (iii) cash issued in lieu of fractional First Citizens Common Shares pursuant to Section 3.03; (iv) cash issued to holders of Dissenting Shares; and (v) the Aggregate Share Consideration.
written certifications.ARTICLE IV
Actions Pending Consummation of Merger
4.01 Forbearances of FuturaComunibanc. From the date hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement, as required by law (including Pandemic Measures) or required by an applicable Regulatory Order, without the prior written consent of First Citizens, FuturaCivista, which consent shall not be unreasonably withheld, Comunibanc shall not, and shall cause each of its Subsidiaries not to:
(a) Ordinary Course.Course. Conduct the business of FuturaComunibanc and its Subsidiaries other than in the ordinary and usual course or fail to use reasonable efforts to preserve intact their respective business organizations and assets and maintain their respective rights, franchises and existing relations with customers, suppliers, vendors, employees and business associates, or voluntarily take any action which, at the time taken, is reasonably likely to have an adverse effect upon Futura’sComunibanc’s ability to perform any of its material obligations under this Agreement.
Agreement or 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, except as required by applicable law or policies imposed by any Governmental Authority or by any applicable Regulatory Order.(b) Capital Stock.Stock Other than pursuant to Rights Previously Disclosed and outstanding on the date hereof, . (i) issue,Issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional FuturaComunibanc Common SharesStock or any Rights,other capital stock of Comunibanc, (ii) enter into any agreement with respect to the foregoing, or (iii) permit any additional FuturaComunibanc Common SharesStock to become subject to new grants of employee or director stock options, otherany Rights, or (iv) effect any recapitalization, reclassification, stock split, or similar stock-based employee rights.
change in capitalization.(c) Dividends, Etc.Dividends; Distributions; Adjustments. (i) Make, declare, pay or set aside for payment any dividend or distribution on any shares of its capital stock, other than dividends from Henry County Bank to Comunibanc; provided that, subject to the provisions set forth in Section 6.15, (A) the paymentComunibanc shall be permitted to pay a dividend of the previously declared cash dividend$0.41 on Futuraeach outstanding share of Comunibanc Common Shares in an amount equal to $.15 per shareStock for the quarter endedsix-month period January 1, 2022 through June 30, 2007,2022, to be declared and paid in June, 2022 consistent with past practices, prorated if the Effective Time occurs prior to the declaration of such dividend, and (B) Comunibanc shall be permitted to pay, immediately prior to Closing, a dividend $0.20 on each outstanding share of Comunibanc Common Stock if the Effective Time occurs after October 31, 2022, so long as in the case of both (A) and (B) the declaration and payment of a cashsuch dividend on Futura Common Shares in an amount not to exceed $.15 per sharecomplies with a record date and a payment date in the quarter ended September 30, 2007, (C) the declaration and payment of a cash dividend on Futura Common Shares in an amount not to exceed $.17 per share with a record date and a payment date in November or December 2007, and (D) dividends from wholly owned Subsidiaries to Futura,all applicable laws, or (ii) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock.
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(d) Compensation; Employment Agreements; Etc.Agreements. Enter into, modify, amend, renew or amend or renewterminate any employment, consulting, severance, retention, change in control, or similar agreements or arrangements with any director, consultant, officer or employee of FuturaComunibanc or any of its Subsidiaries, hire or engage any full-time employee or consultant, other than as replacements for positions existing on the date hereof, or grant any salary or wage increase or bonus or increase any employee benefit (including incentive or bonus payments), except (i) as Previously Disclosed, (ii) for changes that are required by applicable law or (iii) to satisfy Previously Disclosed contractual obligations existing asand except for changes in the ordinary course of the date hereof.business consistent with past practice.
(e) Benefit Plans.Plans Except as contemplated by this Agreement, enter. Enter into, establish, adopt, amend, modify, make any contributions to or amendterminate (except (i) as may be required by applicable law, (ii) to satisfy Previously Disclosed contractual obligations existing as of the date hereofcontemplated by this Agreement, or (iii) pursuant to the regular annual renewal of insurance contracts) any pension, retirement, phantom stock, option, 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 FuturaComunibanc or any of its Subsidiaries, or take any action to accelerate the payment of benefits or the vesting or exercisability of any restricted stock, options, restrictedphantom stock or other compensation or benefits payable thereunder.
(f) Dispositions.Dispositions. Sell, transfer, mortgage, 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 course, of business for full and fair consideration actually received.
consistent with past practices, including any debt collection or foreclosure transactions.(g) Acquisitions.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 entity.
Person.(h) Governing Documents.Documents. Amend the Futura Governing DocumentsComunibanc Articles or the articlesorganizational and governing documents of incorporation or bylaws (or similar governing documents) of any of Futura’sits Subsidiaries.
(i) Accounting Methods.Methods. Implement or adopt any change in its accounting principles, practices or methods, other than as may be required by generally accepted accounting principles.
GAAP.(j) Contracts.Material Contracts Except in the ordinary course of business consistent with past practice, enter into or terminate any material contract (as defined in Section 5.03(k)) or. (i) Terminate, amend, or modifywaive any provision of, any Material Contract; (ii) make any change in any material respectinstrument or agreement governing the terms of any of its existingsecurities, or material contracts.
(k) Claims. Exceptlease or any other Material Contract, other than normal renewals of leases and other Material Contracts without material adverse changes of terms with respect to Comunibanc or any Comunibanc 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 (B) that has a term of one year or longer and that requires payments or other obligations by Comunibanc or any Comunibanc Subsidiary of $25,000 or more under the Material Contract; or (iv) enter into any Material Contract if the Material Contract, in the
ordinary courseaggregate with all Material Contracts entered into by Comunibanc or any Comunibanc Subsidiary from and after the date of
business consistent with past practice, settlethis Agreement, would result in aggregate required payments by Comunibanc or any
Comunibanc Subsidiary in excess of $100,000.(k) Claims. Settle any claim, suit, action or proceeding, 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 $50,000 or in the aggregate not to exceed $100,000for all such settlements, that is not material to Futura and its Subsidiaries, taken as a whole.
claims, actions or proceedings.(l) Adverse Actions.Actions. (i) Take any action while knowing that such action would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; or (ii) knowingly take any action that is intended or is reasonably likely to result in (I)(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)(ii) any of the conditions to the Merger set forth in Article VII not being satisfied, or (III)(iii) a material violation of any provision of this Agreement except, in each case, as may be required by applicable law or regulation.
by any Governmental Authority.(m) Risk Management.Management. Except pursuant to applicable law or regulation,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 avoid 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) Indebtedness.Borrowings. Incur any indebtedness for borrowed money otherOther than in the ordinary course, consistent with past practice, assume guarantee, endorse or otherwise as an accommodation become responsible for the obligations of business.
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(o) Indirect Loans.Loans; Participations. (i) Make or purchase any indirect or brokered loans, not including participationLoans, or (ii) purchase from or sell to any financial institution or other non-depository lender an interest in loansa Loan, except for such credit facilities made to borrowers in Comunibanc’s Territory which are secured by collateral located in the Comunibanc’s Territory in the ordinary course and consistent with other banks.
past practices.(p) Capital Expenditures.Expenditures Except as Previously Disclosed,. Make, or commit to make, any capital expenditures that exceed by more than five percent (5%) Comunibanc’s capital expenditure budget set forth in Section 4.01(p) of the Comunibanc Disclosure 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 additionsapplicable with respect to its loan portfolio or improvementsany segment thereof); (ii) make or acquire, or modify, renew or extend any Loan except for Loans made acquired, renewed or extended in the ordinary course, consistent with past practices and in compliance with Henry County 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 new Loans (other than unsecured Loans), if immediately after making the Loan the Person obtaining the Loan and the Person’s Affiliates would have debt owed to Comunibanc or any of its Subsidiaries that is, in the aggregate, in excess of $1,000,000, (B) in the case of the modification, renewal, or extension of any Loan (other than unsecured Loans) outstanding as of the date of this Agreement, if immediately after the modification, renewal, or extension of the Loan the Person obtaining the modification, renewal, or extension of the Loan and the Person’s Affiliates would have an aggregate credit exposure to Comunibanc or any of its Subsidiaries that is, in excess of $1,000,000, (C) in the case of new unsecured Loans, or the modification, renewal, or extension of any unsecured Loan outstanding as of the date of this Agreement, if immediately after making the new unsecured Loan or immediately after the modification, renewal or extension of the unsecured Loan the Person obtaining the new unsecured Loan or the modification, renewal or extension of the unsecured Loan and the Person’s Affiliates would have unsecured debt owed to Comunibanc or any of its Subsidiaries that is, in the aggregate, in excess of $500,000 , or (D) that is in excess of $500,000 and that is classified by Henry County Bank as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “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 Civista shall be required to respond to any request for a consent to make such Loan or extension of credit in writing within three (3) business days after the loan package is delivered to Civista.
(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 otherwise purchase or sell securities in the portfolio individually that exceed $50,000$3,000,000 or in the aggregate that would exceed $100,000.$15,000,000.
(q)(s) Loan Restrictions.Taxes Originate or issue a commitment to originate any loan in a principal amount in excess of $2,500,000.
(r) Taxes.. (i) Fail to prepare andor file or cause to be prepared andor 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 shown,due (whether or not required to be shown on any such Tax Return;Returns), or (iii) make, change or revoke any Tax election or Tax accounting method, file any amended Tax return,Return, settle any Tax claim or assessment or consent to the extension or waiver of any statute of limitations with respect to Taxes (or offer or agree to do any of the foregoing or surrender its rights to do any of the foregoing or to claim any refund of Taxes or file any amended Tax Return).
(r)(t) Commitments.Offices and Facilities. (i) Open, close or relocate any branch office, ATMs, loan production office or other significant office or operations facility of Comunibanc or its Subsidiaries at which business is conducted, other than as specified on Section 4.01(t) of the Comunibanc Disclosure Schedule or (ii) fail to use commercially reasonable efforts to maintain and keep their respective properties and facilities in their present condition and working order, ordinary wear and tear excepted.
(u) Interest Rates. Increase or decrease the rate of interest paid on time deposits or certificates of deposit, except in a manner consistent with past practices in relation to rates prevailing in the relevant market.
(v) Foreclosures. Foreclose upon or otherwise cause Comunibanc or any of its Subsidiaries to take title to or possession or control of any real property or entity thereon without first obtaining a Phase I thereon which indicates that the property does not contain any Recognized Environmental Conditions (as defined in the ASTM-E1527-13 standard for Phase I Environmental Site Assessments); 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 Comunibanc has reason to believe that such real property may contain any such Hazardous Material.
(w) Deposit Liabilities. Cause or permit any material change in the amount or general composition of deposit liabilities.
(x) Reorganization 368(a). Not take, or fail to take, any action that would reasonably be expected to prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
(y) Commitments. Agree or commit to do any of the foregoing.
4.02 Forbearances of First CitizensCivista. From the date hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement, as required by law (including Pandemic Measures) or as Previously Disclosed,required by an applicable Regulatory Order, without the prior written consent of Futura, First CitizensComunibanc, Civista shall not, and shall cause each of its Subsidiaries not to:
(a) Ordinary Course.Capital Stock Conduct the business of First Citizens and its Subsidiaries other than in the ordinary and usual course. Effect any recapitalization, reclassification, stock split, or fail to use reasonable efforts to preserve intact their business organizations and assets and maintain their rights, franchises and existing relations with customers, suppliers, employees and business associates, or voluntarily take any action which, at the time taken, is reasonably likely to have an adverse effect upon First Citizens’ ability to perform any of its material obligations under this Agreement.
(b) Preservation. Fail to use reasonable efforts to preserve intact in any material respect their business organizations and assets and maintain their rights, franchises and existing relations with customers, suppliers, employees and business associates.
(c) Dividends, etc. Make, declare, pay or set aside for payment any dividend, other than (A) cash dividends on First Citizens Common Shares in an amount not to exceed, on an annualized basis, the aggregate per share amount of $1.16, with record and payment dates consistent with past practice, and (B) dividends from wholly owned subsidiaries to First Citizens.
(d) Accounting Methods. Implement or adopt anysimilar change in
its accounting principles, practicescapitalization.(b) Governing Documents. Amend the Civista Articles or methods,the Civista Regulations in a manner that would materially and adversely affect the holders of Comunibanc Common Stock, or adversely affect the holders of Comunibanc Common Stock relative to other than as may be required by generally accepted accounting principles.
(e)holders of Civista Common Shares.(c) Adverse Actions.Actions. (i) Take any action while knowing that such action would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; or (ii) knowingly take any action that is intended or is reasonably likely to result in (I)(i) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respectmaterially inaccurate at any time at or prior to the Effective Time, (II)(ii) any of the conditions to the Merger set forth in Article VII not being satisfied, or (III)(iii) a material violation of any provision of this Agreement except, in each case, as may be required by applicable law or regulation; provided, however, that nothing contained herein shall limit the ability of First Citizens to exercise its rights under the Voting Agreement.
(f) Risk Management. Except pursuant to applicable law or regulation, (i) implement or adoptby any material change in its interest rate and other risk management policies, procedures or practices; (ii) fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk; (iii) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk;Governmental Authority, or (iv) fail to follow its existing policies or practices with respect to managing its fiduciary risks.
(g) Capital Stock. Other than pursuant to Rights Previously Disclosed and outstanding on the date hereof, (i) issue, sell or otherwise permit to become outstanding, or authorize the creation of, any
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additional First Citizens Common Shares or any Rights, or (ii) enter into any agreement with respect to the foregoing.
(h) Acquisitions. Acquire (other than (i) 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 casedelay in the ordinary and usual course of business consistent with past practice or (ii) the acquisition of deposits or individual branches) allconsummation of the assets, business, or properties of any other bank holding company or state or national bank.
(i)transactions contemplated by this Agreement.(d) Commitments.Commitments. Agree or commit to do any of the foregoing.
Representations and Warranties
5.01 Disclosure Schedules. On or prior to the date hereof, First Citizens has delivered to Futura a schedule,Representations and Futura has delivered to First Citizens a schedule (each respectively, its “Disclosure Schedule”), setting forth, among other things, items,Warranties of Comunibanc. Except as disclosed in the disclosure of which are necessary or appropriate either in responseschedule delivered by Comunibanc to an express disclosure requirement contained in a provision hereof or 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; provided, however, that (a) no such item is required to be set forth in aCivista concurrently herewith (the “Comunibanc Disclosure Schedule as an exception to a representation or warranty if its absence would not be reasonably likely to result in the related representation or warranty being deemed untrue or incorrect under the standard established by Section 5.02, and (b)”); provided that (i) the mere inclusion of an item in athe Comunibanc Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by a partyComunibanc 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. Futura’s representations, warranties and covenants contained in this Agreement shall not be deemed(ii) any disclosures made with respect to be untrue, incorrect or to have been breached as a resultsection of effects on Futura arising solely from actions taken in compliance with a written request of First Citizens.
5.02 Standard. No representation or warranty of Futura or First Citizens contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no party hereto Article V 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.
5.03 Representations and Warranties of Futura. Subject to Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure Schedule corresponding to the relevant paragraph below, Futuracross-referenced, Comunibanc hereby represents and warrants to First Citizens:
Civista as follows:(a) Organization, Standing and Authority. Futura
(i) Comunibanc is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio and any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. Futura is registered as a bank holding company duly registered with the FRB under the BHCA. ChampaignComunibanc 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. Henry County Bank is a national banking associationan Ohio-chartered commercial bank and is supervised and regulated by the ODFI and FDIC. Henry County Bank is duly organized, licensed, validly existing and in good standing under the laws of the United StatesState of America. Champaign BankOhio, 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.
Section 5.01(a)(i) of the Comunibanc Disclosure Schedule sets forth the foreign jurisdictions in which Comunibanc or its Subsidiaries conduct business.(ii) There are no restrictions on the ability of any Subsidiary of Comunibanc 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. Section 5.01(a)(ii) of the Comunibanc Disclosure Schedule sets forth a true and complete list of all Subsidiaries of Comunibanc as of the date hereof.
(b) Capital Structure of FuturaComunibanc.
(i) As of the date of this Agreement,hereof, the authorized capital stock of FuturaComunibanc consists solely of 3,000,000 Futura2,000,000 shares of Comunibanc Common Shares,Stock, of which 2,614,511828,504 shares are outstanding; 279,443 of which are subject to Outstanding Options;currently issued and 30,999 of which are subject to, but not issuable upon conversion of, Stock Appreciation Rights.outstanding (“Comunibanc Common Stock.”) Comunibanc has no other capital stock authorized. As of the date hereof, 118,666 Futura Common Shares were held in the Futura 401(k) Plan and 15,946there are: (A) no shares of Treasury Shares were held by FuturaComunibanc or otherwise owned by FuturaComunibanc or its Subsidiaries. Section 5.03(c) of Futura’s Disclosure Schedule contains (i) a schedule of Outstanding Options setting forth the name of each option holder, the number of Futura Common Shares subject to Outstanding Options, the vesting dates, the grant dates, the expiration dates
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and the exercise prices for all Outstanding Options and (ii) a schedule of outstanding Stock Appreciation Rights setting forth the name of each rights holder, the number of Futura Common Shares subject to outstanding Stock Appreciation Rights, the grant prices, the vesting dates and the expiration dates for all Stock Appreciation Rights. The outstanding Futura Common Shares have been duly authorized, are validly issued and outstanding, fully paid and nonassessable, and are not subject to any preemptive rights (and were not issued in violation of any preemptive rights). As of the date hereof, except as Previously Disclosed in its Disclosure Schedule and except for the Outstanding Options and Stock Appreciation Rights, (A) there are no shares of Futura Common Shares authorized and reserved for issuance, (B) Futura does not have any Rights issued or outstanding with respect to Futura Common Shares, and (C) Futura does not have any commitment to authorize, issue or sell any Futura Common Shares or Rights, except pursuant to this Agreement.
(c) Subsidiaries.
(i)(A) Champaign Bank and Champaign Investment Company are the only Subsidiaries of Futura, (B) except as Previously Disclosed, Futura owns allAll of the issued and outstanding
equity securitiesComunibanc Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of
eachpreemptive rights. Comunibanc does not have, and is not bound by, any outstanding or issued Rights with respect to the Comunibanc Common Stock.(ii) Neither Comunibanc nor any of its Subsidiaries (C)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 Comunibanc is a party or by which it is bound with respect to any equity securitiessecurity of any class of Comunibanc or with respect to any equity security, partnership interest or similar ownership interest of any class of any of its Subsidiaries are or may become required to be issued (other than to it or its wholly-owned Subsidiaries) by reason of any Right or otherwise, (D) there are no contracts, commitments, understandings or arrangements by which any of such Subsidiaries is or may be bound to sell or otherwise transfer any equity securities of any such Subsidiaries (other than to it or its wholly-owned Subsidiaries), (E) there are no contracts, commitments, understandings, or arrangements relating to Futura’s rights to vote or to dispose of such securities and (F) all of the equity securities of each Subsidiary held by Futura or its Subsidiaries are fully paid and nonassessable (except pursuant to 12 U.S.C. Section 55) and are owned by Futura or its Subsidiaries free and clear of any Liens.
(ii) Except as Previously Disclosed, Futura does 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 its Subsidiaries.
(d)(c) Corporate Power; Authorized and Effective AgreementAuthority; No Violation. Each of Futura and Champaign Bank
(i) Comunibanc has full corporate power and authority to carry on its business as it is now being conductedexecute and to own all of its propertiesdeliver this Agreement and, assets. Subjectsubject to the adoption of this Agreement byshareholder and other actions described below, to consummate the holders of the requisite number of outstanding Futura Common Shares entitled to vote thereon (“Futura Shareholder Adoption”)transactions contemplated
hereby. The execution and the approvaldelivery of this Agreement and the consummation of the Merger by applicable federal and state banking authorities, Futura has the corporate power and authority to execute, deliver and perform its obligations under this Agreement, and Champaign Bank has the corporate power and authority to consummate the Subsidiary Merger in accordance withhave been duly and validly approved by the Board of Directors of Comunibanc. The Board of Directors of Comunibanc has determined, subject to Section 6.06 of this Agreement, that the Parent Merger, on the terms and conditions set forth in this Agreement, is in the best interests of this Agreement.
(e) Corporate Authority. Subject to Futura Shareholder Adoption,Comunibanc and its shareholders and has directed that this Agreement and the transactions contemplated hereby
have been authorizedbe submitted to Comunibanc’s shareholders for approval (with the Comunibanc 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
Futurathe holders of a majority of the outstanding shares of Comunibanc Common Stock (the “Requisite Comunibanc Vote”), and the
Futura Board prior toadoption and approval of the
date of this Agreement. TheSubsidiary Merger Agreement
to Merge, when executed by
Champaign Bank, shall have been approved by the Board of Directors of Champaign Bank and by the Futura Board,Comunibanc as
the sole shareholder of
Champaign Bank.Henry County Bank, no other corporate proceedings on the part of Comunibanc are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement
ishas been duly and validly executed and delivered by Comunibanc and (assuming due authorization, execution and delivery by Civista) constitutes a valid and
legally binding obligation of
Futura,Comunibanc, enforceable
against Comunibanc in accordance with its terms (except
in all cases as enforceability may be limited by
applicable bankruptcy, insolvency,
moratorium, reorganization
moratorium, fraudulent transfer andor similar laws
affecting the rights of
general applicability relatingcreditors generally and the availability of equitable remedies).(ii) Neither the execution and delivery of this Agreement by Comunibanc nor the consummation by Comunibanc of the transactions contemplated hereby, including the Parent Merger and the Subsidiary Merger, nor compliance by Comunibanc with any of the terms or provisions hereof, will (A) violate any provision of the Comunibanc Articles 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 affecting creditors’ rightsinjunction applicable to Comunibanc or any Comunibanc 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 Comunibanc or any Comunibanc Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Comunibanc or any Comunibanc Subsidiary is a party, or by general equity principles). The Futura Board has received the written opinionwhich they or any of Keefe, Bruyettetheir respective properties or assets may be.
(d) Consents and Woods, Inc., to the effect that, as of the date hereof, the Merger Consideration is fair to the holders of Futura Common Shares from a financial point of view.
(f) Regulatory Approvals;Approvals.(i) No Defaults.
(i) Except as Previously Disclosed, 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 FuturaComunibanc or any of its Subsidiaries in connection with the execution, delivery or performance by FuturaComunibanc 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 federal and state banking authoritiesRegulatory Authorities to approve the transactions contemplated by the Agreement, and to continue Futura’s trust
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powers and trust activities, (B) the
filingsfiling with the SEC and
state securities authorities,declaration of effectiveness of a registration statement on Form S-4 (the “Registration Statement”) under the Securities Act including the proxy statement/prospectus (the “Proxy Statement/Prospectus”) relating to the meeting, including any adjournment or postponements thereof, of Comunibanc shareholders to be held in connection with this Agreement and the Merger (the “Comunibanc Meeting”), (C)
Requisite Comunibanc Vote, (D) the filing of the
Parent Certificate of Merger with the OSS pursuant to the OGCL, and
(D)filing the Subsidiary Merger Certificate with the OSS after approval by the ODFI, and (E) the receipt of the approvals set forth in
Section 7.01(b).
(ii) As of the date hereof, FuturaComunibanc 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) Subject to Futura Shareholder Adoption, the approvals set forth in Section 7.01(b), the expiration of related regulatory waiting periods, and required filings under federal and state securities laws, 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) constitute 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 Futura or of any of its Subsidiaries or to which Futura or any of its Subsidiaries or properties is subject or bound, (B) constitute a breach or violation of, or a default under, the Futura Articles or the Futura Code or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument. Without limiting the generality of the forgoing, the Merger will not constitute a “Control Share Acquisition,” as defined in Article VI of the Futura Articles.
(g)(e) Financial Statements; Material Adverse Effect.Effect; Internal Controls
.(i) FuturaComunibanc has delivered or will deliver to First Citizens (a)Civista (A) audited consolidated financial statements for each of the fiscal years ended December 31, 2002, 2003, 2004, 20052020, 2019 and 2006,2018, respectively, consisting of consolidated balance sheets and the related consolidated statements of income, comprehensive income and retained earningsshareholders’ equity and cash flows for the fiscal years ended on such date,dates, including the footnotes thereto and the reportreports prepared with respect thereto by Crowe Chizek and Company LLC, Futura’sCliftonLarsenAllen LLP, Comunibanc’s independent registered public accounting firm, and (b)firm; (B) unaudited consolidated financial statements for the nine-month interim period ended MarchSeptember 30, 2021 and each subsequent quarter thereafter, consisting of balance sheets and the related statements of income; and(C) unaudited consolidated monthly financial statements for October 31, 2007,2021 and each subsequent month thereafter, consisting of balance sheets and the related statements of income (collectively, “Futura’sthe “Comunibanc Financial Statements”Statements”). Futura’sThe Comunibanc Financial Statements, as of the dates thereof and for the periods covered thereby, have been prepared in conformity with generally accepted accounting principles,GAAP, consistently applied throughout the periods indicated, and fairly present the financial position of FuturaComunibanc and its Subsidiaries as of the dates thereof and the results of operations and cash flows for the periods indicated, exceptsubject in the case of the interim financial statements to normal year-end adjustments and the absence of notes thereto. Since December 31, 2006, there has not been any material adverse change in the financial condition of operations, assets or business of Futura. Except as set forth in Futura’s Financial Statements, Futura and Champaign Bank have no liabilities or obligations asAs of the date hereof, other than liabilitiesthe books and obligations that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect on Futura or Champaign Bank.
(ii) Since March 31, 2007, Futurarecords of Comunibanc 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, CliftonLarsenAllen LLP has not
resigned (or informed Comunibanc that it intends to resign) or been dismissed as independent public accountants of Comunibanc as a result of or in connection with any disagreements with Comunibanc on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.(ii) Neither Comunibanc nor any of its Subsidiaries has incurred any material liability not disclosedor obligation of any nature whatsoever, except for (A) those liabilities that are reflected or reserved against on the consolidated balance sheet of Comunibanc included in Futura’sthe Comunibanc Financial Statements.
Statements for fiscal year ended December 31, 2020 (including any notes thereto), (B) liabilities incurred in the ordinary course of business consistent in nature and amount with past practice since December 31, 2020 or (C) in connection with this Agreement and the transactions contemplated hereby.(iii) Since MarchDecember 31, 2007,2020, (A) FuturaComunibanc and its Subsidiaries have conducted their respective businesses in the ordinary and usual course consistent with past practice, (excluding matters related to this Agreement and the transactions contemplated hereby) and (B) no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events (described in any paragraph of Section 5.03 or otherwise), is reasonably likely to have a Material Adverse Effect with respect to Futura.
(h) Litigation. ExceptComunibanc or any of its Subsidiaries.(iv) Comunibanc has established and maintains a system of internal accounting controls for Comunibanc and its Subsidiaries sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and applicable law, including policies and procedures that (A) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Comunibanc and its Subsidiaries in all material respects; (B) provide reasonable assurance that transactions are recorded as Previously Disclosed,necessary to facilitate preparation of financial statements in conformity with GAAP, and that receipts and expenditures of Comunibanc and its Subsidiaries are being made in accordance with authorizations of management and directors of Comunibanc 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 Comunibanc or its Subsidiaries that could have a material effect on their financial statements. Comunibanc has no litigation, claimKnowledge of any deficiency in the effectiveness of Comunibanc’s and its Subsidiaries’ internal controls over financial reporting as of the end of the periods covered by the Comunibanc Financial Statements and, to Comunibanc’s Knowledge, any fraud, whether or not material, that involves management or other proceeding before any Governmental Authority is pending against Futuraemployees of Comunibanc or its Subsidiaries. Comunibanc
has provided Civista access to all documentation related to Comunibanc’s internal control over financial reporting. Since December 31, 2018, to Comunibanc’s Knowledge, except as set forth in Comunibanc’s Disclosure Schedule, there has been no complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Comunibanc or any of its Subsidiaries and, to Futura’s Knowledge, no such litigation,or their respective internal accounting controls, including without limitation any complaint, allegation, assertion or claim that Comunibanc or other proceedingHenry County Bank has been threatened.engaged in questionable accounting or auditing practices.
(f) Litigation. Except as Previously Disclosed,set forth in Section 5.01(f) of Comunibanc Disclosure Schedule, there is no judgment, decree, injunction, rulesuit, action, investigation, claim, proceeding or order of any Governmental Authority outstandingreview pending, or to Comunibanc’s Knowledge, threatened against Futuraor affecting it or any of its Subsidiaries or any of the current or former directors or executive officers of it or any of its Subsidiaries (and it is not aware of any basis for any such suit, action, investigation, claim, proceeding or review) (i) that involves a Governmental Authority, or (ii) that, individually or in the aggregate, is (A) material to it and its Subsidiaries, taken as a whole, or is reasonably likely to result in a material restriction on its or any of its Subsidiaries’ businesses or, after the Effective Time, the business of Civista 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 regulatory restriction imposed upon or entered into by Comunibanc, any of its Subsidiaries or the assets of it or any of its Subsidiaries (or that, upon consummation of the Merger, would apply to Civista or any of its Affiliates) that is or could reasonably be expected to be material to Comunibanc or any of its Subsidiaries.
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(i)(g) Regulatory Matters.Matters
.(i) Neither FuturaComunibanc nor any of its Subsidiaries ornor 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, without limitation, the Office ofFDIC, the Comptroller of the Currency, the Federal Reserve SystemFRB, and the FDIC)ODFI) or the supervision or regulation of it or any of its Subsidiaries (collectively, the “Regulatory Authorities”“Regulatory Authorities”).
(ii) Neither FuturaComunibanc nor any of its Subsidiaries 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.
(j)(h) Compliance with Laws. Each Comunibanc and each of Futuraits Subsidiaries hold, and have held at all times, 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 connection therewith), except where neither the cost of failure to hold nor the cost of obtaining and holding the applicable license, franchise, permit or authorization (nor the failure to pay any fees or assessments) would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Comunibanc, and, to the Knowledge of Comunibanc, no suspension or cancellation of any such necessary license, franchise, permit or authorization is threatened. Comunibanc and each of its Subsidiaries:
(i) isSubsidiaries have complied in complianceall material respects with alland are not in default or violation under any applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders law, statute, order, rule, regulation, policy and/or decrees applicable thereto, including thoseguideline of any Governmental Authority relating to the conductComunibanc or any of trust activities or to the employees conducting such businesses,its Subsidiaries, including without limitation all laws related to data protection or privacy, the PatriotUSA PATRIOT Act, the International Money Laundering Abatement and Anti-Terrorist FinancingBank Secrecy Act, of 2001, 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 Services ModernizationProtection 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 other applicable fair lending laws and other lawsagency requirements relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, ordersthe origination, sale and approvalsservicing of mortgage and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit them to own or lease their properties and to conduct their businesses as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to Futura’s knowledge, no suspension or cancellation of any of them is threatened; and
(iii) has not received, since December 31, 2006, any notification or communication from any Governmental Authority (A) asserting that Futura or any of 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, to Futura’s Knowledge, do any grounds for any of the foregoing exist).
(k)consumer Loans.(i) Material Contracts; Defaults.
(i) Except for this Agreement and those agreements andas set forth in the contracts Previously Disclosed,Comunibanc Disclosure Schedule listed under Section 5.01(i)(i), neither FuturaComunibanc nor any of its Subsidiaries is a party to or is bound by any contract or subject to any agreement contract, arrangement, commitment or understanding (whether written or oral) (i) that is a “material contract” within the meaning of Item 601(b)(10)verbal) of the SEC’sRegulation S-K, (ii) that is up for renewal or extension (either by notice, lackfollowing types as of notice or otherwise) after the date of this Agreement, and no such contract or (iii) that restrictsagreement is presently being negotiated or limitsdiscussed:
(A) any contract involving commitments to others to make capital expenditures or purchases or sales in excess of $25,000 in any wayone case or $100,000 in the conductaggregate in any period of business by it12 consecutive months;
(B) any contract relating to any direct or indirect indebtedness of Comunibanc or any of its Subsidiaries for borrowed money, other than deposit liabilities in the ordinary course of business (including without limitation a non-competeloan agreements, lease purchase arrangements, guarantees, agreements to purchase goods or similar provision). Neither Futura norservices or to supply funds or other undertakings relating to the extension of credit), or any conditional sales contracts, equipment lease agreements and other security arrangements with respect to personal property with an obligation in excess of $25,000 in any one case or $100,000 in the aggregate in 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 Comunibanc or any of its Subsidiaries;
(D) any contract containing covenants limiting the freedom of Comunibanc or any 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 Comunibanc’s or any 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 Comunibanc or any of its Subsidiaries or any arrangement under which Comunibanc or any of its Subsidiaries has advanced or loaned any amount to any of their respective insiders or immediate family member of any insider (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;
(J) other than this Agreement and any ancillary agreements being executed in connection with this Agreement, any contract providing for the acquisition or disposition of any portion of the assets, properties or securities of Comunibanc or any of its Subsidiaries;
(K) any contract that requires the payment of royalties;
(L) any contract pursuant to which Comunibanc or any of its Subsidiaries has any obligation to share revenues or profits derived from Comunibanc or any of its Subsidiaries with any other Person;
(M) any contract between (i) Comunibanc or any of its Subsidiaries, on the one hand, and any officer, director, employee or consultant of Comunibanc or any of its Subsidiaries, on the other hand, and (ii) Comunibanc or any of its Subsidiaries, on the one hand, and any Associate or Affiliate of any director, officer, employee or consultant of Comunibanc or any of its Subsidiaries, on the other hand; and
(N) any other legally binding contract not of the type covered by any of the other items of this Section 5.01(i) involving money or property and having an obligation in excess of $25,000 in the aggregate in any period of 12 consecutive months or which is otherwise not in the ordinary and usual course of business.
(ii) “Material Contracts” shall mean those contracts on the Comunibanc Disclosure Schedule listed under Section 5.01(i)(ii). True, complete and correct copies of all of the Material Contracts have been made available to Civista. 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 Comunibanc or any of its Subsidiaries, as the case may be, and (B) to the Knowledge of Comunibanc, as to the other parties to such Material Contracts. Except as disclosed in the Comunibanc Disclosure Schedule, Comunibanc and/or its Subsidiaries, as applicable, and to the Knowledge of Comunibanc, 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 Comunibanc nor its Subsidiaries, and to the Knowledge of Futura,Comunibanc, no other party, is in violation, breach or default of any material obligation, condition or covenant under any contract, agreement, commitment, arrangement, lease, insurance policyof the Material Contracts, and neither Comunibanc nor its Subsidiaries, and to the Knowledge of Comunibanc, no other party, has received any notice that any of the Material Contracts will be terminated or other instrument to which Futura orwill not be renewed. Neither Comunibanc nor any of its Subsidiaries is a party, by whichhas received from or given to any other Person any notice of default or other violation under any of their respective assets, business,the Material Contracts, nor, to the Knowledge of Comunibanc, does any condition exist or operations may be bound or affected in any way, or under which any of their respective assets, business, or operations receive benefits, and there has not occurred any event that,occurred which with thenotice or lapse of time or the giving of notice or both would constitute such a default by Futura orunder any of its Subsidiaries or, to the Knowledge of Futura, any other party.
(l)Material Contracts.(j) Brokerage and Finder’s Fees. Except as Previously Disclosed, Futuraset forth in Section 5.01(j) of Comunibanc Disclosure Schedule, neither Comunibanc nor any of its Subsidiaries has notengaged 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 by this Agreement.
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(m) (k)Employee Benefit PlansPlans; Employee Matters. Except as Previously Disclosed,
(i) Section 5.03(m) 5.01(k) of Futura’sComunibanc Disclosure Schedule contains a complete and accurate list of all existing 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”“Consultants”) or director or former director (the “Directors”“Directors”) of FuturaComunibanc or any 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 FuturaComunibanc or its Subsidiaries or any of the SubsidiariesERISA Affiliate has any present or future liability (the “Compensation“Compensation and Benefit Plans”Plans”). Neither FuturaComunibanc nor any of its 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 disclosed in Section 5.01(k) of Comunibanc Disclosure Schedule, no Compensation and Benefit Plan except as contemplated by this Agreement.
holds any Comunibanc Common 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, or 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”“Pension Plan”) and which is intended to be qualified under Section 401(a) of the Code has either received a favorable determination letter (including a determination that the related trust under such Compensation and Benefit Plan is exempt from tax under Section 501(a) of the Code)Determination Letter from the Internal Revenue Service (“IRS”IRS”), and Futura is not aware of anyno circumstances exist which are likely to result in revocation of any such favorable determination letter.Determination Letter; or has been adopted on a prototype plan which has received a current opinion letter from the national office of the IRS. There is no material pending or, to the knowledgeKnowledge of Futura,Comunibanc, threatened legal action, suit or claim relating to the Compensation and Benefit Plans. Neither FuturaComunibanc nor any of its Subsidiaries nor any ERISA Affiliate has engaged in a transaction, or omitted to take any action, with respect to any Compensation and Benefit Plan that would reasonably be expected to subject FuturaComunibanc or any 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.
Except as disclosed in Section 5.01(k) of Comunibanc Disclosure Schedule, to the Knowledge of Comunibanc, 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 such Compensation and Benefit Plans that are self-insured.(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 FuturaComunibanc or any of its Subsidiaries with respect to any terminated “single-employer plan”, within the meaning of Section 4001(a)(15) of ERISA, formerly maintained by any of them, or any single-employer plan of any entity (an “ERISA Affiliate”“ERISA Affiliate”) which is considered one employer with FuturaComunibanc under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (an “ERISA“ERISA Affiliate Plan”Plan”). None of Futura, any ofComunibanc, 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 since September 26, 1980. No notice of a “reportable event”,event,” within the meaning of Section 4043 of ERISA, has been required to be filed for any Compensation and Benefit Plan or by any ERISA Affiliate Plan. To the Knowledge of Futura,Comunibanc, there is no pending investigation or enforcement action by the U.S. Department of Labor (the “DOL”) or the IRS or any other governmental agencyGovernmental Authority with respect to any Compensation and Benefit Plan.
(iv) All contributions required to be made 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 FuturaComunibanc or any of its Subsidiaries was or is a party have been timely made or have been reflected on Futura’s financial statements. Neither any Pension Plan nor any ERISA Affiliate Plan has an “accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA and all required payments to the PBGC with respect to each Pension Plan or ERISA Affiliate Plan have been made on or before their due dates. None of Futura, any of its Subsidiaries or any ERISA Affiliate (x) has provided, or would reasonably be expected to be required to provide, security to any Pension Plan or to any ERISA Affiliate Plan pursuant to Section 401(a)(29) of the Code, and (y) has taken any action, or omitted to take any action, that has resulted, or would
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reasonably be expected to result, in the
imposition of a lienComunibanc Financial Statements.(v) Except as otherwise provided under Section 412(n) of the Code or pursuant to ERISA.
(v) Neither Futura 6.10(c), neither Comunibanc nor any of its Subsidiaries has any obligations 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, and each such Compensation and Benefit Plan may be amended or terminated without incurring liability thereunder. There has been no communication to Employees by FuturaComunibanc or any of its 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) Futura andNeither Comunibanc, any of its Subsidiaries do notnor any ERISA Affiliate maintain any Compensation and Benefit Plans covering leased or foreign (i.e.,non-United States) Employees.
Employees, independent contractors or non-employees.(vii) With respect to each Compensation and Benefit Plan, if applicable, FuturaComunibanc has provided or made available to First Citizens,Civista, true and complete copies of existing:existing (A) Compensation and Benefit Plan documents and amendments thereto;thereto, including a written description of any Compensation and Benefit Plan or any other employee benefit obligation that is not otherwise in writing, and all board actions approving the same, (B) trust instruments and insurance contracts;contracts, including renewal notices, (C) the twothree most recent Forms 5500 filed with the IRS;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;description or wrap document and summaries of material 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; andIRS, (I) the most recent nondiscrimination tests performed under ERISA and the Code (including 401(k) and 401(m) 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) 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 FuturaComunibanc nor any 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 issued thereunder.
(x) AsExcept as disclosed in Section 5.01(k) of Comunibanc Disclosure Schedule, 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 of First Citizens, FuturaCivista, Comunibanc or the Surviving Corporation, or any of their respective Subsidiaries 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)Code and applicable regulations thereunder) of FuturaComunibanc on a consolidated basis or which would violate 12 U.S.C. Section 1828(k) or regulations thereunder.
(xi) Comunibanc and each of its Subsidiaries are and have been in compliance 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 regardlimitation, any such laws respecting employment discrimination and occupational safety and health requirements, and (i) none of Comunibanc 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 whether such paymentwages and hours under the Fair Labor Standards Act (FLSA), and (ii) there is reasonable compensation for personal services performedno unfair labor practice or employment-related complaint against Comunibanc or any of its Subsidiaries pending or, to be performed in the future.
(xi) In accordance withknowledge of Comunibanc, threatened before any state or federal court, the terms ofNational Labor Relations Board, the Futura 401(k) Plan, Futura Common Shares may not be acquired pursuantEqual Employment Opportunity
Commission (EEOC) or any other federal, state or local administrative body relating to participants’ elections. Only Futura 401(k) Plan participants’ employer matching contribution and employer discretionary profit sharing contribution accounts may have Futura Common Shares credited thereto.
(n)employment or employment-related policies, practices or conditions.(l) Labor Matters. Neither FuturaComunibanc nor any 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 FuturaComunibanc or any 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 FuturaComunibanc or any 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 it or any of its Subsidiaries pending or, to Futura’s knowledge,Comunibanc’s Knowledge, threatened, nor is FuturaComunibanc aware of any activity involving its or any of its Subsidiaries’ employees seeking to certify a collective bargaining unit or engaging in other organizational activity. FuturaComunibanc and its Subsidiaries are in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours.
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(o)(m) Takeover Laws. Futura The Comunibanc Board has taken all action required to be taken by Futura in order to exemptapproved this Agreement, the Voting AgreementSupport Agreements and the transactions contemplated byhereby and thereby as required to render inapplicable to this Agreement, the Support Agreements and the Voting Agreementtransactions contemplated thereby from (i) the requirements of any “moratorium,” “control share,” “fair price,” “affiliate transaction,” “business combination” or other antitakeoveranti-takeover laws and regulations of the State of Ohio (collectively, “Takeover Laws”) applicable to it; and (ii) any applicable provisionsincluding without limitation Sections 1701.83 through 1701.85 of the Futura Governing Documentsand/or the governing documents of any of Futura’s Subsidiaries.
(p)OGCL (“Takeover Laws”).(n) Environmental Matters. Neither the conduct nor the operation of FuturaComunibanc or any 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 Environmental Laws and to Futura’sComunibanc’s Knowledge, no condition exists or has existed or event has occurred with respect to any of them or any such property that with notice or the passage of time, or both, is reasonably likely to result in liability under Environmental Laws. To Futura’s Knowledge, neither FuturaNeither Comunibanc nor any of its Subsidiaries has received any notice from any person or entityPerson that FuturaComunibanc or its Subsidiaries or the operation or condition of any property ever 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 potential responsibility) for the cleanup or other remediation of any pollutants, contaminants, or hazardous or toxic wastes, substances or materialsHazardous Materials at, on, beneath, or originating from any such property.
(q)(o) Tax Matters.Matters
.(i)(A) All Tax Returns that were or are required to be filed by or with respect to FuturaComunibanc and its 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 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 5.01(o)) have been paid in full, and (C) no unexpired waivers of statutes of limitation have been given by or requested with respect to any Taxes of FuturaComunibanc or its Subsidiaries. FuturaComunibanc has made available to First CitizensCivista true and correct copies of the United States federal income Tax Returns filed by FuturaComunibanc and its Subsidiaries for each of the three (3) most recent fiscal years ended on or before December 31, 2006.years. Neither FuturaComunibanc nor any of its Subsidiaries has any liability with respect to any Taxes in excess of the amounts accrued with respect thereto that are reflected in Futura’s March 31, 2007 financial statements the Comunibanc Financial Statementsor that have arisen in the ordinary and usual course of business since March 31, 2007.September 30, 2014. The accruals and reserves for Taxes reflected in Futura’sComunibanc Financial Statements are adequate for the periods covered. There are no Liens for Taxes upon the assets of FuturaComunibanc or any of its Subsidiaries other than Liens for current Taxes not yet due and payable. As of the date hereof, neither Futura nor any of its Subsidiaries has any reason to believe that any conditions exist or fail to exist that might prevent or impede the Parent Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the Code as a result of the transfertransactions contemplated by this Agreement.
(iii) FuturaComunibanc and its 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) To the Knowledge of Futura, noNo claim has ever been made by any Governmental Authority in a jurisdiction where FuturaComunibanc or any of its Subsidiaries doesdo not file Tax Returns that FuturaComunibanc or such Subsidiaryany of its Subsidiaries is or may be subject to taxation by that jurisdiction nor to the Knowledge of Futura, is there any factual basis for any such claim.
(v) Neither FuturaComunibanc nor any Subsidiaryof its Subsidiaries has applied for any ruling from any Governmental Authority with respect to Taxes nor entered into a closing agreement (or similar arrangement) since December 31, 1996 with any Governmental Authority.
(vi) Except as Previously Disclosed, neither FuturaNeither Comunibanc nor any Subsidiaryof its Subsidiaries has been audited by any Governmental Authority for taxable years ending on or subsequent to December 31, 2002,2015. No Tax audit or administrative or judicial Tax proceedings of any Governmental Authority are pending or being conducted with respect to Comunibanc or any of its Subsidiaries and, to the Knowledge of Futura,Comunibanc, no such audit or other proceeding has been threatened. Except as Previously
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Disclosed, noNo Governmental Authority has asserted, is now asserting, or, to the Knowledge of Futura,Comunibanc, is threatening to assert against FuturaComunibanc or any of its Subsidiaries any deficiency or claim for additional Taxes.
(vii) Except as Previously Disclosed, neither FuturaNeither Comunibanc nor any Subsidiaryof its Subsidiaries (A) is a party to any Tax allocation or sharing agreement, nor do Futura(B) has ever been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code, other than an affiliated group of which Comunibanc is or any Subsidiary havewas the common parent corporation (the “Comunibanc Group”), or (C) has any liability for the Taxes of any personPerson (other than Futura or a Subsidiary) underSection 1.1502-6 (or any similar provisionmembers of state, local, or foreign law)the Comunibanc Group) as a transferee or successor, by contract, or otherwise.
(viii) Except as Previously Disclosed, neither FuturaNeither Comunibanc nor any Subsidiaryof its Subsidiaries has agreed to any extension of time with respect to any Tax Return or a Tax assessment or deficiency.
deficiency, and no such extension of time has been requested.(ix) Neither FuturaComunibanc nor any Subsidiaryof 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) Neither Futura nor any Subsidiary has ever been a member of an affiliated group of corporations, other than an affiliated group of which Futura is or was the common parent.
(xi) Neither Futura nor any Subsidiary has filed an election under Section 338(g) or 338(h)(10) of the Code.
(xii) Neither Futura nor any Subsidiary owns an interest in any (A) domestic international sales corporation, (B) foreign sales corporation, (C) controlled foreign corporation, or (D) passive foreign investment company, as such terms are defined in the Code.
(xiii) There are no joint ventures, partnerships, limited liability companies, or other arrangements or contracts to which FuturaComunibanc or any Subsidiaryits Subsidiaries is a party that could be treated as a partnership for Tax purposes.
(xiv) All tax returns(xi) Except as set forth on Section 5.01(o) of the Comunibanc Disclosure Schedule, neither Comunibanc nor any 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 the Bank are “tax exempt use property” or “tax exempt bond financed property” within the meaning of Section 168 of the Code and the Bank is not a party to a “long-term contract” within the meaning of Section 460 of the Code.
(xiii) Comunibanc has not taken any action and is not aware of any kind relatingfact or circumstance that would reasonably be expected to trust activities, that are required to be filed by Futura, have been duly filed, taxes timely paid and no issues have been raised, byprevent the relevant taxing authority, in connection withMerger from qualifying as a “reorganization” within the examinationmeaning of any said tax returns.
(r)Section 368(a) of the Code.(p) Risk Management Instruments. Neither Futura Except as set forth in Section 5.01(p), neither Comunibanc nor any 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.
(s)(q) Books and Records. The books of account, minute books, stock record books, and other records of FuturaComunibanc and its Subsidiaries, all of which have been or will be made available to First Citizens,Civista, are complete and correct in all material respects and 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 FuturaComunibanc and its Subsidiaries, including the maintenance of an adequate system of internal controls that is sufficient to provide reasonable assurances that transactions are executed in accordance with management’s authorization, that transactions are recorded as necessary, that access to assets is permitted only in accordance with management’s authorization, and 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 FuturaComunibanc and its Subsidiaries contain accurate and complete records of all meetings held of, and corporate action taken by, the shareholders, the Comunibanc Board and the governing bodies of Directors,its Subsidiaries, and committees of the Comunibanc Board and the governing bodies of Directors of Futura and its Subsidiaries, and no meeting of any such shareholders, Comunibanc Board and the governing bodies of Directors,its Subsidiaries, or committee has been held for which minutes have been prepared and are not contained in such minute books, except forbooks. Notwithstanding the foregoing, Civista acknowledges that the minutes of the meetings of Futura’sthe Comunibanc Board and Committees provided to Civista do not contain a complete description of Directors relatingmatters related to the process leading to this Agreement and the transactions contemplated hereunder. The fiduciary books and records of Champaign Bank, from trust activities, have been fully, properly and accurately maintained in all material respects, have been maintained in accordance with applicable fiduciary accounting practices and with no material inaccuracies or discrepancies of any kind contained or reflected therein, and they fairly present the substance of trust events and transactions included therein.
(t)Merger.(r) Insurance. Futura’sSection 5.01(r) of the Comunibanc Disclosure Schedule sets forth a summary description of all of the insurance policies, binders, or bonds maintained by FuturaComunibanc or its Subsidiaries. FuturaComunibanc and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of Futura reasonably has determined
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to beis prudent in accordance with safe and sound industry practices. All such insurance policies are in full force and effect; FuturaComunibanc and its Subsidiaries are not in material default thereunder; andthereunder, all claims thereunder have been filed in due and timely fashion.
(u) Disclosure. The representationsfashion and warranties contained in this Section 5.03 do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statementsComunibanc and information contained in this Section 5.03 not misleading.
(v) Material Adverse Change. Futura has not, on a consolidated basis, suffered a change in its business, financial condition or results of operations since December 31, 2006, that has had, or is reasonably likely to have, a Material Adverse Effect on Futura.
(w) Absence of Undisclosed Liabilities. Neither Futura nor any of its Subsidiaries
haswill cause to be filed in due and timely fashion any
liability (contingentclaims that have not yet been filed as of the date of this Agreement or
otherwise) that is materialwhich arise before the Effective Time of the Merger.(s) Title to Futura on a consolidated basis, or that, when combined with all liabilities as to similar matters would be material to Futura on a consolidated basis, except as disclosed inReal Property and Assets.
(i) Section 5.01(s) of the Futura Financial Statements.
(x) Properties. Section 5.03(x) of Futura’sComunibanc Disclosure Schedule lists and describes all real property, and any leasehold interest in real property, owned or held by
FuturaComunibanc or
any of its Subsidiaries and used in the business of Futura or any of its Subsidiaries.
FuturaComunibanc and its Subsidiaries have good
and marketable title, free and clear of all
liens, encumbrances, charges, defaults or equitable interestsLiens, to all of the properties and assets, real and personal, reflected on the
FuturaComunibanc Financial Statements as being owned by
FuturaComunibanc as of
MarchDecember 31,
2007,2020, or acquired after such date, except
(i)(A) statutory
liensLiens for amounts not yet due and payable,
(ii)(B) pledges to secure deposits and other
liensLiens incurred in the ordinary course of banking business,
(iii)(C) with respect to real property, such imperfections of title, easements, encumbrances,
liens,Liens, charges, defaults or equitable interests, if any, as do not
materially affect the use of properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties,
(iv)and (D) dispositions and encumbrances in the ordinary course of
business,business. No portion of any real property owned by Comunibanc 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 on Section 5.01(s) of the Comunibanc Disclosure Schedule is valid, legally binding, in full force and (v) lienseffect, and enforceable in accordance with its terms. There is not under any such lease agreements any default by Comunibanc or its Subsidiaries, or to the Knowledge of Comunibanc, to the other party under any such lease agreement, which with notice or lapse of time, or both, would constitute a default. The consummation of the transactions contemplated hereby will not result in a breach or default under any such lease agreements. Neither Comunibanc nor any of its Subsidiaries has received written notice that the landlord 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) The real property owned or leased by Comunibanc or its Subsidiaries complies in all material respects with all applicable private agreements, zoning codes, ordinances and requirements and other governmental laws and regulations relating thereto and there are no litigation or condemnation proceedings pending or, to Comunibanc’s Knowledge, threatened with respect to any such real property. All licenses and permits necessary for the occupancy and use of the real property owned or leased by Comunibanc or its Subsidiaries, as used in the ordinary course, consistent with past practices of Comunibanc and its Subsidiaries, have been obtained and are in full force and effect. All buildings, structures and improvements located on, properties acquiredfixtures contained in, foreclosureand appurtenances attached to the real property owned or on account of debts previously contracted.leased by Comunibanc 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 FuturaComunibanc or any of its Subsidiaries, as lessee, leases real or personal property (except for leases that have expired by their terms or that Futura or any such Subsidiary has agreed to terminate since the date hereof) are valid without default thereunder by the lessee or, to Futura’s knowledge,the Knowledge of Comunibanc, the lessor.
(y)(t) Loans; Certain TransactionsLoans.
(i) The allowance for loan and lease losses as reflected on the Comunibanc Financial Statements was (A) in the reasonable opinion of the members of senior management and the boards of directors of each of Comunibanc and Henry County Bank, 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) Each loan, reflected as an asset in the Futura Financial Statements asextension of March 31, 2007,credit, loan agreement, credit agreement, note or borrowing arrangement (including leases, credit enhancements, commitments, guarantees and each balance sheet date subsequent thereto, other than loans the unpaid balanceinterest-bearing assets) (collectively, “Loans”) of which does not exceed $150,000 in the aggregate, (i)Comunibanc and Comunibanc Subsidiaries (A) is evidenced by notes, agreements or other evidences of indebtedness whichthat are true, genuine and what they purport to be, (ii)(B) to the extent carried on the books and records of Comunibanc and Comunibanc Subsidiaries as a secured Loan, has been secured by valid liens andcharges, mortgages, pledges, security interests, restrictions, claims, liens or encumbrances, as applicable, which have been perfected and (iii)(C) is the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, subject to enforceability as may be limited by bankruptcy, insolvency, fraudulent conveyancemoratorium, reorganization or similar laws affecting the rights of creditors generally and other lawsthe availability of general applicability relating to or affecting creditors’ rights and to general equity principles. Except as Previously Disclosed,equitable remedies. Section 5.01(t) of the Comunibanc Disclosure Schedule lists each Loan that has as of March 31, 2007, Champaign Bankthe date hereof an outstanding balance of $100,000 or more and that (A) is not a partyover 90 days or more delinquent in payment of principal or interest, (B) is classified by Comunibanc or its Subsidiaries as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “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 Comunibanc and the Comunibanc Subsidiaries (including Loans held for resale to a loan, includinginvestors) was solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant Loan files are being maintained, in all material respects in accordance with the relevant notes or other credit or security documents, the written underwriting standards of Comunibanc and the Comunibanc Subsidiaries (and, in the case of Loans held for resale to investors, the underwriting standards, if any, loan guaranty,of the applicable investors) and with any director, executive officer or 5% shareholderall applicable federal, state and local laws, regulations and rules.
(iv) None of Futurathe agreements pursuant to which Comunibanc or any of itsthe Comunibanc Subsidiaries has sold Loans or pools of Loans, or participations in Loans or pools of Loans, contains any person, corporationobligation to repurchase the Loans or enterprise controlling, controlledinterests 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 Comunibanc or under common control with any of the foregoing. All loans and extensionsComunibanc Subsidiaries to any “executive officer” or other “insider” (as each term is defined in Regulation O promulgated by the FRB) of credit that have been made by Champaign Bank andComunibanc or the Comunibanc Subsidiaries, other than Loans that are subject to 12 C.F.R. Part 31, comply therewith.
(z) and that were made and continue to be in compliance with Regulation O or that are exempt therefrom, which are listed inAllowance for Loan Losses Section 5.01(t). The allowance for of the Comunibanc Disclosure Schedule.(vi) Neither Comunibanc nor any of the Comunibanc 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 losses reflected onpurchase commitment from, any Governmental Authority or Regulatory Authority relating to the Futura Financial Statements, asorigination, sale or servicing of their respective dates, is adequatemortgage or consumer Loans, and (B) aware of any actual or threatened claim, proceeding or investigation with respect thereto by any Person.
(vii) Without limitation of the foregoing, Comunibanc and each of its Subsidiaries have complied in all material respects with and 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 Comunibanc Disclosure Schedule lists (A) each Loan of Comunibanc or any Comunibanc Subsidiary as of the date of this Agreement that was made in connection with the Paycheck Protection Program established under the requirementsCARES Act, and (B) each Loan of generally accepted accounting principlesComunibanc and the Comunibanc Subsidiaries that is subject to providepayment deferral or otherwise has undergone troubled debt restructuring under the CARES Act as of the date of this Agreement (including all outstanding amounts and the expiration date for reasonably anticipated losses on outstanding loans, netany deferral or other modification) (each Loan referred to in (B) a “CARES Act Modified Loan”). For purposes of recoveries.
(aa)this Agreement, “CARES Act” means, collectively, the Coronavirus Aid, Relief, and Economic Security Act, as amended, any extension thereof, and any other economic stimulus or other laws, rules, and regulations related to the Pandemic.(u) Repurchase Agreements. With respect to all agreements pursuant to which FuturaComunibanc or any of its Subsidiaries has purchased securities subject to an agreement to resell, if any, FuturaComunibanc or such Subsidiary,any of its Subsidiaries, as the case may be, has a valid, perfected first lien or security interestLien in 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.
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(v) Investment Securities Portfolio. All investment securities held by Comunibanc or its Subsidiaries, as reflected in the Comunibanc Financial Statements are carried in accordance with GAAP consistent with the applicable guidelines issued by the Regulatory Authorities. Comunibanc or 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 the Comunibanc 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 Comunibanc or its Subsidiaries.(bb)(w) Deposit Insurance.
All of the deposits held by Comunibanc or any Comunibanc 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 Comunibanc or the Comunibanc Subsidiary, as applicable and (ii) all applicable laws. The
depositsdeposit accounts of
BankComunibanc and any Comunibanc Subsidiary are insured by the FDIC
in accordance with The Federalthrough the Deposit Insurance
Act (“FDIA”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 or revocation of the insurance are pending or, to Comunibanc’s Knowledge, threatened.(x) Information Security. Except as set forth in Section 5.01(x) of the Comunibanc Disclosure Schedule, to Comunibanc’s Knowledge, no third party has gained unauthorized access to any information systems or networks controlled by or material to the operation of the business of Comunibanc and the
Comunibanc Subsidiaries (including without limitation any information system or networks owned or controlled by any third party (a “Third Party System”)), and, Bank has paid all assessments and filed all reports required by the FDIA and under the National Housing Act priorto Comunibanc’s Knowledge, there are no material data security or other technological vulnerabilities with respect to its information technology systems or networks or any Third Party System material to the enactmentoperation of the Financial Institutions Reform, Recovery,business of Comunibanc and Enforcement Actthe Comunibanc Subsidiaries, in each case that, individually or in the aggregate, would reasonably be expected to be material to Comunibanc. Comunibanc maintains an information privacy and security program that maintains reasonable measures designed to protect the privacy, confidentiality and security of 1989.
(cc)all data or information that constitutes personal data or personal information under applicable law against any (i) loss or misuse of the data, (ii) unauthorized or unlawful operations performed upon the data, or (iii) other act or omission that compromises the security or confidentiality of the data.(y) Bank Secrecy Act, Anti-Money Laundering and OFAC and Customer Information. To Futura’s Knowledge, Futura has Comunibanc is not been advised in writingaware of and has no reason to believe that any facts or circumstances, exist, which would cause FuturaComunibanc or any of its Subsidiaries to be deemed (i) to be operating in violation of the Bank Secrecy Act, the Patriot Act, any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering Law;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,laws, including without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999. FuturaAct. Comunibanc is not aware of any facts or circumstances that would cause FuturaComunibanc 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 FuturaComunibanc or any of its Subsidiaries to undertake any material remedial action. The FuturaComunibanc Board (or, where appropriate, the boardgoverning bodies of directors of one of Futura’sits Subsidiaries) has adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply, in all material respects, with Section 326 of the Patriot Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the Patriot Act and the regulations thereunder, and FuturaComunibanc (or the appropriate Subsidiary)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 thereunder.
(dd)(z) CRA Compliance. Neither FuturaComunibanc nor any of its Subsidiaries has received any notice of non-compliance with the applicable provisions of the Community Reinvestment Act and the regulations promulgated thereunder, and ChampaignHenry County Bank has received a CRA rating of satisfactory“satisfactory” or better from the FDIC as a result of its most recent CRA examination. Neither FuturaComunibanc nor any of its Subsidiaries knowshas Knowledge of any fact or circumstance or set of facts or circumstances which would be reasonably likely tocould cause FuturaComunibanc or oneany of its Subsidiaries to receive notice of non-compliance with such provisions or cause the CRA rating of Champaign Bankany Comunibanc Subsidiary to fall below satisfactory.“satisfactory.”
(aa) Related Party Transactions. Except as set forth in Section 5.01(aa) of the Comunibanc Disclosure Schedule, neither Comunibanc nor any of its Subsidiaries has entered into any transactions with any Affiliate of Comunibanc or its Subsidiaries or any Affiliate of any director or officer of Comunibanc or its Subsidiaries (collectively, the “Related Parties”). Except as set forth in Section 5.01(aa) of the Comunibanc Disclosure Schedule, none of the Related Parties presently (i) owns, directly or indirectly, any interest in (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 Comunibanc or any of its Affiliates, (ii) owns, directly or indirectly, in whole or in part, any tangible or intangible property that Comunibanc or any of its Subsidiaries uses or the use of which is necessary for conduct of their business, (iii) has brought any action against, or owes (other than Loans made to such entities in the ordinary course of business) any amount to, Comunibanc or its Subsidiaries, or (iv) on behalf of Comunibanc or 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 officer or director of Comunibanc or its Subsidiaries, is a partner or stockholder (excepting stock holdings solely for investment purposes in securities of publicly held and traded companies). Section 5.01(aa) of the Comunibanc Disclosure Schedule contains a complete list of all contracts between Comunibanc, its Subsidiaries and any Related Party
(collectively, the “Related Party Agreements”) entered into on or prior to the date of this Agreement or contemplated under this Agreement to be entered into before the Effective Date (other than those contracts entered into after the date of this Agreement for which Civista has given its prior written consent). The Bank is not party to any transaction with any Related Party on other than arm’s-length terms.
(bb) Prohibited Payments. None of Comunibanc, or the Comunibanc Subsidiaries, or to the Knowledge of Comunibanc, any director, officer, employee, agent or other Person acting on behalf of Comunibanc or any of the Comunibanc Subsidiaries has, directly or indirectly, (i) used any funds of Comunibanc or any of the Comunibanc Subsidiaries for unlawful contributions, unlawful gifts, unlawful entertainment or other expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic governmental officials or employees or to foreign or domestic political parties or campaigns from funds of Comunibanc or any of the Comunibanc Subsidiaries, (iii) violated any provision that would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar law, (iv) established or maintained any unlawful fund of monies or other assets of Comunibanc or any of the Comunibanc Subsidiaries, (v) made any fraudulent entry on the books or records of Comunibanc or any of the Comunibanc Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any Person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business to obtain special concessions for Comunibanc or any of the Comunibanc Subsidiaries, to pay for favorable treatment for business secured or to pay for special concessions already obtained for Comunibanc or any of the Comunibanc Subsidiaries, or is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department.
(cc) Fairness Opinion. The Comunibanc Board has received the opinion of ProBank Austin to the effect that, as of the date hereof, the Merger Consideration to be received by the Comunibanc shareholders in the Parent Merger is fair to the holders of Comunibanc Common Stock from a financial point of view.
(dd) Absence of Undisclosed Liabilities. Neither Comunibanc nor any 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 Comunibanc on a consolidated basis, except as disclosed in the audited balance sheet dated December 31, 2020 contained in the Comunibanc Financial Statements or set forth in Section 5.01(dd) of the Comunibanc Disclosure Schedule.
(ee) Material Adverse Effect. Comunibanc has not, on a consolidated basis, suffered a change in its business, financial condition or results of operations since December 31, 2020, that has had or could reasonably be expected to have a Material Adverse Effect on Comunibanc or any of its Subsidiaries.
(ff) Tax Treatment of Merger. As of the date of this Agreement, Comunibanc is not aware of any fact or state of affairs relating to Comunibanc that could cause the Merger not to be treated as a “reorganization” under Section 368(a) of the Code
(gg) Comunibanc Information. The information provided in writing by Comunibanc relating to Comunibanc and its Subsidiaries that is to be contained 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. No representation or warranty by Comunibanc, and no statement by Comunibanc 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 to make such representation, warranty or statement not misleading to Civista.
5.04 5.02 Representations and Warranties of First Citizens.Civista Subject. Except (a) as disclosed in the disclosure schedule delivered by Civista to Sections 5.01 and 5.02 and exceptComunibanc concurrently herewith to the extent applicable (the “Civista Disclosure Schedule”); provided that (i) the mere inclusion of an item in the Civista Disclosure Schedule as Previously Disclosedan exception to a representation or warranty shall not be deemed an admission by Civista that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a paragraphMaterial Adverse Effect and (ii) any disclosures made with respect to a section of its Disclosure Schedule corresponding Article V shall be deemed to qualify any other section of Article V specifically referenced or cross-referenced, or (b) as disclosed in any Civista SEC Reports publicly filed with or furnished to the relevant paragraph below, First CitizensSEC by Civista after January 1, 2021 and prior to the date hereof, Civista hereby represents and warrants to FuturaComunibanc as follows:
(a) Organization, Standing and Authority. First Citizens
(i) Civista is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. First CitizensOhio and is a financial holding company duly registered with the FRB under the BHCA. Civista 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. Civista is duly qualified to do business and is in good standing in the State of Ohio and any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. First Citizens
(ii) Each Subsidiary of Civista (A) is registered as a bank holding company under the BHCA. Citizens Bank is a state banking association duly organized and validly existing and in good standing under the laws of the Stateits jurisdiction of Ohio. Citizens Bankorganization, (B) is duly licensed or qualified to do business and, where such concept is recognized under applicable law, in good standing in the State of Ohio and any foreignall jurisdictions (whether federal, state, local or foreign) where its ownership, leasing or leasing of property or assets or the conduct of its business requires it to be so qualified.
(b) First Citizens Common Shares.
(i) As of the date hereof, the authorized capital stock of First Citizens consists of 10,000,000 First Citizens Common Shares, of which 5,434,300.44 shares were outstanding as of the date hereof. As of the date hereof, except as Previously Disclosed, First Citizens does not have any Rights issued or outstanding with respect to First Citizens Common Shares and First Citizens does not have any commitment to authorize, issue or sell any First Citizens Common Shares or Rights, except pursuant to this Agreement. The outstanding First Citizens Common Shares have been duly authorized and are validly issued and outstanding, fully paid and nonassessable, and are subject to preemptive rights (but were not issued in violation of any preemptive rights).
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(ii) The First Citizens Common Shares to be issued in exchange for Futura Common Shares in the Parent Merger, when issued in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable and will be subject to preemptive rights, but will not be issued in violation of such preemptive rights.
(c) Ownership of Futura Common Shares. As of the date of this Agreement, neither First Citizens nor any of its directors, officers or affiliates (as defined in Section 1704 of the OGCL), beneficially owned any Futura Common Shares.
(d) Significant Subsidiaries. Each of First Citizens’ Significant Subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization, and is duly qualified to do business and is in good standing in the jurisdictions where its ownership or leasingoperation of property or the conduct of its business requires it to be so licensed or qualified or in good standing and First Citizens owns, directly or indirectly,(C) has all the issued and outstanding equity securities of each of its Significant Subsidiaries.
(e) Corporate Authority. Each of First Citizens and its Significant Subsidiaries has therequisite corporate power and authority
to own, lease or operate its properties and assets and to carry on its business as
itnow conducted. There are no restrictions on the ability of any Subsidiary of Civista to pay dividends or distributions, except, in the case of a Subsidiary that is
now being conductedan insured depository institution, for restrictions on dividends or distributions generally applicable to all such regulated entities. The deposit accounts of Civista 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 Comunibanc, threatened.(b) Capital Structure of Civista. As of date hereof, the authorized capital stock of Civista consists of 40,000,000 Civista Common Shares, of which 14,948,797 shares are outstanding and 200,000 shares of preferred stock, without par value, none of which are outstanding. The outstanding Civista 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 the Agreement Date, Civista has available 154,123 Civista Common Shares reserved for issuance for the Civista Board Deferred Compensation Plan and for grants to senior management and other employees. As of date hereof, 2,760,787 Civista Common Shares were held in treasury by Civista.
(c) Ownership of Comunibanc Common Stock. As of the date of this Agreement, Civista and its Subsidiaries do not beneficially own all its properties and assets. First Citizensany of the outstanding Comunibanc Common Stock.
(d) Authority; No Violation.
(i) Civista has thefull corporate power and authority to execute deliver and perform its obligations underdeliver this Agreement and, subject to the Voting Agreementshareholder and other actions described below, to consummate the transactions contemplated herebyhereby. The execution and thereby.
(f) Corporate Authority; Authorizeddelivery of this Agreement and Effectivethe consummation of the Parent Merger and the Subsidiary Merger have been duly and validly approved by the Board of Directors of Civista. The Board of Directors Civista has determined that the Parent Merger, on the terms and conditions set forth in this Agreement,. Subject is in the best interests of Civista and its shareholders and has adopted a resolution to the foregoing effect. Except for the adoption and approval of the Subsidiary Merger Agreement by Civista, as
Civista Bank’s sole shareholder, no other corporate proceedings on the part of Civista are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Civista and (assuming due authorization, execution and delivery by Comunibanc) constitutes a valid and binding obligation of Civista, enforceable against Civista in accordance with its terms (except in all cases as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization). The Civista Common Shares to be issued in the Merger have been validly authorized and, when issued, will be validly issued, fully paid and nonassessable, and no current or past shareholder of Civista will have any preemptive right or similar rights in respect thereof.
(ii) Neither the execution and delivery of this Agreement by Civista, nor the holdersconsummation by Civista of the requisite majority of outstanding First Citizens Common Shares entitled to vote thereon (“First Citizens Shareholder Adoption”), this Agreement and the transactions contemplated hereby, including the Merger have been authorized by all necessary corporate action of First Citizens and the First Citizens Board priorSubsidiary Merger, nor compliance by Civista with any of the terms or provisions hereof, will (A) violate any provision of the Civista Articles or the Civista 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 Civista, any of the date hereof. The AgreementCivista 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 result in the creation of any Lien upon any of the respective properties or assets of Civista or any of the Civista Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to Merge, when executed by Citizens Bank, shall have been approved bywhich Civista or any of the Board of Directors of Citizens Bank and by the First Citizens Board, as the sole shareholder of Citizens Bank. This AgreementCivista Subsidiaries is a valid and legally binding agreementparty, or by which they or any of First Citizens, enforceable in accordance with its terms (except as enforceabilitytheir respective properties or assets may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transferbound, except (in the case of clause (2) above) for such violations, conflicts, breaches or defaults which would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Civista.
(e) Consents and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).
(g) Regulatory Approvals;Approvals.(i) No Defaults.
(i) Except as Previously Disclosed, 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
First CitizensCivista or any of its
Significant Subsidiaries in connection with the execution, delivery or performance by
First CitizensCivista of this Agreement or
to consummatethe consummation of the transactions contemplated hereby, including the Merger, except for (A) the
filingfilings of applications,
waivers or notices,
and the Agreement to Merge, as applicable, with
the federal and state banking authoritiesRegulatory Authorities to approve the transactions contemplated by
thisthe Agreement,
and to continue Futura’s trust powers and trust activities; (B) the filing
and declaration of effectiveness of the Registration
Statement;Statement, (C)
Requisite Comunibanc Vote, (D) the filing of the
Parent Merger Certificate
of Merger with the OSS pursuant to the
OGCL; (D) such filings as areOGCL, and filing the Subsidiary Merger Certificate with the OSS, (E) any approvals and notices required
with respect to the Civista Common Shares to be
made or approvalsissued as
are required to be obtainedpart of the Merger Consideration under the
securities or “Blue Sky” lawsrules of
various states in connection withNASDAQ and (f) the
issuance of First Citizens Common Shares in the Parent Merger; and (E) receipt of the approvals set forth in
Section 7.01(b).
(ii) As of the date hereof, First CitizensCivista 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) Subject to First Citizens Shareholder Adoption, the approvals set forth in Section 7.01(b), the expiration of related regulatory waiting periods, and required filings under federal and state securities laws, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (A) constitute 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 First Citizens or of any of its Significant Subsidiaries or to which First Citizens or any of its Significant Subsidiaries or properties is subject or bound, (B) constitute a breach or violation of, or a default under, the First Citizens Articles or First Citizens Code, or (C) require any consent or approval
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(f) SEC Reports.under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.
(h) Financial Reports and SEC Documents; Material Adverse Effect.
(i)
First Citizens’Civista has timely filed all reports, registration statements,
schedules, definitive proxy statements
orand other
statements filed since December 31, 2005 ormaterials, together with any amendments required to be
filed bymade with respect thereto, that it
or any of its Significant Subsidiarieswas required to file with the SEC,
(collectively, “First Citizens SEC Documents”) as of the date filed (or if amended or superseded by a filing prior to the date hereof then on the date ofand all such
amended or superseded filing), (A)reports, registration statements, proxy statements, other materials and amendments have complied
or will comply 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 applicable requirements underSEC by Civista pursuant to the
Securities Act or the Exchange Act prior to the date of this Agreement (the “Civista 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 rulesdates of the relevant meetings, respectively), and regulations promulgated thereunder, andconsidering all amendments to any Civista SEC Report filed prior to the extent applicable and in effect, the Sarbanes-Oxley Act, as the case may be, and (B) did not and will not containdate hereof, contained any untrue statement of a material fact or omitomitted to state aany material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances underin which they were made, not misleading;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 Civista SEC Reports complied as to form in all material respects with the published rules and eachregulations of the balance sheets orSEC with respect thereto.
(g) Financial Statements; Material Adverse Effect; Internal Controls.
(i) The financial statements of condition contained in orCivista and its Subsidiaries included (or incorporated by reference into any such First Citizensreference) in Civista SEC Documentfilings (including the related notes, where applicable) (A) have been prepared from, and schedules thereto) fairly presents, or willare in accordance with, the books and records of Civista and its Subsidiaries, (B) fairly present in all material respects the financial position of First Citizens and its Significant Subsidiaries as of its date, and the statements of income orconsolidated results of operations, andcash flows, changes in shareholders’ equity and cash flows or equivalent statements in such First Citizens SEC Documents (including any related notesconsolidated financial position of Civista and schedules thereto) fairly presents, or will fairly present, the results of operations, changes in shareholders’ equity and cash flows, as the case may be, of First Citizens and its Significant Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to which they relate,recurring year-end audit adjustments normal in each casenature and amount), (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 (D) have been prepared in accordance with generally accepted accounting principles, consistently applied during the periods involved, except, in each case, as may be noted therein, subject to normal year-end audit adjustmentsindicated in such statements or in the casenotes thereto. As of unaudited statements.
the date hereof, the books and records of Civista and its Subsidiaries have been maintained in all material respects in accordance with generally accepted accounting principles and any other applicable legal and accounting requirements and reflect only actual transactions. As of the date hereof, BKD, LLP has not resigned (or informed Civista that it intends to resign) or been dismissed as independent public accountants of Civista as a result of or in connection with any disagreements with Civista on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.(ii) Since March 31, 2007, no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events (described in any paragraph of Section 5.04 or otherwise), is reasonably likely to have a Material Adverse Effect with respect to First Citizens.
(i) Litigation.
Except as Previously Disclosed, no litigation, claim or other proceeding before any Governmental Authority is pending against First Citizens or any of its Significant Subsidiaries and, to First Citizens’ Knowledge, no such litigation, claim or other proceeding has been threatened. There is no judgment, decree, injunction, rule or order of any Governmental Authority outstanding against First Citizens or any of its Significant Subsidiaries.
(j) Regulatory Matters.
(i) Neither
First CitizensCivista nor any of its
Significant 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 Civista included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (including any notes thereto), (B) liabilities incurred in the ordinary course of business consistent in nature and amount with past practice since December 31, 2020 or (C) in connection with this Agreement and the transactions contemplated hereby.(h) Regulatory Matters.
(i) Neither Civista nor Civista Bank nor any of their respective properties is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from a Regulatory Order from any Regulatory Authority.
(ii) Neither First CitizensCivista nor any of its Significant SubsidiariesCivista Bank 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.
(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 Civista, no litigation, claim or other proceeding before any court or Governmental Authority is pending against Civista or Civista Bank, and, to Civista’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 Civista.
(k)(j) Compliance with Laws. Except as Previously Disclosed, Civista and each of First Citizens and its Significant Subsidiaries:
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, including those relating toand (ii) have all licenses, franchises, permits and authorizations which are necessary for the lawful conduct of trust activitiestheir respective businesses and ownership of their respective properties, rights and assets under and pursuant to applicable law, except 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 the employees conducting such businesses, including, without limitation, the Patriot Act, the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Financial Services Modernization Act and all other applicable fair lending laws and other laws relatingaggregate, to discriminatory business practices; and
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(ii) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit them to conduct their businesses substantially as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effecthave a Material Adverse Effect on Civista and, to the best of its knowledge,Civista’s Knowledge, no suspension or cancellation of any of them is threatened;such necessary license, franchise, permit or authorization has, prior to the date hereof, been threatened in writing, and
(iii) has not received since December 31, 2006, any notification or communication from any Governmental Authority (A) asserting that First CitizensCivista or any of its Significant Subsidiaries isare 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 to First Citizens’ Knowledge, do any grounds for any of the foregoing exist).
(l) Civista 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 Civista or any of its Subsidiaries.(k) Brokerage and Finder’s Fees. Except as Previously Disclosed, First Citizensfor Stephens, Inc., Civista 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.
(m)(l) Tax MattersTakeover Laws. (i) All Tax Returns that were or are Civista has taken all action required to be filedtaken by or with respectCivista in order to First Citizensexempt this Agreement, the Support Agreements and its Subsidiaries have been dulythe transactions contemplated hereby and timely filed, or an appropriate extension has been granted,thereby from, and all such Tax Returnsthis Agreement, the Support Agreements and the transactions contemplated hereby and thereby are true, correct,exempt from, (i) the requirements of any Takeover Laws, and complete in all material respects, (ii) all Taxes shown to be due on the Tax Returns referred to in clause (i) have been paid in full, (iii) no unexpired waivers of statutes of limitation have been given by or requested with respect to any Taxes of First Citizens or its Significant Subsidiaries. Neither First Citizens nor any Subsidiary has been audited by any Governmental Authority for taxable years ending on or subsequent to December 31, 2002 and, to the Knowledge of First Citizens, no such audit or other proceeding has been threatened. No Governmental Authority has asserted, is now asserting, or, to the Knowledge of First Citizens, is threatening to assert against First Citizens or any of its Subsidiaries any deficiency or claim for additional Taxes. Neither First Citizens nor any of its Subsidiaries has any liability with respect to any Taxes that accrued on or before the endapplicable provisions of the most recent period covered by First Citizens’ SEC Documents filed prior toCivista Articles, the date hereof in excessCivista Regulations and/or the governing documents of the amounts accrued with respect thereto that are reflected in the financial statements included in First Citizens’ SEC Documents filed on or prior to the date hereof or that have arisen in the ordinary courseCivista Bank.
(m) Tax Treatment of business subsequent to the periods covered by such filings.Merger. As of the date hereof, First Citizens has no reasonof this Agreement, Civista is not aware of any fact or state of affairs relating to believeCivista that any conditions exist that might prevent or impedecould cause the Parent Merger from qualifyingnot to be treated as reorganization with the meaning ofa “reorganization” under Section 368(a) of the Code.
(n) Books and RecordsCivista Information. The books of account, minute books, stock record books and other records of First Citizensinformation provided in writing by Civista relating to Civista and its Subsidiaries are complete and correctthat is to be contained in all material respects, have been maintained in accordance with sound business practices and the requirements of Section 13(b)(2) ofRegistration 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, and fairly present the substance of events and transactions included therein.
(o) Disclosure. The representations and warranties containedor in this Section 5.04 doany 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 Civista, and no statement by Civista 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 the statements and information contained in this Section 5.04such representation, warranty or statement not misleading.
(p) Material Adverse Change. First Citizens has not, on a consolidated basis, suffered a change in its business, financial condition or results of operations since March 31, 2007, that has had, or is reasonably likelymisleading to have, a Material Adverse Effect on First Citizens.
6.01 Commercially Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each of FuturaComunibanc and First CitizensCivista 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 desirable, or advisable under applicable laws, so as to permit consummation of the Merger as promptly as practicable and otherwise to enable consummation of the transactions contemplated hereby and shall cooperate fully with the other party hereto to that end.
6.02 Shareholder Approvals. Futura and First Citizens each
(a) Comunibanc shall take all action necessary in accordance with applicable law the Futura Governing Documents, and the First CitizensComunibanc Articles to duly call, give notice of, convene and, First Citizens Code, respectively, all
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action necessary to convene an appropriate meeting of its shareholders to consider and vote upon the adoption of this Agreement and any other matters required to be approved or adopted by Futura’s and First Citizens’ shareholders for consummation of the Parent Merger (including any adjournment or postponement, the “Futura Meeting” and the “First Citizens Meeting,” respectively), as promptlysoon as practicable after the Registration Statement is declared effective. The Futura Board shall recommend thateffective, hold a meeting of its shareholders adopt this Agreement at the Futura Meeting, unlessand, except as otherwise necessary to fulfill the fiduciary duties of the Futura Board, as determined by the Futura Board in good faith after consultation with and based upon advice of independent legal counsel.
6.03 Registration Statement.
(a) First Citizens and Futura shall cooperate andprovided herein, use
their respectiveits reasonable best efforts to
prepare, within 45 daystake such other actions necessary to obtain the relevant shareholder approvals, in each case as promptly as practicable for the purpose of
executionobtaining the Requisite Comunibanc Vote. Comunibanc shall keep Civista informed on a current basis regarding its solicitation efforts and voting results following the dissemination of
this Agreement, in accordance with all applicable laws, rules and regulations, and First Citizens shall file with the
SEC (i) a joint proxy statement/prospectus for distributionProxy Statement/Prospectus to the shareholders of
First CitizensComunibanc. Each member of the Comunibanc Board shall have executed and
Futura in connectiondelivered to Civista a Support Agreement concurrently with the
First Citizens Meetingexecution of this Agreement.(b) Except in the case of an Acceptance of Superior Proposal permitted by Section 6.06, Comunibanc shall solicit, and use its reasonable best efforts to obtain, the Futura Meeting (as amended and supplemented,Requisite Comunibanc Vote at the “Proxy Statement/Prospectus”Comunibanc Meeting. Subject to Section 6.06(d), Comunibanc shall (i) through the Comunibanc Board, recommend to its shareholders adoption of this Agreement (the “Comunibanc Recommendation”), and (ii) include such recommendation in the Proxy Statement/Prospectus. Comunibanc hereby acknowledges its obligation to submit this Agreement to its shareholders at the Comunibanc Meeting as provided in this Section 6.02. If requested by Civista after consultation with Comunibanc, Comunibanc will engage a registration statement onForm S-4proxy solicitor, reasonably acceptable to Civista and at Civista’s expense, to assist in the solicitation of proxies from shareholders relating to the offerRequisite Comunibanc Vote.
6.03 Registration Statement; Proxy Statement/Prospectus.
(a) Upon the execution and saledelivery of the First Citizens Common Shares in connectionthis Agreement, Civista, with the merger (as amendedassistance of Comunibanc shall promptly cause the Registration Statement to be prepared and supplemented,Civista shall cause the “Registration Statement”).Registration Statement to be filed with the SEC. Civista and Comunibanc 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 Proxy Statement/Prospectus will be includedparties shall cooperate in responding to and will constitute a part ofconsidering any questions or comments from the SEC staff regarding the information contained in the Registration Statement. The parties will cooperate with each other in connection with the preparation ofIf at any time after the Registration Statement is filed with the SEC, and prior to the Proxy Statement/Prospectus. EachEffective Time, any event relating to Comunibanc or Civista is discovered by Comunibanc or Civista, as applicable, which should be set forth in an amendment of, Futura and First Citizensor a supplement to, the Registration Statement, the discovering party shall usepromptly inform the other party with all reasonable effortsrelevant information relating to such event, whereupon Civista shall promptly cause an appropriate amendment to the Proxy Statement/ProspectusRegistration Statement to be declared effective underfiled with the Securities ActSEC. Upon the effectiveness of such amendment, each of Comunibanc and Civista (if prior to the meeting of the Comunibanc shareholders pursuant to Section 6.02 hereof) will take all necessary action as promptly as reasonably practicable after filing thereof and First Citizensto permit an appropriate amendment or supplement to be transmitted to the shareholders entitled to vote at such meeting. Civista shall keep the Registration Statement effective as long as necessary to complete the transactions contemplated by this Agreement. First Citizens shallalso use all reasonable best efforts to obtain prior to the effective date of the Registration Statement, all necessary state securities law or “Blue Sky”“blue sky” permits and approvals required to carry out the transactions contemplated by this Agreement. Futura agrees toAgreement, and Comunibanc shall furnish to First Citizens all information concerning Futura, its Subsidiaries, officers, directorsComunibanc and shareholdersthe holders of Comunibanc Common Stock as may be reasonably requested in connection with any such action. Comunibanc shall provide Civista with all information concerning its directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the foregoing.
Registration Statement.(b) Futura shall be providedCivista and Comunibanc each agrees to use its commercially reasonable efforts and to cooperate with the other party in all reasonable opportunityrespects to reviewprepare the Proxy Statement/Prospectus for filing with the SEC and, comment on drafts ofwhen the Registration Statement and Proxy Statement/Prospectus (including each amendment or supplement thereto) and all responses to requestsis effective, for additional information by and replies to comments of the SEC, prior to filing such with or sending suchdelivery to the SEC. First Citizens shall provide Futura with copies of all filings made and correspondence with the SEC. First Citizens shall include in any such documents or responses all comments reasonably proposed by Futura as necessary to ensure compliance of such documents with all applicable laws, rules and regulations. First Citizens shall not file, mail or otherwise deliver such document or respond to the SEC over Futura’s reasonable objection.
Comunibanc shareholders.(c) None of the information supplied or to be supplied by Futura or First Citizens, respectively, for inclusion or incorporation by reference in (i) the Registration Statement, at the time the Registration Statement and each amendment or supplement thereto, if any,If either party becomes effective under the Securities Act, shall contain any untrue statement of a material fact or shall omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) the Proxy Statement/Prospectus and any amendment or supplement thereto, at the date of mailing to the Futura shareholders and the First Citizens shareholders and at the time of the Futura Meeting and the First Citizens Meeting, as the case may be, shall contain any untrue statement of a material fact or shall omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or any statement which, in the light of the circumstances under which such statement is made, will be false or misleading with respect to any material fact, or which will omit to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier statement in the Proxy Statement/Prospectus or any amendment or supplement thereto. If Futura shall become aware prior to the Effective Time of any information furnished by Futura 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, Futurathat party shall promptly inform First Citizens thereof. If First Citizens shall become aware prior to the Effective Time of any information furnished by First Citizens that would cause any of the statements in the Proxy Statement/Prospectus to be false or misleading with respect to
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any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, First Citizens shall promptly inform Futuraother thereof and to take the necessary steps to correct the Proxy Statement/Prospectus.
(d) First Citizens6.04 Public Announcements. Neither Comunibanc nor Civista shall, advise Futura, promptly after First Citizens receives notice thereof,and neither Comunibanc nor Civista shall permit any of (i)their respective Subsidiaries to, issue or cause the receiptpublication of any writtenpress release or material oral communication from the SEC regarding the Registration Statementother public announcement with respect to, or Proxy Statement/Prospectus; (ii) the time when the Registration Statement has become effectiveotherwise make any public statement, or, any supplement or amendment has been filed; (iii) the issuance of any stop order or the suspension of the qualification of First Citizens Stock for offering or saleexcept as otherwise specifically provided in any jurisdiction; (iv) the initiation or threat of any proceeding for any such purpose; or (v) any request by the SEC for the amendment or supplement of the Registration Statement or the Proxy Statement/Prospectus or for additional information.
6.04 Press Releases. Upon the execution of this Agreement, First Citizens and Futura shall issueany disclosure of nonpublic information to a joint press release regarding this Agreement andthird party, concerning, the transactions contemplated hereby, which joint press release shall be subject to the prior approval of First Citizens and Futura. Neither Futura nor First Citizens will,by this Agreement without the prior approvalconsent (which shall not be unreasonably withheld, conditioned or delayed) of Civista, in the other party,case of a proposed announcement, statement or disclosure by Comunibanc, or Comunibanc, in the case of a proposed announcement, statement or disclosure by Civista; provided that either Civista may, without the prior consent of Comunibanc (but after prior consultation with Comunibanc 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 by applicable law or regulation orby the NASDAQ rules.
rules of the SEC.6.05 Access; Information.
(a) Each of First Citizens and Futura shall afford, uponUpon reasonable notice and subject to applicable laws relating to the exchange of information, the other partyComunibanc shall, and the other party’s officers, employees, counsel, accountants and other authorized representatives suchshall cause each of its Subsidiaries to, afford Representatives of Civista, reasonable access, during normal business hours throughoutduring the period prior to the Effective Time, to theall its properties, books, records (including, without limitation, tax returnscontracts, commitments and work papers of independent auditors), properties, personnel and to such other information as such party may reasonably request in view of the relative interests of the parties in the transactions contemplated by this Agreementrecords, and, during such period, (i)Comunibanc shall, furnish promptlyand shall cause its Subsidiaries to, such partymake available to Civista (i) a copy of each material report, schedule, registration statement and other documents filed or received by it during such period pursuant to the requirements of federal securities laws or federal or state securitiesbanking or bankinginsurance laws, and (ii) shall grant access to all other information concerning theits business, properties and personnel of it as the otherCivista may reasonably request, in viewincluding periodic updates of the relative interestsinformation provided in Section 5.01(gg). Comunibanc shall allow one Representative of Civista selected by Civista from time to time to attend, solely as observers, all meetings of the parties in the transactions contemplated by this Agreement. Futura shall invite two representatives of First Citizens, which representatives shall be First Citizens directorsand/or senior executive officers selected by First Citizens, to attend any Futura Comunibanc Board(and Champaigncommittees thereof) and Henry County Bank directors’ meeting heldboard after the date of this Agreement; provided, however, that in no event shall such First Citizens representativesCivista Representative be invited to or be permitted to attend any executive session of Futura or ChampaignComunibanc’s Board, Henry County Bank’s Boardboard or any meeting at which Futura, in its sole discretion,Comunibanc reasonably determines that such attendance is inconsistent with the Futura Board’sfiduciary obligations or confidentiality requirements of the ChampaignComunibanc Board, Henry County Bank Board’sboard, as applicable. Upon the reasonable request of Comunibanc, Civista shall furnish such reasonable information about it and its business as is relevant to Comunibanc and its shareholders in connection with the transactions contemplated by this Agreement. Neither Comunibanc nor Civista, 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 obligations.
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 partyComunibanc nor Civista will, nor shall and will cause its representatives not to,either party’s Representatives, use any information obtained pursuant to this Section 6.05 (as well as any other information obtained prior to the date hereof in connection with the entering into of this Agreement) for any purpose unrelated to the consummation of the transactions contemplated by this Agreement, and such information will be subject to the confidentiality provisionprovisions of Section 6.20.
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 to the Effective Time, as soon as reasonably practicable after they become available, but in no event more than 30 days after the end of each party shall promptlycalendar month ending after the date hereof, Comunibanc will furnish the other with copies of all monthly and other interimto Civista (i) consolidated financial statements produced in (including balance sheets, statements of operations and stockholders’ equity) of Comunibanc or any of its Subsidiaries (to
the ordinary courseextent available) as of business asand for such month then ended, (ii) internal management reports showing actual financial performance against plan and previous period, and (iii) to the same shall become available.
extent permitted by applicable law, any reports provided to the Comunibanc Board or any committee thereof relating to the financial performance and risk management of Comunibanc or any of its Subsidiaries.6.06 Acquisition Proposals; Break Up FeeProposal.
(a) FuturaFrom the date of this Agreement through the first to occur of the Effective Time or the termination of this Agreement, Comunibanc shall not, and shall cause any of its Subsidiaries and its and its Subsidiaries’the officers, directors, employees, advisors and other agents of Comunibanc and its Subsidiaries not to, directly or indirectly (i) solicit, initiate, encourage, facilitate (including by way of providing information) or initiate inquiriesinduce any inquiry, proposal or proposalsoffer with respect to, or engage
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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
concerning,regarding, or
provide any confidential informationfurnish to any Person
or Group any confidential or nonpublic information with respect to or in connection with, an Acquisition Proposal, (iii) take any other
than First Citizens,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
(i) any
acquisitionAcquisition Transaction or
purchase of allAcquisition Proposal, (vi) enter into any agreement or
substantially allagreement in principle requiring, directly or indirectly, Comunibanc 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
assetsforegoing.(b) Notwithstanding anything to the contrary in Section 6.06(a), if Comunibanc or any of Futura or Champaign Bank or (ii) any merger, consolidation or business combination with Futura or Champaign Bank (hereinafter collectively referred to as an “Acquisition Proposal”); provided, however, that nothing contained in this section shall prohibit Futura from furnishing information to, or entering into discussion or negotiations with, any Person which makesits 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), Comunibanc and its Representatives may take any action described in Section 6.06(a)(ii), if, and toonly if, the extent that (I) the FuturaComunibanc Board after consultation with and based upon the advice of counsel, determines in good faith, after consultation with Comunibanc’s 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 Comunibanc Board to take such action is required to fulfillwould more likely than not be deemed a breach by the Comunibanc Board of its fiduciary duties to the shareholders of FuturaComunibanc under applicable lawLaw; provided, that Comunibanc 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 24 hours) following receipt of any Acquisition Proposal or any request for nonpublic information or inquiry that would reasonably be expected to lead to any Acquisition Proposal, Comunibanc shall (i) advise Civista in writing of the receipt of any Acquisition Proposal, request or inquiry and (II) before furnishingthe terms and conditions of such Acquisition Proposal, request or inquiry, (ii) shall promptly provide to Civista a written summary of the material terms of such Acquisition Proposal, request or inquiry including the identity of the Person or Group making the Acquisition Proposal, and (iii) shall keep Civista promptly apprised of any related developments, discussions and negotiations (including providing Civista with a copy of all material documentation and correspondence relating thereto) on a current basis. Comunibanc agrees that it shall simultaneously provide to Civista any information concerning Comunibanc 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 Civista.
(d) Notwithstanding anything herein to the contrary, at any time prior to the Comunibanc Meeting, Comunibanc may accept or approve a Superior Proposal thereby withdrawing its recommendation of the Agreement (“Acceptance of Superior Proposal”), if and only if (x) from and after the date hereof, Comunibanc has complied with Sections 6.02 and 6.06, and (y) the Comunibanc Board has determined in good faith, after consultation with outside legal counsel, that the failure to take such action would more likely than not be deemed
a breach by the Comunibanc board of its fiduciary duties to the shareholders of Comunibanc under applicable law; provided, that the Comunibanc Board may not effect an Acceptance of Superior Proposal unless:
(i) Comunibanc shall have received an unsolicited bona fide written Acquisition Proposal and the Comunibanc Board shall have concluded in good faith (after consultation with Comunibanc’s financial advisors and outside legal counsel) that such Acquisition Proposal is a Superior Proposal, after taking into account any amendment or modification to this Agreement agreed to or entering into discussions or negotiations with, such Person, Futura provides immediateproposed by Civista;
(ii) Comunibanc shall have provided prior written notice to First CitizensCivista at least five business days in advance (the “Notice Period”) of taking such action, which notice shall advise Civista that the Comunibanc Board has received a Superior Proposal, specifying the material terms and conditions of such action,Superior Proposal (including the identity of the Person or Group making the Superior Proposal);
(iii) during the Notice Period, Comunibanc shall, and shall cause its financial advisors and outside counsel to, negotiate with Civista in good faith (to the extent Civista desires to so negotiate) to make such Personadjustments to the terms and conditions of this Agreement so that such Superior Proposal ceases to constitute a Superior Proposal; and
(iv) the substanceComunibanc Board shall have concluded in good faith (after consultation with Comunibanc’s 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 Civista, 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, Comunibanc shall deliver a new written notice to Civista 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 Comunibanc Board determines in good faith, after consultation with Comunibanc’s outside legal counsel and independent financial advisors, and taking into account all the legal, financial, regulatory and other aspects of such Acquisition Proposal.
(b) InProposal, including as to certainty and timing of consummation, would, if consummated, result in a transaction that is more favorable to the event Futuraholders of Comunibanc 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 Champaign Bank executes a definitive agreementproposed by Civista); provided that for purposes of the definition of “Superior Proposal,” the references to “20% or more” in respectthe definition of or closes, an Acquisition Proposal Futuraor Acquisition Transaction shall pay to First Citizens in immediately available funds the sum of $2,200,000.00 within ten (10) days after the earlier of such execution or closing.
6.07 Affiliate Agreements. Not later than the 15th day prior to the mailing of the Proxy Statement, Futura shall deliver to First Citizens a schedule of each person that, to the best of its knowledge, is or is reasonably likely to be, as of the date of the Futura Meeting, deemed to be an “affiliate” of Futura (each, a “Futura Affiliate”) as that term is defined in Rule 145 under the Securities Act. Futura shall use its reasonable best efforts to cause each person who may be deemed to be
a Futura Affiliatereferences to
execute“50% or more.”(ii) “Acquisition Proposal” means any proposal, offer, inquiry, or indication of interest (whether binding or non-binding, and deliverwhether communicated to Futura onComunibanc or beforepublicly announced to Comunibanc’s shareholders) by any Person or Group (in each case other than Civista or any of its Affiliates) relating to an Acquisition Transaction involving Comunibanc or any of its present or future consolidated Subsidiaries, or any combination of such Subsidiaries, the datepurchase assets of mailingwhich constitute 20% or more of the Proxy Statement an agreementconsolidated assets of Comunibanc as reflected on Comunibanc’s 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) or purchase from Comunibanc by any Person or Group, other than Civista or any of its Affiliates, of 20% or more in interest of the total outstanding voting securities of Comunibanc 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 Civista or any of its Affiliates, beneficially owning 20% or more in interest of the total outstanding voting securities of Comunibanc or any of its Subsidiaries (measured by voting power), or any merger, consolidation, share exchange, business combination or similar transaction involving Comunibanc pursuant to which the shareholders of Comunibanc immediately preceding such transaction would hold less than 50% of the equity interests in the form attached hereto as Exhibit B.
6.08 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 Comunibanc, or (C) any liquidation or dissolution of Comunibanc or any of its Subsidiaries.6.07 Takeover 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 anythe Takeover 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 and the Voting Agreement from or, if necessary, challenge the validity or applicability of, any applicablethe Takeover Law, as now or hereafter in effect.
6.09 6.08 Certain Policies. Before the Effective Time, FuturaComunibanc shall, upon the request of First Citizens,Civista, (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 First CitizensCivista, and (ii) evaluate the need for any reserves including, but not limited to, reserves relating to any outstanding litigation, any taxTax audits or any liabilities to be incurred upon cancellation of any contracts as a result of the Merger; provided, however, that FuturaComunibanc shall not be obligated to take any such action pursuant to this Section 6.09 6.08 unless and until First CitizensCivista 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 certifies to FuturaComunibanc that First Citizens’Civista’s representations and warranties, subject to Section 5.02, are true and correct as of such date and that First CitizensCivista is otherwise in material in compliance with this Agreement; providedfurther, however, that FuturaComunibanc shall not be obligated to take any such action pursuant to this Section 6.09 6.08 if such action would be clearly inconsistent with generally accepted accounting principles. Without limiting the generality of the foregoing, before the Effective Time, Futura shall, upon the request of First Citizens, take all actions necessary (including, without limitation, applying for any required approvals of Governmental Authorities) in order to cause Champaign Bank to pay a cash dividend to Futura in an amount requested by First Citizens; provided, however, that the amount of such cash dividend shall not cause Champaign Bank to fail to meet any applicable capital requirements under federal or state law. Futura’sGAAP. Comunibanc’s representations, warranties and covenants contained in this Agreement shall not be deemed to be untrue or breached in any respect for any purpose as a consequence of any modifications or changes undertaken solely on account of this Section 6.09.
6.10 NASDAQ Listing 6.08. First Citizens shall file a listing application, or a NASDAQ Notification Form for Change in the Number of Shares Outstanding, as required by NASDAQ, with respect to the shares of First Citizens Common Shares to be issued to the holders of Futura Common Shares in the Merger.
6.11 6.09 Regulatory Applications.
(a) First CitizensCivista and FuturaComunibanc and their respective Subsidiaries shall cooperate and use their respective commercially reasonable best efforts to allow Civista to prepare, within 45 days of execution of this Agreement,submit and file all documentationapplications and
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requests for regulatory approval, to timely effect all filings and to obtain all permits, consents, approvals andand/or authorizations of all third parties and Governmentalthe Regulatory Authorities necessary to consummate the transactions contemplated by this Agreement. Each of First Citizens and Futura shall have the right to review in advance, and to the extent practicable each will consult with the other, in each case subject to applicable laws relating to the exchange of information, with respect to, and shall be provided in advance so as to reasonably exercise its right to review in advance, all material written information submitted to any third party or any Governmental Authority in connection with the transactions contemplated by this Agreement. In exercising the foregoing right,rights under this Section 6.09, each of the parties hereto agrees to act reasonably and as promptly as practicable. Each party heretoCivista agrees that it will consult with the other party heretoComunibanc with respect to the obtaining of all material permits, consents, approvals and authorizations of all third parties and Governmentalfrom the Regulatory Authorities necessary or advisable to consummate the transactions contemplated by this Agreement and each party willto keep the other partyComunibanc apprised of the status of material matters relating to completionobtainment of such consents, approvals and/or authorizations from the Regulatory Authorities. Comunibanc shall have the right to review in advance, subject to applicable laws relating to the exchange of information, all material written information submitted to the Regulatory Authorities in connection with the transactions contemplated hereby.
by this Agreement. Notwithstanding the forgoing sentence, Comunibanc shall not have any right to review and/or inspect any competitively sensitive business or other proprietary information submitted by Civista to any Regulatory Authority, including, but not limited to any business plan and/or financial data or analysis prepared by Civista in relation to such consents, approvals and/or authorizations from the Regulatory Authorities.(b) Each partyComunibanc agrees, upon request, to furnish the other partyCivista with all information concerning itself, its Subsidiaries,Henry County Bank and their directors, officers and shareholders and such other matters as may be reasonably
necessary, advisable and/or advisablerequired in connection with any filing, notice or application made by or on behalf of such other partyCivista or any of its Subsidiaries to any third party or GovernmentalRegulatory Authority.
6.12 6.10 Employment Matters; Employee BenefitsBenefits..
(a) It is understood and agreed that nothing in this Section 6.12 6.10 or elsewhere in this Agreement shall be deemed to be a contract of employment or be construed to give FuturaComunibanc’s or any of its Subsidiaries’ employees any rights other than as employees at will under applicable law, and FuturaComunibanc’s and its Subsidiaries’ employees shall not be deemed to be third-party beneficiaries of this Agreement. Employees of FuturaComunibanc or any of its Subsidiaries who become employees of First CitizensCivista as a result of the Merger shall as determined by First Citizens, participate in either Futura’s Compensation and Benefit Plans (for so long as First Citizens determines necessary or appropriate) or in the employee benefit plans sponsored by First CitizensCivista for First Citizens’Civista’s employees immediately after the Effective Time (with credit for their years of service with FuturaComunibanc or its Subsidiaries for participation and vesting purposes under First Citizens’Civista’s applicable plans)plans, to the extent such plans permit), including credit for years of service and for seniority under vacation and sick pay plans and programs.programs, but subject to the eligibility and other terms of such plans. In addition, to the extent Futura employees participate in First Citizens’ group health plan (instead of continued participation in Futura’s group health plan), First CitizensCivista agrees to use commercially reasonable efforts to (i) waive all restrictions and limitations for pre-existing conditions under First Citizens’Civista’s group health plan. Inplan and applicable insurance and (ii) give effect, in determining any deductible, co-insurance and maximum out-of-pocket limitations, to amounts paid by such continuing employees (and their covered dependents) under the event that, within 120 days aftergroup health plan maintained by Comunibanc or one of its Subsidiaries during the portion of the 2022 plan year prior to the Effective Date,Time.
(b) Subject to any applicable regulatory restrictions, Civista shall pay to each employee of Comunibanc or its Subsidiaries who (i) is not subject to an existing contract providing for severance and/or a Futurachange in control payment, (ii) is an employee (other than a Futura employee who has a written agreement with Futuraof Comunibanc or any of its Subsidiaries which provides for severance benefits)immediately before the Effective Time, (iii) is eithernot offered continued employment by Civista or any of its Subsidiaries after the Effective Time or is terminated by First Citizens, other than forCivista without cause within three (3) months after the Effective Time, and (iv) who sign and deliver Civista’s standard form of termination and release agreement, a severance amount equal to two weeks 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 Comunibanc or voluntarily terminates becauseany of its Subsidiaries, less applicable local, state and federal tax withholding; provided, however, that the minimum severance payment shall equal four 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 material diminution inlump sum within 14 days following the employee’s base compensation or becausetermination, providedthat such employee has not been terminated for cause. In addition, Civista will offer outplacement assistance to any such terminated employee for the geographic location at which the employee must perform his or her services is changed by more than 25 miles from the primary location atsame period of time during which such employee performs servicesis entitled to severance hereunder. For any employee of Comunibanc or its Subsidiaries participating in Comunibanc’s, or any of its Subsidiaries’, group health program at the Effective Time then such terminated Futura employee shall bewho is entitled to receive from First Citizens (i) upa severance payment, the employee will be able to a maximum of twenty-six (26) weeks of severancepurchase health insurance coverage at the full premium rate for the entire COBRA period; Civista will pay based upon a formula of two (2) weeks’ base pay for each year of service and (ii) paymentthe cost of COBRA premiumscoverage for such employees for a period equal to the periodnumber of weeks such employee is entitled to severance.
(c) Prior to the Effective Date, but after the receipt of the last to be obtained of either the Requisite Comunibanc Vote and the regulatory approvals required by Section 7.01(b) of this Agreement, the Comunibanc Board shall adopt a resolution approving the termination of its and/or the applicable Subsidiaries’ 401(k) Plan(s) (the “Comunibanc 401(k) Plan”) effective as of a date immediately preceding the Effective Date. In addition, the Comunibanc Board shall approve the adoption of any amendments to the Comunibanc 401(k) Plan sufficient to terminate the Comunibanc 401(k) Plan immediately preceding the Effective Date and to provide for distributions in cash. Following the Effective Date, Civista, as the successor in interest to Comunibanc, shall begin the process of requesting from the IRS a determination that such terminated Futura employee receives such severance benefits. For purposesthe termination of the Comunibanc 401(k) Plan is in compliance with Section 401(a) of the Code (the “Determination Letter”) and distributing benefits under the Comunibanc 401(k) Plan to plan participants after the receipt by Civista of the Determination Letter. Civista agrees to take all commercially reasonable steps necessary or appropriate to accept roll-overs of benefits from the Comunibanc 401(k) Plan to the Civista 401(k) plan for employees of Comunibanc and its Subsidiaries who continue as employees of Civista and its Subsidiaries after the Effective Time, subject to the provisions of the Civista 401(k) Plan.
(d) As soon as practicable after the date of this Agreement, Comunibanc will request that the ESOP Trustee take all necessary action required by the Comunibanc ESOP plan documents and applicable law to conduct a pass-through vote of the Comunibanc ESOP participants to direct the ESOP Trustee to vote the shares of Comunibanc Common Stock owned by the Comunibanc ESOP and allocated to the plan accounts of Comunibanc ESOP participants either in favor of or against the Parent Merger (the “ESOP Vote”). Comunibanc will further request the ESOP Trustee provide to Civista for review and comment, 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 Cumunibanc ESOP participants in connection with the ESOP Vote. Civista shall have five (5) business days to review and provide comments with respect to the materials to be distributed to ESOP participants with respect to the ESOP Vote.
(e) Prior to the Effective Date, but after the receipt of the last to be obtained of either the Requisite Comunibanc Vote and the regulatory approvals required by Section 7.01(b) of this Agreement, the Comunibanc Board shall adopt a resolution approving the termination of the Comunibanc ESOP effective as of a date immediately preceding the Effective Date. In addition, the Comunibanc Board shall approve the adoption of any amendments to the Comunibanc ESOP sufficient to terminate the Comunibanc ESOP immediately preceding the Effective Date and to otherwise give effect to the provisions of this Section 6.12(a), “employees6.10(e). The accounts of Futura” shall include employees of Futura or any of its Subsidiaries.
(b) Notwithstandingall participants in the foregoing, Futura shall, conditioned upon the occurrenceComunibanc ESOP as of the Effective Time takeshall become fully vested upon termination of the ESOP. At the Effective Time, any remaining shares of Comunibanc Common Stock held in the Comunibanc ESOP shall be converted into the right to receive, without interest, the Merger Consideration. Within sixty (60) days following actions:
(i)the Effective Date, Civista and the ESOP Trustee shall arrange to request from the IRS a determination that the termination of the Comunibanc ESOP is in compliance with Sections (401(a) and 409 of the Code (the “ESOP Determination Letter”). Civista and the ESOP Trustee shall arrange to make partial distributions of up to 75% of the account balances credited to the ESOP participants as of the Effective Date (taking into account that portion of the Merger Consideration received by the ESOP on the Effective Date) as soon as administratively practicable after the Effective Date, with the remaining portion to be distributed as soon as administratively practicable after receipt by Civista 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 Comunibanc 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 Civista, and Comunibanc shall consider in good faith revising such notice or communication to reflect any comments or advice that Civista timely provides.
(g) Nothing in this Agreement shall confer upon any employee, director or consultant of Comunibanc or any of the Comunibanc Subsidiaries or affiliates any right to continue in the employ or service of Civista, or any Civista Subsidiary or affiliate thereof, or shall interfere with or restrict in any way the rights of Comunibanc, Civista or any Subsidiary or Affiliate thereof to discharge or terminate The Futura Banc Corp 401(k) Profit Sharing Plan (Plan No. 002) (the “Futura 401(k) Plan”)the services of any employee, director or consultant of Comunibanc or any of the Comunibanc 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 Comunibanc or any of the Comunibanc Subsidiaries or affiliates, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
(h) Notwithstanding anything else in this Agreement to the contrary, on or prior to the Effective Date by resolution adopted by the Futura Board, on terms reasonably acceptable to First Citizens; amend the Futura 401(k) Plan to the extent necessary to (aa) comply with all applicable laws to the extent not previously amended, and (bb) provide, to the extent deemed necessary by Futura, for the allocation of all employer contributions, and the full vesting thereof, as of the termination date; make all employer matching and discretionary contributions, with such discretionary contributions not to exceed $150,000, to the Futura 401(k) Plan in cash for the period January 1, 2007, through the plan’s termination date; and notify Futura 401(k) Plan participants of its termination prior to the Effective Date.
(ii) terminate the Futura Banc Corp. Supplemental Executive Retirement Plan (the “SERP”) effective as of the Effective Date (or such earlier date as First Citizens and Futura shall agree); upon the Effective
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Date (or such earlier date as First Citizens and Futura shall agree) or such later date as may be approved by SERP participants that is not later than thirty (30) days following the Effective Date, pay the SERP participants the value of their Separate Accounts (as such term is defined in the SERP) in cash, such value to be determined by Futura as of the Effective Date by multiplying the Cash Exchange Amount by the number of Futura Common Shares credited to the Separate Accounts, and by adding the product thereof to the value of all other amounts credited to the Separate Accounts; and amend the SERP to the extent deemed necessary by Futura to carry out the intent of this Section 6.12(b)(ii). In no event shall the aggregate amount of payments made to all SERP participants in accordance with this Section 6.13(b)(ii) exceed $500,000.
(iii) upon the Effective Date, pay all deferred fees of members of the Futura Board that have been deferred pursuant to any director fee deferral plan of Futura, which deferred fees shall not exceed $220,000 in the aggregate.
(iv) upon the Effective Date, make the payments and provide the benefits to the two Futura executive employees, whose employment shall terminate upon the Effective Time, pursuant to each such executive’s March 20, 2007 Change In Control Agreement with Futura.
(c) Following the execution of this Agreement, FuturaComunibanc shall take all actions necessary to prevent any further Futura Common Shares from being acquired by or contributedfully vest, terminate and pay all accrued benefit amounts to the Futura 401(k)respective participants under (i) the Henry County Bank Director Supplemental Retirement Program, (ii) the Henry County Bank Salary Reduction Deferred Compensation Plan, including, without limitation, adopting any necessary amendments toand the Futura 401(k) Plan within 30 days following(iii) the execution of this Agreement.Director Deferred Fee Plan.
(d) Except as set forth herein, Futura shall take all action requested by First Citizens(i) On or prior to the Effective TimeDate Civista will take all actions necessary to assume and thereafter discharge each respective split dollar agreement with certain executives and directors under the (A) Split Dollar Life Insurance Agreement & Endorsement Method Split Dollar Plan – Executives and (B) Split Dollar Life Insurance Agreement & Endorsement Method Split Dollar Plan – Directors (collectively the “Split Dollar Plans”). At the request of Civista, Comunibanc will use its reasonable best efforts to terminate or amend anyeach participant agreement under the Split Dollar Plans. Any payment made to a participant in connection with the termination of their respective split dollar agreement under the Futura Benefit and PensionSplit Dollar Plans shall be approved by Civista prior to be effective at or immediately before the Effective Time.
6.13 payment.6.11 Notification of Certain MattersMatters; Disclosure Supplements. Each
(a) Civista and Comunibanc (for purposes of Futura and First Citizensthis 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 it(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 respect to iton the Notifying Party or (ii) which the Notifying Party believes would or would be reasonably likely to cause or constitute a material breach of any of itsthe Notifying Party’s representations, warranties or covenants contained herein that reasonably could be expected to give rise, either individually or agreements contained herein.
6.14 [Reserved].
6.15 Accountingin the aggregate, to the failure of a condition set forth in Article VII; provided that any failure to give notice in accordance with the foregoing 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) Civista and Tax Treatment. EachComunibanc shall each promptly supplement, amend and update, upon the occurrence of First Citizensany change prior to the Effective Time, and Futura agrees notas of the Effective Time, the Civista Disclosure Schedule and the Comunibanc Disclosure Schedule (as applicable) with respect to take any actions subsequent tomatters or events hereafter arising which, if in existence or having occurred as of the date of this Agreement, that would adversely affecthave been required to be set forth or described in the characterization ofCivista Disclosure Schedule or the Merger as a tax-free reorganization under Section 368(a) of the Code.
6.16 No Breaches of Representations and Warranties. Between the date ofComunibanc Disclosure Schedule (as applicable) or this Agreement and the Effective Time,including, without the written consentlimitation, any fact which, if existing or known as of the other party, each of First Citizens and Futura 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 Vof Civista or Comunibanc (as applicable) contained herein materially incorrect, untrue or misleading. No supplement, amendment or update to the Civista Disclosure Schedule or Comunibanc 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 this Agreement after the execution of this Agreement; or (ii) affect a party’s rights with respect to become untrue or incorrect in any material respect.
6.17 termination under Article VIII of this Agreement.6.12 ConsentsData Conversion. Each of First CitizensFrom and Futuraafter the date hereof, the parties shall use their commercially reasonable efforts to facilitate the integration of Comunibanc with the business of Civista 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 Civista. 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 October 21, 2022. 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.
6.13 Consents. Comunibanc shall use its reasonable best efforts to obtain any required consents to the transactions contemplated by this Agreement.
6.18 6.14 Insurance Coverage. FuturaComunibanc shall cause the policies of insurance listed in the Comunibanc Disclosure Schedule, or replacements therefor on substantially similar terms, to remain in effect betweenuntil the dateEffective Time.
6.15 Dividends. In the calendar quarter in which the Closing occurs, each of this AgreementCivista and Comunibanc shall coordinate with the other the declaration of any dividends in respect of Civista Common Shares and Comunibanc
Common Stock and the Effective Date.
6.19 Correctionrecord dates and payment dates relating thereto, it being the intention of Information. Eachthe parties hereto that holders of First CitizensComunibanc Common Stock shall not receive two dividends, or fail to receive one dividend, in any quarter with respect to their shares of Comunibanc Common Stock and Futura shall promptly correct and supplement any information furnished under this Agreement so thatshares of Civista Common Share any such information shall be correct and completeholder receives in all material respects at all times, and shall include all facts necessary to make such information correct and completeexchange therefor in all material respects at all times.
6.20 the Merger.6.16 Confidentiality. Except for the use of information in connection with the Registration StatementProxy 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”“Information”) received by each of FuturaComunibanc and First CitizensCivista pursuant to the terms of this Agreement shall be kept in strictest confidence; confidence and not used for any purpose other than a mutually acceptable transaction contemplated hereby; providedthat, subsequent to the filingmailing of the Registration Statement withProxy Statement/Prospectus to the SEC,shareholders of Comunibanc, this Section 6.20 6.16 shall not apply to information included in the Registration Statement or to beInformation included in the Proxy Statement to be
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sent to the shareholders of FuturaStatement/Prospectus. Comunibanc and First Citizens under Section 6.03. Futura and First CitizensCivista agree that the Information will be used only for the purpose of completing the transactions contemplated by this Agreement. FuturaComunibanc and First CitizensCivista 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 (i) is or becomes generally available to the public other than through the failure of FuturaComunibanc or First CitizensCivista to fulfill its obligations hereunder, (ii) wasis demonstrated as already known to the party receiving the Information on a nonconfidential basis prior to the disclosure, or (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. In the event the transactions contemplated by this Agreement are not consummated, FuturaComunibanc and First CitizensCivista agree to return all copies of the Information (including all copies, summaries, memorandum thereof) provided to the other promptly.
6.21 Supplemental Assurances.
(a) On the date the Registration Statement becomes effectivepromptly and on the Effective Date, Futura shall deliver to First Citizens a certificate signed by its principal executive officer and its principal financial officer to the effect, todestroy all electronic copies of such officers’ knowledge, that the information contained in the Registration Statement relating to the business and financial condition and affairs of Futura, does not 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 not misleading.
(b) On the date the Registration Statement becomes effective and on the Effective Date, First Citizens shall deliver to Futura a certificate signed by its chief executive officer and its chief financial officer to the effect, to such officers’ knowledge, that the Registration Statement (other than the information contained therein relating to the business and financial condition and affairs of Futura) does not 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 not misleading.
6.22 Information.6.17 Regulatory Matters. First Citizens, FuturaCivista, Comunibanc and each of their Subsidiaries shall cooperate and each of them agrees to use its commercially reasonable best efforts to remediate any order, decree, formal or informal agreement, memorandum of understanding or similar agreement by FuturaComunibanc or any of its SubsidiariesSubsidiary with, or a commitment letter, board resolution or similar submission by FuturaComunibanc or any of its SubsidiariesSubsidiary to, or supervisory letter from any Regulatory Authority to FuturaComunibanc or any of its Subsidiaries,Subsidiary, to the satisfaction of such Regulatory Authority.
6.23 First Citizens Board of Directors Structure Following the Parent Merger. At the Effective Time, the First Citizens Board shall select three (3) members of the Futura Board and take all necessary action to appoint those directors to fill vacancies existing on the First Citizens Board at the Effective Time (the “New Directors”). Such New Directors shall serve until the next annual meeting of shareholders. For the three annual meetings of shareholders following the Effective Time, First Citizens agrees, subject to compliance with applicable fiduciary duties, the requirements under First Citizens’ Nominating Committee Charter and applicable laws, rules and regulations, and in the absence of unethical behavior or other cause for removal on the part of a New Director, to nominate and recommend the New Directors for election to the First Citizens Board; provided, however, that in the event of a general reduction in the number of authorized number of directors of First Citizens, the number of New Directors nominated and recommended for election to the First Citizens Board pursuant hereto may be reduced so long as the New Directors continue to represent at least 20% of the total members of the First Citizens Board for the period specified hereby. In the event that any New Director retires, resigns or dies, in each case within the three (3) years following the Effective Time, or decides not to stand for reelection as provided for in this section, the remaining New Directors and First Citizens shall mutually agree upon a candidate for appointment or nomination subject to compliance with applicable fiduciary duties, the requirements under First Citizens’ Nominating Committee Charter and applicable laws, rules and regulations.
6.24 Establishment of Bank Community Board. At the Effective Time, and for a period of up to three (3) years thereafter, First Citizens shall establish a Bank Community Board to be comprised of all current outside directors on the Futura Board who are not Futura or Champaign Bank employees, who wish to participate on such Board and who have not been designated to fill vacancies in accordance with Section 6.23.
6.25 Bank Name and Signage. First Citizens shall, through December 31, 2008, use its reasonable best efforts to continue to use the “Champaign Bank” name at all Champaign Bank branches, in the markets
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6.18 Indemnification.serviced by those branches and in the operations (including letterhead, product literature and advertising) of those branches.
6.26 Indemnification; Directors’ and Officers’ Liability Insurance.
(a) For a period of six (6) years after the Effective Time,
First CitizensCivista shall indemnify each Person who served as a director or officer of
FuturaComunibanc on or
after the date of this Agreement and before the Effective Time, to the fullest extent
permitted pursuant toprovided by the
Futura Governing Documents asComunibanc Articles and the provisions of
the date of this Agreement and the OGCL, from and against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed action, suit or proceeding by reason of the fact that such Person was a director or officer of
Futura; Comunibanc; provided, however, that any such indemnification shall be subject to compliance with the provisions of applicable state and federal
laws, including, without limitation,laws.(b) Before the provisionsEffective Date, Comunibanc shall procure, at the expense of 12 U.S.C. § 1828(k) and Part 359 of the FDIC’s regulations (12 C.F.R. Part 359).
(b) First Citizens shall purchaseCivista, a policy of
Directors’officers’ and
Officers’ Liability Insurancedirectors’ and company liability insurance with respect to actions, omissions, events, matters or circumstances occurring prior to the Effective Time as currently maintained by Comunibanc (“
D & O Policy”Tail Policy”) to be effective for a period of
four (4)six years
beginning onfollowing the Effective
Date,Time, on terms no less advantageous than those contained in
Futura’sComunibanc’s existing
directors’ and officers’ and
directors’company’s liability insurance
policy (“Current Futura D & O Policy”);policy; provided, however, that
First Citizensthe premium on the Tail Policy shall not
be requiredexceed 150% of Comunibanc’s current premium levels.6.19 Environmental Assessments. Comunibanc hereby agrees to pay an annual premiumpermit Civista to engage, at the expense of Civista, a qualified consultant, mutually agreeable to Comunibanc and Civista, to conduct a Phase I Environmental Site Assessment in accordance with the requirements of ASTM E1527-13 “Standard Practice for the D & O Policy that isEnvironmental Site Assessments: Phase I Environmental Site Assessment Process (“Phase I”), or such other lesser standard of review as determined by Civista in excessits sole discretion, of 125%each parcel of the annual premium currently paid for the Current Futura D & O Policy, which is $13,000; provided further, however, that if such amount is insufficientreal estate owned by
Comunibanc or any Subsidiary, including real estate acquired by Henry County Bank upon foreclosure. Civista agrees to procure the D & O policy, First Citizens shall purchase as much comparable insurance as can be obtained for such amount. The D & O Policytake commercially reasonable efforts to minimize any disruption of Comunibanc’s business operations and will reimburse the presentindemnify and former officers and directors of Futurahold harmless Comunibanc with respect to claims against such directors and officersany damages or losses resulting from or arising from factsout of the Phase I, except for any damages or events which occurred before the Effective Time.
(c) If First Citizenslosses caused by Comunibanc’s or any of its
successorsSubsidiaries’ negligence or
assignswillful misconduct.6.20 Litigation and Claims. Each of Civista and Comunibanc shall, consolidateto 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 Civista or Comunibanc, as applicable, threatened against Civista, Comunibanc 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 Civista, Comunibanc or their respective Subsidiaries with respect hereto or merge intothereto, or (b) seeks to enjoin or otherwise restrain the transactions contemplated hereby or thereby. Comunibanc shall give Civista the opportunity to participate at its own expense in the defense or settlement of any other entityshareholder litigation against Comunibanc and/or its directors or Affiliates relating to the transactions contemplated by this Agreement, and no such settlement shall be agreed without Comunibanc’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).
6.21 NASDAQ Listing. Civista shall cause the Civista Common Shares to be issued in the Merger to be approved for listing on the NASDAQ - Capital Market® as of the Effective Time.
6.22 Absence of Control. It is the intent of the parties to this Agreement that Civista, by reason of this Agreement, shall not be deemed (until consummation of the transactions contemplated herein) to control, directly or indirectly, Comunibanc or any of its Subsidiaries and shall not exercise or be deemed to exercise, directly or indirectly, a controlling influence over the continuingmanagement or surviving entitypolicies of such consolidationComunibanc or merger or shall transfer all or substantially allany of its assetsSubsidiaries. Prior to any entity, thenthe Effective Time, Comunibanc exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
6.23 Representation on Civista Board . Civista shall cause one (1) Person who is currently a member of the Comunibanc Board to be vetted and appointed to the Civista Bank board of directors for a term commence as soon as practicable after the Effective Time, in each case, proper provisionaccordance with the Civista Bank Regulations, corporate governance guidelines, and applicable law. The Person selected to be appointed to the Civista Bank board will be mutually agreed to in writing by Civista and Comunibanc, acting in good faith.
6.23 Advisory Board. Civista shall be made so thatuse commercially reasonable efforts to cause the successors and assignsformation of First Citizens shall assumean advisory board of Civista Bank comprised of those Comunibanc Directors serving as of the obligations set forth in this Section 6.26.
day prior to the execution of the Agreement.ARTICLE VII
Conditions to Consummation of the Merger
Merger; Closing7.01 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligation of each of First CitizensCivista and FuturaComunibanc to consummate the Merger is subject to the fulfillment or written waiver by First CitizensCivista and FuturaComunibanc prior to the Effective Time of each of the following conditions:
(a) Shareholder ApprovalsApproval. This Agreement and the Merger shall have been duly adopted and approved by the requisite vote of the shareholders of Futura and the shareholders of First Citizens.
Comunibanc.(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 have containedcontain (i) any conditions, restrictions or requirements which the First CitizensCivista Board reasonably determines would be, either before or after the Effective Time reasonably likely to have a Material Adverse Effect on First CitizensCivista 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 thatwhich the First CitizensCivista Board reasonably determines would be, either before or after the Effective Time be unduly burdensome.
For purposes of this Section 7.01(b), any regulatory approval that does not result in the termination of all outstanding Regulatory Orders applicable to Comunibanc and/or its Subsidiaries, if any, prior to or at the Effective Time shall be deemed to have a Material Adverse Effect on Civista 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)(c) Registration StatementListing of Civista Common Shares. The Registration Statement shall have become effective under the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC.
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(e) Blue Sky Approvals. All permits and other authorizations under state securities laws necessary to consummate the transactions contemplated hereby and to issue the shares of First CitizensCivista Common Shares to be issued in the
Parent Merger shall have been
receivedauthorized for listing on the NASDAQ—Capital Market®.(d) Effectiveness of Registration Statement and be in full forceProxy Statement/Prospectus. The Registration Statement and effect.
(f) NASDAQ Listing. The First Citizens Common Shares to be issued in the Parent MergerProxy Statement/Prospectus shall have been approved for listing on NASDAQ,declared effective by the SEC and shall not be subject to official notice of issuance.
any stop order or any threatened stop order by the SEC.7.02 Conditions to Obligation of FuturaComunibanc. The obligation of FuturaComunibanc to consummate the Merger is also subject to the fulfillment or written waiver by FuturaComunibanc prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of First CitizensCivista set forth in this Agreement shall be true and correct, subject to Section 5.02, 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 be true and correct as of such date), and FuturaComunibanc shall have received a certificate, dated the Effective Date, signed on behalf of First CitizensCivista, by the Chief Executive Officer and the Chief Financial Officerchief executive officer of First Citizens,Civista to such effect.
(b) Performance of Obligations of First CitizensCivista. First Citizens Civista shall have performed in all material respects all obligations required to be performed by First CitizensCivista under this Agreement at or prior to the Effective Time, and FuturaComunibanc shall have received a certificate, dated the Effective Date, signed on behalf of First CitizensCivista by the Chief Executive Officer and the Chief Financial Officer of First CitizensCivista to such effect.
(c) Tax Opinion. Futura shall have received an opinion of Squire, Sanders & Dempsey L.L.P., its counsel, dated the Effective Date, to the effect that, on the basis of facts, representations and assumptions set forth in such opinion, (i) the Parent Merger constitutes a “reorganization” within the meaning of Section 368(a) of the Code and (ii) no gain or loss will be recognized by shareholders of Futura who receive First Citizens Common Shares. In rendering its opinion, counsel shall require, and First Citizens and Futura shall supply, reasonable and customary written representations.
(d) Directors’ and Officers’ Liability Insurance. In accordance with the terms and subject to the conditions of Section 6.26, First Citizens shall have purchased the D & O Policy.
(e) Payment of Merger Consideration. First Citizens shall have delivered the aggregate Merger Consideration to the Exchange Agent on or before the Effective Time, and the Exchange Agent shall provide Futura with a certificate evidencing such delivery.
(k) No Material Adverse Effect. From the date of this Agreement, there shall have not occurred any Material Adverse Effect on First Citizens, or any change, condition or development that, individually or in the aggregate, has resulted in or could reasonably be expected to result in a Material Adverse Effect on First Citizens.
7.03 Conditions to Obligation of First CitizensCivista. The obligation of First CitizensCivista to consummate the Merger is also subject to the fulfillment or written waiver by First CitizensCivista prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of FuturaComunibanc set forth in this Agreement shall be true and correct, subject to Section 5.02, 5.01, 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 be true and correct as of such date) and First CitizensCivista shall have received a certificate, dated the Effective Date, signed on behalf of FuturaComunibanc, by the Chief Executive Officer and the Chief Financial Officerpresident of FuturaComunibanc to such effect.
(b) Performance of Obligations of FuturaComunibanc. Futura Comunibanc 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 First CitizensCivista shall have received a certificate, dated the Effective Date, signed on behalf of FuturaComunibanc by the Chief Executive Officer and the Chief Financial Officerpresident of FuturaComunibanc to such effect.
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(c) Cancellation Agreements. First Citizens shall have received from each holder of an Outstanding Option or Stock Appreciation Right an executed and legally binding agreement pursuant to which each such option or right is cancelled and terminated.
(d) [Reserved.]
(e) Affiliate Agreements. First Citizens shall have received the affiliate agreements referred to in Section 6.07, to the extent such agreements were executed and provided to Futura.
(f) Consents. Futura Comunibanc shall have obtained the consent or approval of each personPerson (other than Governmental Authorities and Regulatory 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, have or bein Civista’s reasonable likely toestimate have a Material Adverse Effect, after the Effective Time, on the Surviving Corporation.
(g) Dissenters’ Rights. The holders of not more than 10% of the outstanding Futura Common Shares shall have perfected dissenters’ rights under Section 1701.85 of the OGCL in connection with the transactions contemplated by this Agreement.
(h)(d) FIRPTA Certification. First Citizens Civista shall have received a statement executed on behalf of Futura,Comunibanc, dated as of the Effective Date, satisfying the requirements of Treasury Regulations Section 1.1445-2(c)(3) (in a form reasonably acceptable to Civista certifying that the FuturaComunibanc Common SharesStock do not represent United States real property interests within the meaning of Section 897 of the Code and the Treasury Department regulations promulgated thereunder.
(i)(e) Tax OpinionDissenting Shares. First Citizens The holders of not more than 5% of the outstanding Comunibanc Common Stock shall have received an opinionperfected their dissenters’ rights in accordance with the OGCL.
(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 by Comunibanc or any of Vorys, Sater, Seymourits Subsidiaries, including real estate acquired in connection with foreclosure. Any one of the following conditions is met (i) the Phase Is shall not reveal results unsatisfactory to Civista which, in Civista’s reasonable judgment, would require the expenditure of greater than $100,000 in the aggregate to remedy, (ii) any violation or potential violation of the representations and Pease LLP,warranties contained in Section 5.01(n) of this Agreement disclosed in a Phase I report shall have been remedied by Comunibanc or any of its counsel, dated the Effective Date,Subsidiaries to the effect that, onreasonable satisfaction of Civista, or (iii) Civista and Comunibanc shall have agreed to an adjustment to the basisMerger Consideration to account for any unsatisfactory items in the Phase I or any violations or potential violations of facts, representationsSection 5.01(n).
(g) Tail Policy. Comunibanc shall have procured the Tail Policy in accordance with the terms and assumptionssubject to the conditions of Section 6.18(b).
(h) Estoppel Certificates. Comunibanc shall have used its best efforts to deliver to Civista an estoppel certificate, in such form as is acceptable to Civista, for each lease agreement set forth in such opinion, (i) the Parent Merger constitutes a “reorganization” within the meaning of Section 368(a) 5.01(s) of the Code and (ii) no gain or loss will be recognized by shareholders of Futura who receive First Citizens Common Shares. In rendering such opinion, counsel shall require, and First Citizens and Futura shall supply, reasonable and customary written representation.
(j)Comunibanc Disclosure Schedule from the applicable counterparty.(i) No Material Adverse Effect. From the date of this Agreement, there shall not have not occurred any Material Adverse Effect on Futura, or any change, conditionevent, circumstance or development that individually or in the aggregate, has resulted inhad or could reasonably be expected to result inhave a Material Adverse Effect on Futura.
8.01 Termination. This Agreement may be terminated, and the Merger may be abandoned:
(a)Mutual Consent. At any time prior to the Effective Time, by the mutual written consent of First CitizensCivista and Futura,Comunibanc, if the Boardboard of Directorsdirectors of each so determines by vote of a majority of the members of its entire Board.
board.(b)Breach. At any time prior to the Effective Time, by First CitizensCivista or FuturaComunibanc upon written notice to the other party, if its respective Boardboard of Directorsdirectors so determines by vote of a majority of the members of itsthe entire Board,board, in the event of either: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 thirty (30)30 days after the giving of written notice to the breaching party of such breach;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 thirty (30)30 days after the giving of written notice to the breaching party of such breach,breach; providedthatsuch 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)Delay. At any time prior to the Effective Time, by First CitizensCivista or FuturaComunibanc upon written notice to the other party, if its respective Boardboard of Directorsdirectors so determines by vote of a majority of the members of its entire Board,board, in the event that the Parent Merger is not consummated by December 31, 2007,November 30, 2022, except
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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) No Approval.By FuturaComunibanc or First Citizens,Civista upon written notice to the other party, if its Boardboard of Directorsdirectors so determines by a vote of a majority of the members of its entire Board,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 requests, directed or advised Civista or Comunibanc to withdraw its application for approval of the Merger, or (iii) any Governmental Authority of competent jurisdiction shall have issued a final nonappealable actionlaw or order permanently enjoining or otherwise prohibiting or making illegal the consummation of such Governmental Authority or (ii) the Futura shareholdersParent Merger or the First Citizens shareholders fail to adoptSubsidiary Merger.
(e) By either Comunibanc or Civista if the Requisite Comunibanc Vote shall not have been obtained at the Comunibanc 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 Comunibanc Vote at the FuturaComunibanc Meeting or First Citizens Meeting, as applicable.
(e) at any adjournment or postponement thereof.(f) By:
(i) Comunibanc if (A) the Comunibanc Board (or a duly authorized committee thereof) has authorized an Acceptance of Superior Proposal, and (B) Comunibanc has complied in all respects withPayment Pursuant to Section 6.06. Upon a; provided, that the right of Comunibanc to terminate this Agreement pursuant to this Section 8.01(f) is conditioned on and subject to the prior payment madeby Comunibanc to First CitizensCivista of the Termination Fee in accordance with Section 6.06,8.02(b). Any purported termination pursuant to this AgreementSection 8.01(f) shall automatically terminate without further actbe void and of no force or action by either Futuraeffect if Comunibanc shall not have paid and Civista shall not have received the Termination Fee; or First Citizens.
(f) First Citizens Common Shares. If(ii) Civista prior to the Average First Citizens Pricetime the Requisite Comunibanc Vote is obtained, if (A) the Comunibanc Board shall have (1) failed to include the Comunibanc Recommendation in the Proxy Statement/Prospectus, or withdrawn, modified or qualified the Comunibanc Recommendation in a manner adverse to Civista, or publicly disclosed that it intends to do so, or failed to recommend against acceptance of a First Citizens Common Share is less than $16.67, then Futura may, at its option, terminate this Agreement; provided, however,tender offer or exchange offer constituting an Acquisition Proposal that in the event that Futura notifies First Citizens of its intent to terminate this Agreement under this Section, then, prior to Futura exercising any right of termination hereunder, First Citizens may, at its sole option, for a period ofhas been publicly disclosed within five (5) business days after the commencement of the tender or exchange offer, in any case whether or not permitted by the terms hereof 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) Comunibanc or its Board of Directors has breached its obligations under Section 6.02 or Section 6.06 in any material respect.
(g) By written notice of Comunibanc to Civista if, and only if, both of the following conditions are satisfied at any time during the five-day period commencing on the Determination Date, such termination to be effective on the tenth day following the Determination Date:
(i) the Civista Market Value on the Determination Date is less than the Civista Market Price multiplied by 0.80; and
(ii) the number obtained by dividing the Civista Market Value on the Determination Date by the Civista Market Price shall be less than the Index Ratio minus 0.20;
Subject, however, to the following three sentences: If Comunibanc elects to exercise its termination right pursuant to this Section 8.01(g), it shall give prompt written notice thereof to Civista. During the five business day period commencing with Civista’s receipt of such notice, offer to distribute to Futura shareholders an additional number of First Citizens Common Shares necessary in orderCivista shall have the option to increase the Share Exchange Ratio to equal 85%a quotient, the numerator of which is equal to the product of the quotientCivista Market Price, the Exchange Ratio (as then in effect), and the Index Ratio minus 0.20 and the denominator of $23,which is equal to the Civista Market Value on the Determination Date. If within such five business day period, Civista delivers written notice to Comunibanc that it intends to proceed with the Parent Merger by paying such additional consideration as contemplated by the preceding sentence, and notifies Comunibanc of the revised Exchange Ratio, then no termination shall have occurred pursuant to this Section 8.01(g), and this Agreement shall remain in full force and effect in accordance with its terms (except that the Exchange Ratio shall have been so modified).
For purposes of this Section 8.01(g), the following terms shall have the meanings indicated below:
“Determination Date” shall mean any date following the first date on which all regulatory approvals (and waivers, if applicable) necessary for consummation of the Merger have been received (disregarding any waiting period) and prior to the Effective Date.
“Final Index Price” means the average of the daily closing value of the Index for the ten consecutive trading days immediately preceding the Determination Date.
“Index” means the NASDAQ Bank Index or, if such Index is not available, such substitute or similar index as substantially replicates the NASDAQ Bank Index.
“Index Ratio” means the Final Index Price divided by the Average First CitizensInitial Index Price.
“Initial Index Price (the “First Citizens Offer”). If First Citizens does not make” means $5,345.88, the First Citizens Offer, Futura may terminateclosing value of the Index on January 7, 2022.
“Civista Market Price” shall mean the volume average weighted closing sale price of a Civista Common Share on The NASDAQ—Capital Market® during the 20 consecutive trading days immediately preceding the date of this Agreement.
(g) “Tax-Free ReorganizationCivista Market Value. If First Citizens does not elect to increase” means, as of any specified date, the Share Exchange Ratio pursuant to Section 3.10(b), this Agreement shall automatically terminate without further act or action by either Futura or First Citizens.
average of the volume weighted daily closing sales prices of a share of Civista Common Shares as reported on The NASDAQ—Capital Market® for the ten consecutive trading days immediately preceding such specified date.8.02 Effect of Termination and Abandonment,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 9.01 6.16, this Section 8.02, and Article IX shall survive any termination of this Agreement; and (ii) notwithstanding anything to the contrary contained in this Agreement, neither Civista nor Comunibanc shall be relieved or released from any liabilities or damages arising out of its fraud or willful and material breach of any provision of this Agreement occurring prior to 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 Comunibanc Board or has been made directly to the Comunibanc shareholders generally or any Person shall have publicly announced (and, in each case, not unconditionally withdrawn) an Acquisition Proposal with respect to Comunibanc, and (1) this Agreement is terminated by either Civista or Comunibanc pursuant to Section 8.01(f), or (2) thereafter this Agreement is terminated by Civista pursuant to Section 8.01(b) as a result of a willful breach
by Comunibanc; and (B) prior to the date that is twelve (12) months after the date of the termination willof this Agreement, Comunibanc enters into a definitive agreement or consummates a transaction with respect to an Acquisition Proposal (whether or not relievethe same Acquisition Proposal as that referred to above), then Comunibanc shall, on the earlier of the date it enters into the definitive agreement and the date of consummation of the transaction, pay Civista, by wire transfer of same day funds (to an account designated in writing by Civista), a breachingfee equal to $2,008,000 (the “Termination Fee”); and
(ii) this Agreement is terminated by Comunibanc or Civista pursuant to Section 8.01(f), then Comunibanc shall pay Civista, by wire transfer of same day funds (to an account designated in writing by Civista), the Termination Fee no later than two (2) business days after the termination of this Agreement.
(c) Notwithstanding anything to the contrary herein, but without limiting the right of any party fromto recover liabilities or damages arising out of the other party’s fraud or willful and material breach of any provision of this Agreement, in the event that this Agreement is terminated as provided in Section 8.01 under circumstances where the Termination Fee is payable to Civista and paid in full by Comunibanc pursuant to this Section 8.02, the payment of such Termination Fee shall be the sole and exclusive remedy available to Civista and the maximum aggregate liability of Comunibanc with respect to this Agreement and the transactions contemplated by this Agreement, and Comunibanc shall have no further liability with respect to this Agreement or the transactions contemplated hereby to Civista or any of its Affiliates or Representatives.
(d) Comunibanc acknowledges that the agreements contained in Section 8.02 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Civista would not enter into this Agreement; accordingly, if Comunibanc fails promptly to pay Termination Fee, and, in order to obtain the payment Civista commences a suit which results in a judgment against Comunibanc for payment of any such amount, Comunibanc shall pay the costs and expenses of Civista (including reasonable attorneys’ fees and expenses) in connection with the suit. In addition, if Comunibanc fails to pay the Termination Fee, then Comunibanc shall pay interest on the overdue amounts (for the period commencing as of the date that the overdue 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 or willful and material breach of this Agreement, giving rise to such termination. Notwithstanding anything contained herein toshall be (together with the contrary,amounts specified in this Section 8.02(d)) the parties hereto agree that irreparable damage will occursole monetary remedy of Civista in the event thatof a party breaches anytermination of its obligations, duties,this Agreement specified in the section under circumstances where the Termination Fee is payable and is paid in full.
ARTICLE IX
Miscellaneous
9.01 No Survival. None of the representations, warranties, covenants and agreements contained herein. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches ofin this Agreement and to enforce specifically the terms and provisions of this Agreementor in any court of the United States or any state having jurisdiction, this being in additioninstrument delivered pursuant to any other remedy to which they are entitled by law or in equity.
ARTICLE IX
Miscellaneous
9.01 Survival. No representations, warranties, agreements and covenants contained in this Agreement shall survive the Effective Time,
(otherother than
Sections 6.12, 6.23, 6.24, 6.25those covenants and
6.26agreements contained herein and
this Article IXtherein which
shall surviveby their terms apply in whole or in part after the Effective
Time)Time.9.02 Amendment. Subject to compliance with applicable law, this Agreement may be amended by the parties hereto at any time before or after the terminationreceipt of the Requisite Comunibanc Vote; provided, however, that after the receipt of the Requisite Comunibanc Vote, there may not be, without further approval of such shareholders of Comunibanc, any amendment of this Agreement if thisthat requires such further approval under applicable law. This Agreement is terminatedmay not be amended, modified 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, (other than Sections 6.04, 6.05(b), 6.05(c), 6.06(b), 6.20, 8.02, and this Article IX which shall survive such termination).
9.02 Waiver; Amendment. Priorthe parties hereto may, to the Effective Time,extent legally allowed, (a) extend the time for the performance of any provisionof 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 Comunibanc Vote, there may not be, without further approval of such shareholders of Comunibanc, as applicable, any extension or waiver of this Agreement mayor any portion thereof that requires such further approval under applicable law. Any agreement on the part of a party hereto to any such extension or waiver shall be (i) waived by thevalid only if set forth in a written instrument signed on behalf of such party, benefited by the provision,but such extension or (ii) amendedwaiver or modified atfailure 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 time, by an agreement in writing between the parties hereto executed in the same manner as this Agreement, except that after the Futura Meetingsubsequent or the First Citizens Meeting, this Agreement may not be amended if such amendment would violate the OGCL or the federal securities laws.
9.03 other failure.9.04 Counterparts. This Agreement may be executed in one or more counterparts each(including by electronic means), all of which shall be deemedconsidered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to constitute an original.
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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 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.9.04 9.06 Governing LawLaw; Jurisdiction. This Agreement shall be governed by and interpretedconstrued in accordance with the laws of the State of Ohio, without regard to any applicable to contracts made and to be performed entirely within such State (except to the extent that mandatory provisionsconflicts of federal law are applicable).
9.05 Expenses.principles. Each party heretoagrees that it will bear all expenses incurred by itbring any action or proceeding in connection withrespect of any claim arising out of or related to this Agreement andor the transactions contemplated hereby except that printingexclusively in either the Federal District Court for the Northern District of Ohio or state court located in Erie County, Ohio (the “Chosen Courts”), and, mailing expenses shall be shared equally between Futura and First Citizens. All fees to be paid to Regulatory Authorities and the SECsolely in connection with claims arising under this Agreement or the transactions contemplated bythat are the subject of this Agreement, shall be borne by First Citizens.
9.06 Notices. All notices, requests(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 other communications hereunder to a party shall be in writing and shall be deemed given if personally delivered, telecopied (with confirmation) or mailed by registered or certified mail (return receipt requested) to(iv) agrees that service of process upon such party at its address set forth below or such other address as such party may specify by notice to the parties hereto.
If to Futura, to:
Futura Banc Corp.
601 Scioto Street
Urbana, Ohio 43078
| | |
| Attention: | Michael J. Lamping, Chairman, |
President and Chief Executive
Officer
With a copy to:
Cipriano S. Beredo, Esq.
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, Ohio44114-1304
If to First Citizens, to:
First Citizens Banc Corp
100 East Water Street
Sandusky, Ohio 44870
| | |
| Attention: | David A. Voight, |
President and Chief Executive
Officer
With a copy to:
First Citizens Banc Corp
100 East Water Street
Sandusky, Ohio 44870
| | |
| Attention: | James E. McGookey, Senior |
Vice President and General
Counsel
and
John C. Vorys, Esq.
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street, P.O. Box 1008
Columbus, Ohio43216-1008
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement, the Voting Agreement and any separate agreement entered into by the parties 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 Agreement orin any such separate agreement). Nothingaction or proceeding will be effective if notice is given in this Agreement, whether express or implied, is intended to confer
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upon any person, other than the parties hereto or their respective successors, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a 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 are not part 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.”
9.09 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.
9.09 Notices. All notices and other communications hereunder 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 utilizing a next-day service by a recognized next-day courier or (iii) on the earlier of confirmed receipt or the fifth (5th) business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
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| If to Comunibanc to: | | Comunibanc Corp. 122 East Washington Street Napoleon, Ohio 43545 Attention: William L. Wendt, President and CEO; and Anthony E. Grieser, EVP and CFO Email:tgrieser@thehenrycountybank.com |
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| With a copy to: | | Shumaker, Loop & Kendrick, LLP 1000 Jackson Street Toledo, Ohio 43604 Attention: Thomas C. Blank Email: tblank@Shumaker.com |
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| If to Civista, to: | | Civista Bancshares, Inc. 100 East Water Street Sandusky, OH 44870 Attention: Dennis G. Shaffer, CEO & President Email: dgshaffer@civista.bank |
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| With a copy to: | | Civista Bancshares, Inc. 100 East Water Street Sandusky, OH 44870 Attention: Lance A. Morrison, Sr. Vice President & General Counsel Email: lamorrison@civista.bank |
9.10 Entire Understanding. This Agreement, the Comunibanc Disclosure Schedule, the Support Agreements and any separate agreement entered into by the parties 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 Support Agreements or any such separate agreement).
9.11 Assignment; Third-Party Beneficiaries. Neither this Agreement nor any of the rights, interests or 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 claim hereunder, including the right to rely upon the representations and warranties set forth herein. 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 circumstances as of the date of this Agreement or as of any other date.
9.12 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 an 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 shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they 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.
9.13 Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of 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.fact 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 formation of a contract and each party hereto forever waives any such defense.
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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.
FUTURA BANC CORP.
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| COMUNIBANC CORP. |
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| By | | /s/ Michael J. LampingWilliam L. Wendt |
| | William L. Wendt, Chairman, President and CEO |
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| CIVISTA BANCSHARES, INC. |
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| By | | /s/ Dennis G. Shaffer |
| | Dennis G. Shaffer, CEO & President |
EXHIBIT A
FORM OF SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT (this “Agreement”), is entered into as of January ___, 2022, by and among Civista Bancshares, Inc., a financial holding company incorporated under Ohio law (“Civista”), Comunibanc Corp., a bank holding company incorporated under Ohio law (“Comunibanc”), and the undersigned shareholder of Comunibanc (“Shareholder”).
WHEREAS, concurrently with the execution and delivery of this Agreement, Civista and Comunibanc are entering into an Agreement and Plan of Merger, dated as of the date of this Agreement (as amended or supplemented from time to time, the “Merger Agreement”), pursuant to which, among other things, Comunibanc shall be merged with and into Civista, upon the terms and subject to the conditions set forth in the Merger Agreement. Capitalized terms not otherwise defined in this Agreement shall have meanings provided in the Merger Agreement.
WHEREAS, as of the date of this Agreement, Shareholder is the record and beneficial owner and has the power to vote the number of shares of Comunibanc 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 Comunibanc 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 entering into the Merger Agreement, Civista has required that Shareholder agree, and Shareholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follow:
ARTICLE I
VOTING AGREEMENT
Section 1.1 Agreement to Vote. Shareholder hereby agrees that, during the time this Agreement is in effect, at the Comunibanc Meeting, and at any other meeting of the shareholders of Comunibanc, 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 Comunibanc 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.
Name: Michael J. LampingSection 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 Comunibanc or the Comunibanc 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 Comunibanc or the Comunibanc 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 in a manner consistent with the terms of the Merger Agreement Shareholder’s fiduciary duties as a director or officer, as applicable, to Comunibanc, the Comunibanc Subsidiaries or their respective shareholders.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Shareholder represents and warrants to Civista 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 Civista, 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, Shareholder will use their best efforts to cause their spouse to execute this Agreement within five (5) days of the date hereof. Assuming execution of this Agreement by the Shareholder’s spouse, it will constitute 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 2.2Non-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 Comunibanc 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 Comunibanc Meeting or any other shareholder meeting of Comunibanc 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 Civista. Shareholder understands and acknowledges that Civista 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 Comunibanc 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 Comunibanc 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 Civista 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 Civista promptly (and, in any event, within 48 hours) in writing of the number of any additional shares of Comunibanc 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 termination of this Agreement, Transfer or agree to Transfer any Owned Shares other than with Civista’ 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 Comunibanc 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 1701.84 through 1701.85 of the OGCL) 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 Comunibanc register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any Owned Shares, 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 Civista and Comunibanc 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 Civista 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/Prospectus (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 Civista or Comunibanc to any Regulatory Authority or Governmental Authority or to security holders of Civista or Comunibanc) 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 Civista and the Civista Subsidiaries and/or Comunibanc, and the Comunibanc 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 date that is eighteen (18) months following 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 shall relieve any party to this Agreement from any liability for any breach of this Agreement occurring prior to the termination of this Agreement or any obligations under 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:
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| If to Shareholder: | Title: | Chairman,The address provided on Attachment A hereto. |
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| If to Comunibanc to: | | Comunibanc Corp. 122 East Washington Street Napoleon, Ohio 43545 Attention: William L. Wendt, President and CEO; and Anthony E. Greiser, EVP and CFO Email:tgreiser@thehenrycountybank.com |
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| If to Civista, to: | | Civista Bancshares, Inc. 100 East Water Street Sandusky, OH 44870 Attention: Dennis G. Shaffer, CEO & President Email: dgshaffer@civista.bank |
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| With a copy to: | | Civista Bancshares, Inc. 100 East Water Street Sandusky, OH 44870 Attention: Lance A. Morrison, Sr. Vice President & General Counsel Email: lamorrison@civista.bank |
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 Civista.
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 Civista 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 Civista may be entitled (including monetary damages), Civista 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 Civista 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 Ohio, 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 exclusively in either the Federal District Court for the Northern District of Ohio or state court located in Erie County, Ohio (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.
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FIRST CITIZENS BANC CORPVOTING AGREEMENT
Signature Page
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day first written above.
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| SHAREHOLDER | By | /s/ David A. VoightCIVISTA BANCSHARES, INC. |
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| | By: |
| [Name] | | |
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| SHAREHOLDER’S SPOUSE | | |
| (If applicable) | | COMUNIBANC CORP. |
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| | By: |
| [Name] | | William L. Wendt, President and CEO |
ATTACHMENT A
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| Shareholder | | Address and Email | | Owned Shares |
Name: David EXHIBIT B
FORM OF AGREEMENT AND PLAN OF BANK MERGER
This is an Agreement and Plan of Bank Merger (this “Agreement”) dated as of ___________, 2022, between Civista Bank, a commercial bank organized under the laws of the State of Ohio, being located in Sandusky, county of Erie, in the State of Ohio (“Civista Bank”), and The Henry County Bank, a commercial bank organized under the laws of the State of Ohio, being located in Napoleon, county of Henry, in the State of Ohio (“Henry County Bank”).
RECITALS
A. VoightCivista Bancshares, Inc., an Ohio corporation owning all of the outstanding shares of Civista Bank (“Civista”), and Comunibanc Corp., an Ohio corporation all of the outstanding shares of Henry County Bank (“Comunibanc”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), dated January 10, 2022, pursuant to which Comunibanc will merger with and into Civista, with Civista being the surviving corporation (“Parent Merger”).
B. The Merger Agreement contemplates that immediately following, the consummation of the Parent Merger, or at such later time as Civista may determine, Henry County Bank is to be merged with and into Civista Bank.
C. Civista, as the sole shareholder of Henry County Bank and Civista Bank immediately after consummation of the Parent Merger, desires to cause Henry County Bank to merge with and into Civista Bank immediately following the Parent Merger or at such later time as Civista may determine (the “Bank Merger”).
D. 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 Bank Merger, the parties, intending to be legally bound, agree as follows:
AGREEMENTS
1. Bank Merger. At the Effective Time (as hereinafter defined) and upon the terms and conditions set forth in this Agreement, Henry County Bank shall be merged with and into Civista Bank, and Civista Bank shall continue in existence as the surviving corporation of the merger (the “Surviving Bank”).
2. Merger Certificates. Subject to consummation of the Parent Merger and the other provisions of this Agreement, immediately after the Parent Merger or at such later time as Civista may determine, and upon receipt of all required shareholder and regulatory approvals, Civista Bank and Henry County Bank 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 Ohio Secretary of State (“Merger Certificates”).
3. Effective Time. The date and time specified in the Merger Certificates filed with the Ohio Secretary of State shall be deemed the effective time of the Bank Merger (the “Effective Time”).
4. Articles of Incorporation and Regulations. The Articles of Incorporation of Civista Bank, as in effect at the Effective Time, shall be the Articles of Incorporation 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 Regulations of Civista Bank in effect at the Effective Time shall be the Regulations of the Surviving Bank.
5. Directors and Officers. The directors and officers of Civista Bank 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 “Civista Bank.” The main office of the Surviving Bank shall be the main office of Civista Bank immediately prior to the Effective Time. All branch offices of Civista Bank and offices of Henry County Bank which were in lawful operation immediately prior to the Effective Time shall be the branch offices of the Surviving Bank upon consummation of the Bank Merger, subject to the opening or closing of any offices which may be authorized by Civista Bank or the Henry County Bank and applicable regulatory authorities after the date hereof.
7. Conversion of Henry County Bank Shares. At the Effective Time, each issued and outstanding share of Henry County Bank capital stock shall automatically by virtue of the Bank Merger be canceled without payment.
8. Civista Bank Capital Stock. The shares of Civista Bank capital stock issued and outstanding immediately prior to the Effective Time shall remain outstanding and shall not be affected by the Bank 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 Ohio, Civista Bank and Henry County Bank shall become a single corporation and the separate existence of Henry County Bank shall cease. Surviving Bank shall possess all the rights, privileges, powers and franchises of both a public and private nature of Henry County Bank 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 Henry County Bank. All other things in action of or belonging to Henry County Bank 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 Henry County Bank shall not revert or be in any way impaired by reason of the Bank Merger. All rights of creditors and all liens of Henry County Bank shall be preserved unimpaired, and all debts, liabilities and duties of Henry County Bank 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 Bank 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 Bank 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 State of Ohio.
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]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers as of the date set forth above.
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| CIVISTA BANK | Title: | President and CEOTHE HENRY COUNTY BANK |
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| By: | | By: |
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Annex B
DISSENTERS’ RIGHTS UNDER SECTION 1701.85 OF THE OHIO GENERAL CORPORATION LAW
ANNEX B
Dissenters’ Rights Under Section 1701.85 of the Ohio Revised Code
Section 1701.85. Dissenting shareholder’s demand forshareholders – compliance with section – fair cash value of shares.
(A)(1) A shareholder of a domestic corporation is entitled to relief as a dissenting shareholder in respect of the proposals described in sections 1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this section.
(2) If the proposal must be submitted to the shareholders of the corporation involved, the dissenting shareholder shall be a record holder of the shares of the corporation as to which the dissenting shareholder seeks relief as of the date fixed for the determination of shareholders entitled to notice of a meeting of the shareholders at which the proposal is to be submitted, and such shares shall not have been voted in favor of the proposal.
(3) Not later than 20 days before the date of the meeting at which the proposal will be submitted to the shareholders, the corporation may notify the corporation’s shareholders that relief under this section is available. The notice shall include or be accompanied by all of the following:
(a) A copy of this section;
(b) A statement that the proposal can give rise to rights under this section if the proposal is approved by the required vote of the shareholders;
(c) A statement that the shareholder will be eligible as a dissenting shareholder under this section only if the shareholder delivers to the corporation a written demand with the information provided for in division (A)(4) of this section before the vote on the proposal will be taken at the meeting of the shareholders and the shareholder does not vote in favor of the proposal.
(4) If the corporation delivers notice to its shareholders as provided in division (A)(3) of this section, a shareholder electing to be eligible as a dissenting shareholder under this section shall deliver to the corporation before the vote on the proposal is taken a written demand for payment of the fair cash value of the shares as to which the shareholder seeks relief. The demand for payment shall include the shareholder’s address, the number and class of such shares, and the amount claimed by the shareholder as the fair cash value of the shares.
(5) If the corporation does not notify the corporation’s shareholders pursuant to division (A)(3) of this section, not later than ten days after the date on which the vote on the proposal was taken at the meeting of the shareholders, the dissenting shareholder shall deliver to the corporation a written demand for payment to the dissenting shareholder of the fair cash value of the shares as to which the dissenting shareholder seeks relief, which demand shall state the dissenting shareholder’s address, the number and class of such shares, and the amount claimed by the dissenting shareholder as the fair cash value of the shares.
(3)(6) If a signatory, designated and approved by the dissenting shareholder, executes the demand, then at any time after receiving the demand, the corporation may make a written request that the dissenting shareholder provide evidence of the signatory’s authority. The shareholder shall provide the evidence within a reasonable time but not sooner than 20 days after the dissenting shareholder has received the corporation’s written request for evidence.
(7) The dissenting shareholder entitled to relief under division (C)(A)(3) of section 1701.84 of the Revised Code in the case of a merger pursuant to section 1701.80 of the Revised Code and a dissenting shareholder entitled to relief under division (E)(A)(5) of section 1701.84 of the Revised Code in the case of a merger pursuant to section 1701.801 of the Revised Code shall be a record holder of the shares of the corporation as to which the dissenting shareholder seeks relief as of the date on which the agreement of merger was adopted by the directors
of that corporation. Within twenty20 days after the dissenting shareholder has been sent the notice provided in section 1701.80 or 1701.801 of the Revised Code, the dissenting shareholder shall deliver to the corporation a written demand for payment with the same information as that provided for in division (A)(2)(4) of this section.
(4)(8) In the case of a merger or consolidation, a demand served on the constituent corporation involved constitutes service on the surviving or the new entity, whether the demand is served before, on, or after the effective date of the merger or consolidation. In the case of a conversion, a demand served on the converting corporation constitutes service on the converted entity, whether the demand is served before, on, or after the effective date of the conversion.
(5)conversion(9) If the corporation sends to the dissenting shareholder, at the address specified in the dissenting shareholder’s demand, a request for the certificates representing the shares as to which the dissenting shareholder seeks relief, the dissenting shareholder, within fifteen15 days from the date of the sending of such request, shall deliver to the corporation the certificates requested so that the corporation may endorse on them a legend to the effect that demand for the fair cash value of such shares has been made. The corporation promptly shall return the endorsed certificates to the dissenting shareholder. A dissenting shareholder’s failure to deliver the certificates terminates the dissenting shareholder’s rights as a dissenting shareholder, at the option of the corporation, exercised by written notice sent to the dissenting shareholder within twenty20 days after the lapse of thefifteen-day 15-day period, period, unless a court for good cause shown otherwise directs. If shares represented by a certificate on which such a legend has been endorsed are transferred, each new certificate issued for them shall bear a similar legend, together with the name of the original dissenting holder of the shares. Upon receiving a demand for payment from a dissenting shareholder who is the record holder of uncertificated securities, the corporation shall make an appropriate notation of the demand for payment in its shareholder records. If uncertificated shares for which payment has been demanded are to be transferred, any new certificate issued for the shares shall bear the legend required for certificated securities as provided in this paragraph. A transferee of the shares so endorsed, or of uncertificated securities where such notation has been made, acquires only the rights in the corporation as the original dissenting holder of such shares had immediately after the service of a demand for payment of the fair cash value of the shares. A request under this paragraph by the corporation is not an admission by the corporation that the shareholder is entitled to relief under this section.
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(B) Unless the corporation and the dissenting shareholder have come to an agreement on the fair cash value per share of the shares as to which the dissenting shareholder seeks relief, the dissenting shareholder or the corporation, which in case of a merger or consolidation may be the surviving or new entity, or in the case of a conversion may be the converted entity, within three months after the service of the demand by the dissenting shareholder, may file a complaint in the court of common pleas of the county in which the principal office of the corporation that issued the shares is located or was located when the proposal was adopted by the shareholders of the corporation, or, if the proposal was not required to be submitted to the shareholders, was approved by the directors. Other dissenting shareholders, within that three-month period, may join as plaintiffs or may be joined as defendants in any such proceeding, and any two or more such proceedings may be consolidated. The complaint shall contain a brief statement of the facts, including the vote and the facts entitling the dissenting shareholder to the relief demanded. No answer to a complaint is required. Upon the filing of a complaint, the court, on motion of the petitioner, shall enter an order fixing a date for a hearing on the complaint and requiring that a copy of the complaint and a notice of the filing and of the date for hearing be given to the respondent or defendant in the manner in which summons is required to be served or substituted service is required to be made in other cases. On the day fixed for the hearing on the complaint or any adjournment of it, the court shall determine from the complaint and from evidence submitted by either party whether the dissenting shareholder is entitled to be paid the fair cash value of any shares and, if so, the number and class of such shares. If the court finds that the dissenting shareholder is so entitled, the court may appoint one or more persons as appraisers to receive evidence and to recommend a decision on the amount of the fair cash value. The appraisers have power and authority specified in the order of their appointment. The court thereupon shall make a finding as to the fair cash value of a share and shall render judgment against the corporation for the payment of it, with interest at a rate and from a date as the court considers equitable. The costs of the proceeding, including reasonable
compensation to the appraisers to be fixed by the court, shall be assessed or apportioned as the court considers equitable. The proceeding is a special proceeding and final orders in it may be vacated, modified, or reversed on appeal pursuant to the Rules of Appellate Procedure and, to the extent not in conflict with those rules, Chapter 2505.2505 of the Revised Code. If, during the pendency of any proceeding instituted under this section, a suit or proceeding is or has been instituted to enjoin or otherwise to prevent the carrying out of the action as to which the shareholder has dissented, the proceeding instituted under this section shall be stayed until the final determination of the other suit or proceeding. Unless any provision in division (D) of this section is applicable, the fair cash value of the shares that is agreed upon by the parties or fixed under this section shall be paid within thirty30 days after the date of final determination of such value under this division, the effective date of the amendment to the articles, or the consummation of the other action involved, whichever occurs last. Upon the occurrence of the last such event, payment shall be made immediately to a holder of uncertificated securities entitled to payment. In the case of holders of shares represented by certificates, payment shall be made only upon and simultaneously with the surrender to the corporation of the certificates representing the shares for which the payment is made.
(C)(1) If the proposal was required to be submitted to the shareholders of the corporation, fair cash value as to those shareholders shall be determined as of the day prior to the day on which the vote by the shareholders was taken and, in the case of a merger pursuant to section 1701.80 or 1701.801 of the Revised Code, fair cash value as to shareholders of a constituent subsidiary corporation shall be determined as of the day before the adoption of the agreement of merger by the directors of the particular subsidiary corporation. The fair cash value of a share for the purposes of this section is the amount that a willing seller who is under no compulsion to sell would be willing to accept and that a willing buyer who is under no compulsion to purchase would be willing to pay, but in no event shall the fair cash value of a share exceed the amount specified in the demand of the particular shareholder. In computing fair cash value, anyboth of the following shall be excluded:
(a) Any appreciation or depreciation in market value resulting from the proposal submitted to the directors or to the shareholdersshareholders;
(b) Any premium associated with control of the corporation, or any discount for lack of marketability or minority status.
(2) For the purposes of this section, the fair cash value of a share that was listed on a national securities exchange at any of the following times shall be excluded.
the closing sale price on the national securities exchange as of the applicable date provided in division (C)(1) of this section:(a) Immediately before the effective time of a merger or consolidation;
(b) Immediately before the filing of an amendment to the articles of incorporation as described in division (A) of section 1701.74 of the Revised Code;
(c) Immediately before the time of the vote described in division (A)(1)(b) of section 1701.76 of the Revised Code.
(D)(1) The right and obligation of a dissenting shareholder to receive fair cash value and to sell such shares as to which the dissenting shareholder seeks relief, and the right and obligation of the corporation to purchase such shares and to pay the fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this section, unless the corporation by its directors waives such failure;
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(b) The corporation abandons the action involved or is finally enjoined or prevented from carrying it out, or the shareholders rescind their adoption of the action involved;
(c) The dissenting shareholder withdraws the dissenting shareholder’s demand, with the consent of the corporation by its directors;
(d) The corporation and the dissenting shareholder have not come to an agreement as to the fair cash value per share, and neither the shareholder nor the corporation has filed or joined in a complaint under division (B) of this section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger, consolidation, or conversion has become effective and the surviving, new, or converted entity is not a corporation, action required to be taken by the directors of the corporation shall be taken by the partners of a surviving, new, or converted partnership or the comparable representatives of any other surviving, new, or converted entity.
(E) From the time of the dissenting shareholder’s giving of the demand until either the termination of the rights and obligations arising from it or the purchase of the shares by the corporation, all other rights accruing from such shares, including voting and dividend or distribution rights, are suspended. If during the suspension, any dividend or distribution is paid in money upon shares of such class or any dividend, distribution, or interest is paid in money upon any securities issued in extinguishment of or in substitution for such shares, an amount equal to the dividend, distribution, or interest which, except for the suspension, would have been payable upon such shares or securities, shall be paid to the holder of record as a credit upon the fair cash value of the shares. If the right to receive fair cash value is terminated other than by the purchase of the shares by the corporation, all rights of the holder shall be restored and all distributions which, except for the suspension, would have been made shall be made to the holder of record of the shares at the time of termination.
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Annex C
ANNEX C
KEEFE, BRUYETTE & WOODS, INC.
SPECIALISTS IN FINANCIAL SERVICES
211 Bradenton Ave, Dublin, OH 43017
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PHONE | FAX | | | 7205 W. Central Avenue Toledo, OH 43617 419.841.8521 www.probank.com |
June 7, 2007
January 10, 2022
Personal & Confidential
Board of Directors
Futura BancComunibanc Corp.
601 Scioto122 East Washington Street
Urbana,Napoleon, OH 43078
Dear Board Members:
43545Members of the Board:
You have requested our opinion as an independent investment banking firm regardingto the fairness, from a financial point of view, of the Merger Consideration to the stockholdersholders of Futura Banc Corp,Comunibanc Corp. (“FUBK”), of the consideration to be paid to FUBK shareholders in the merger (the “Merger”Comunibanc”) between FUBK and First Citizens Banc Corp., an Ohio corporation (“FCZA”). We have not been requested to opine as to, and our opinion does not in any manner address, FUBK’s underlying business decision to proceed with or effect the Merger.
Pursuantcommon stock pursuant to the Agreement and Plan of Merger dated
June 7, 2007,January 10, 2022 (the “Agreement”) by and
among FUBKbetween Civista Bancshares, Inc. (“Civista”) and
FCZAComunibanc. The Agreement provides for Comunibanc to merge with and into Civista, with Civista being the surviving entity (the
“Agreement”“Merger”)
, at. Capitalized terms used herein without definition shall have the
effective timemeanings given to such terms in the Agreement.The Agreement provides for each of the Merger, FCZA will acquire all of FUBK’s issued and outstanding828,504 shares of Comunibanc common stock. FUBK shareholders will receive $23.00 per share (the “Consideration”) in cash and stock. The aggregate Consideration will be comprised of approximately 80% in FCZA stock and 20% in cash, subject to the individual shareholder’s election, and to overall limitations, as detailed in the Agreement and Plan of Merger. In addition, all FUBK Common Shares in the FUBK 401(k) plan will be converted into the right to receive: (i) $30.13 in cash (the “Cash Consideration”); and become(ii) 1.1888 shares of Civista common stock (the “Stock Consideration”). No fractional shares of Civista will be issued in connection with the Merger, and in lieu thereof, fractional shares will be paid in cash.
Keefe, Bruyette & Woods, Inc.,ProBank Austin, as part of its investment banking business,practice, is regularlycustomarily engaged in the evaluation of businessesadvising and securitiesvaluing financial institutions in connection with mergers and acquisitions negotiated underwritings, and distributions of listed and unlisted securities. We are familiar with the market for common stocks of publicly traded banks and bank holding companies.
other corporate transactions. In connection with
thisrendering our opinion
set forth herein, we
have reviewed
certain financial andand/or considered among other
business data supplied to us by FUBK, including (i)things, the
Agreement and Plan of Merger (ii) Call Report for March 31, 2007 (iii) Annual Reports for the years ended December 31, 2006, 2005 and 2004 (iv) and other information we deemed relevant. following:| (i) | the Agreement dated January 10, 2022; |
| (ii) | certain publicly available financial statements and other historical financial information of Comunibanc and Civista that we deemed relevant; |
| (iii) | certain non-public internal financial and operating data of Comunibanc and Civista that were prepared and provided to us by the respective management of Comunibanc and Civista; |
| (iv) | internal financial projections for Comunibanc for the year ending December 31, 2022, prepared by, and reviewed with, management of Comunibanc; |
| (v) | the pro forma financial impact of the Merger on Civista, based on assumptions relating to transaction expenses, acquisition accounting adjustments, and cost savings as discussed with representatives of Civista; |
| (vi) | publicly reported historical stock price and trading activity for Civista’s common stock, including an analysis of certain financial and stock information of certain other publicly traded companies deemed comparable to Civista; |
| (vii) | the financial terms of certain recent business combinations in the commercial banking industry, to the extent publicly available, deemed comparable to the Merger; |
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Louisville | Nashville | Toledo
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Board of Directors Comunibanc Corp. January 10, 2022 Page 2 | |  |
| (viii) | the current market environment generally and the banking environment in particular; and, |
| (ix) | such other information, financial studies, analyses, and investigations, financial, economic, and market criteria as we considered relevant. |
We also discussed with certain members of senior management of Comunibanc the business, financial condition, results of operations and prospects of Comunibanc, including certain operating, regulatory and other financial matters. We held similar discussions with senior management of Civista regarding the business, financial condition, results of operations and prospects of Civista.
ProBank Austin’s opinion was given in reliance on information and representations made or given by Comunibanc and Civista, and their respective officers, directors, of FUBK, the current positionauditors, counsel, and prospective outlook for FUBK. We reviewed financialother agents, and stock market data of other banks and the financial and structural terms of several other recent transactions involving mergers and acquisitions of banks or proposed changes of control of comparably situated companies.
For FCZA, we reviewed (i) the March 31st, 200710-Q dated May 10th, 2007, (ii) Annual Reports for the years ended December 31, 2006, 2005 and 2004, (iii)on filings, releases and other information we deemed relevant. We also discussed with members of the senior management team of FCZA, the current positionissued by Comunibanc and prospective outlook for FCZA.
For purposes of this opinion we haveCivista, including, without limitation, financial statements, financial projections, and stock price data as well as certain other information from recognized independent sources. ProBank Austin assumed and relied
without independent verification, onupon the accuracy and completeness of
all such information and data and did not independently verify any of such information or data for purposes of its opinion. ProBank Austin does not assume any responsibility or liability for the
material furnishedaccuracy or completeness of such information or data provided by Comunibanc, Civista, or third-party independent source.As part of the due diligence process, we made no independent verification as to us by FUBKthe status and value of Comunibanc’s or Civista’s assets, including the value of their respective loan portfolios and allowances for loan and lease losses, and have instead relied upon representations and information concerning the value of assets and the material otherwise made available to us, including information from published sources, and we have not made any independent effort to verify such data. With respect toadequacy of reserves in the financial information, including forecasts and asset valuations we received from FUBK, we assumed (with your consent) that they had been reasonably prepared reflecting the best currently available estimates and judgment of FUBK’s management.aggregate. In addition, we have not made or obtained any independent appraisals or evaluations of the assets or liabilities, and potentialand/or contingent liabilities of
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FUBK. We have further relied on the assurances of management of FUBK that they are not aware of any facts that would make such information inaccurate or misleading. We express no opinion on matters of a legal, regulatory, tax or accounting nature or the ability of the Merger, as set forth in the Agreement, to be consummated.
In rendering our opinion, we haveProBank Austin assumed that in the course of obtaining the necessary approvals for the Merger,transaction, no restrictions or conditionscondition will be imposed that wouldwill have a material adverse effect on the contemplated benefits of the Mergertransaction to FCZA or the ability to consummate the Merger. Our opinion is based on the market, economic and other relevant considerations as they exist and can be evaluated on the date hereof.
Consistent with the engagement letter with you, we have acted as financial advisor to FUBK in connection with the Merger and will receive a fee for such services. In addition, FUBK has agreed to indemnify us for certain liabilities arising out of our engagement by FUBK in connection with the Merger.
Based upon and subject to the foregoing, as outlined in the foregoing paragraphs and based on such other matters as we considered relevant, it is our opinion that as of the date hereof, the consideration to be paid by FCZA in the Merger is fair, from a financial point of view, to the stockholders of FUBK.
This opinion may not, however, be summarized, excerpted from or otherwise publicly referred to without our prior written consent, although this opinion may be included in its entirety in the proxy statement of FUBK used to solicit stockholder approval of the Merger. It is understood that this letter is directed to the Board of Directors of FUBK in its consideration of the Agreement, and is not intended to be and does not constitute a recommendation to any stockholder as to how such stockholder should vote with respect to the Merger.
Very truly yours,
/s/ Keefe, Bruyette, & Woods, Inc.
Keefe, Bruyette, & Woods, Inc.
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ANNEX D
127 Public Square
Cleveland, Ohio 44114
June 4, 2007
PERSONAL AND CONFIDENTIAL
Board of Directors
First Citizens Banc Corp.
100 East Water Street
Sandusky, Ohio44870-2514
Members of the Board of Directors:
We understand that First Citizens Banc Corp (the “Company”) and Futura Banc Corporation (“Target”) propose to enter into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Target will merge with and into the Company (the “Transaction”) in a transaction in which each outstanding common share, without par value, of Target, other than common shares of Target held in the treasury of Target or owned by the Company, will be converted into the right to receive, at the election of the holders of such common shares, either (a) $23.00 in cash, without interest, (b) a fixed number of common shares, without par value, of the Company or (c) a combination thereof. The terms and conditions of the Transaction are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be paid by the Company pursuant to the Merger Agreement is fair, from a financial point of view, to the Company.
KeyBanc Capital Markets Inc., as part of its investment banking business, is customarily engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes.
In connection with rendering this opinion, we have reviewed and analyzed, among other things, the following: (i) a draft of the Merger Agreement, dated as June 1, 2007, which we understand to be in substantially final form; (ii) certain publicly available information concerning the Target; (iii) certain other internal information, primarily financial in nature, including projections, concerning the business and operations of the Target furnished to us by the Target for purposes of our analysis; (iv) certain publicly available information concerning the trading of, and the trading market for, the Target’s Common Stock; (v) certain publicly available information concerning the CompanyComunibanc and its financing sources; (vi) certain publicly available information with respect to certain other publicly traded companies that we believe to be comparable to the Target, including the trading markets for certain of such other companies’ securities; and (viii) certain publicly available information concerning the nature and terms of certain other transactions that we considered relevant to our inquiry. We have also met with certain officers and employees of the Company and Target to discuss the business and prospects of the Company and Target, respectively, as well as other matters we believed relevant to our inquiry, and considered such other data and information we judged necessary to render our opinion.
In our review and analysis and in arriving at our opinion, we have assumed and relied upon the accuracy and completeness of all of the financial and other information provided to or otherwise reviewed by or discussed with us or publicly available and have assumed and relied upon the representations and warranties of the Target and the Company contained in the Merger Agreement. We have not been engaged to, and have not independently attempted to, verify any of such information. We have also relied upon the management of the Company and Target as to the reasonableness and achievability of the financial and operating projections (and the assumptions and bases therefor) provided to us and, with your consent, we have assumed that such
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projections, including without limitation projected cost savings and operating synergies from the Merger, were reasonably prepared and reflect the best currently available estimates and judgments of the Company’s and Target’s respective managements as to the future financial performance of the Company and Target, respectively. We have not been engaged to assess the reasonableness or achievability of such projections or the assumptions on which they were based and express no view as to such projections or assumptions. In addition, we have not conducted a physical inspection or appraisal of any of the assets, properties or facilities of the Target, or its liabilities (contingent or otherwise).
We understand that consummation of the Merger is subject to, among other things, certain governmental, regulatory or other consents and approvals. We have also assumed that all such consents and approvals necessary for the consummation of the Transaction will be obtained without material adverse effect on the Target or the Transaction. We express no view as to the sufficiency of this opinion for purposes of obtaining such approvals or for any other regulatory or statutory purpose. We also express no opinion as to the decision of the Board of Directors of the Company to proceed with the Merger or as to any other potential transaction in which the Company might engage in lieu of, or in addition to, the Merger.
We have not been asked to, nor do we, offer any opinion as to the material terms of the Merger Agreement or the form of the Transaction. In rendering our opinion, we have assumed, with your consent, that the final executed form of the Merger Agreement does not differ in any material respect from the draft that we have examined, and that the conditions to the Transaction as set forth in the Merger Agreement would be satisfied and that the Transaction would be consummated on a timely basis in the manner contemplated by the Merger Agreement. We express no opinion on matters of a legal, regulatory, tax or accounting nature or the ability of the Merger, as set forth in the Agreement, to the consummated.
It should be noted that thisThis opinion is based on economic and market conditions and other circumstances existing on, and information made available as of, the date hereof and does not address any matters subsequent to such date. In addition, ourhereof. This opinion is in any event, limited to the fairness, as of the date hereof, from a financial point of view, of the considerationMerger Consideration to be paidreceived by the Company pursuant to the Merger Agreement and does not address the Company’s underlying business decision to effect the Transaction or any other termsComunibanc shareholders. As part of the Transaction. It should be noted that although subsequent developments may affectengagement, ProBank Austin reserves the right to review any public disclosures describing this fairness opinion we do not have any obligation to update, revise or reaffirm our opinion.
We havethe firm. ProBank Austin has acted as financial advisor to the
Companyboard of directors of Comunibanc in rendering this opinion and will receive a fee for our services. In addition, Comunibanc has agreed to indemnify ProBank Austin from and against certain liabilities.ProBank Austin 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, any consequences of the Merger to Comunibanc, its stockholders, creditors, or otherwise, or any terms, aspects, merits or implications of any employment, retention, consulting, voting, support, cooperation, stockholder, or other agreements, arrangements or understandings contemplated or entered into in connection with the Merger and will receive fromMerger. ProBank Austin’s opinion does not address the Company a fee for our services, a significant portion of which is contingent upon the consummationfairness of the Transaction (the “Transaction Fee”), as well as the Company’s agreementamount or nature of any compensation to indemnify us under certain circumstances. We also will receive a fee in connection with the deliveryany of this opinion, which fee willComunibanc’s officers, directors or employees or any class of such persons, if any, to be credited against any Transaction Fee earned. We havereceived in the past provided investment banking services toMerger. This opinion has been approved by the Company for which we have received customary compensation. In the ordinary coursefairness opinion committee of our business, we may actively trade securities of the Company for our own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities.ProBank Austin.
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Louisville | Nashville | Toledo
It is understood that this opinion was prepared solely for the confidential use of the Board of Directors of the Company in its evaluation of the proposed Transaction and may not be disclosed, summarized, excerpted from or otherwise publicly referred to without our prior written consent, although this | | |
Board of Directors Comunibanc Corp. January 10, 2022 Page 3 | | |
This opinion may be included in its entirety in any filing made by Civista with the proxy statement of the Company used to solicit shareholder approval of the Merger. Our opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote at any stockholders’ meeting heldSecurities and Exchange Commission in connection with the Transaction.
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Based upon our analysis and subject to the foregoing and such other matters asqualifications described herein, we consider relevant, it is our opinionbelieve that as of the date hereof, the consideration to be paid by the Company pursuant toof this letter, the Merger AgreementConsideration is fair, from a financial point of view, to the Company.
Very truly yours,
/s/ KeyBanc Capital Markets Inc.
KEYBANC CAPITAL MARKETS INC.
holders of Comunibanc common stock.
D-3Respectfully,
ProBank Austin
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Louisville | Nashville | Toledo
Part II
Information Not Required In Prospectus
| |
| Item 20. | Indemnification of Directors and Officers. |
| |
(a) | Ohio General Corporation Law |
(a) Ohio General Corporation Law
Section 1701.13(E) of the Ohio Revised Code grants corporations broad powers to indemnify directors, officers, employees and agents. Section 1701.13(E) provides:
(E)(1) A corporation may indemnify or agree to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, other than an action by or in the right of the corporation, by reason of the fact that hethe person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, against expenses, including attorney’s fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by himthe person in connection with such action, suit, or proceeding, if hethe person acted in good faith and in a manner hethe person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if hethe person had no reasonable cause to believe histhe person’s conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner hethe person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, hethe person had reasonable cause to believe that histhe person’s conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action or suit by or in the right of the corporation to procure a judgment in its favor, by reason of the fact that hethe person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, against expenses, including attorney’s fees, actually and reasonably incurred by himthe person in connection with the defense or settlement of such action or suit, if hethe person acted in good faith and in a manner hethe person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is adjudged to be liable for negligence or misconduct in the performance of histhe person’s duty to the corporation unless, and only to the extent that, the court of common pleas or the court in which such action or suit was brought determines, upon application, that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court of common pleas or such other court shall deem proper;
(b) Any action or suit in which the only liability asserted against a director is pursuant to sectionSection 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee, member, manager, or agent has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in division (E)(1) or (2) of this section, or in defense of any claim, issue, or master therein, hematter in the action, suit, or proceeding, the person shall be indemnified against expenses, including attorney’s fees, actually and reasonably incurred by himthe person in connection with the action, suit, or proceeding.
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(4) Any indemnification under division (E)(1) or (2) of this section, unless ordered by a court, shall be made by the corporation only as authorized in the specific case, upon a determination that indemnification of the director, trustee, officer, employee, member, manager, or agent is proper in the
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circumstances because hethe person has met the applicable standard of conduct set forth in division (E)(1) or (2) of this section. Such determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of the indemnifying corporation who were not and are not parties to or threatened with the action, suit, or proceeding referred to in division (E)(1) or (2) of this section;
(b) If the quorum described in division (E)(4)(a) of this section is not obtainable or if a majority vote of a quorum of disinterested directors so directs, in a written opinion by independent legal counsel other than an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services for the corporation or any person to be indemnified within the past five years;
(d) By the court of common pleas or the court in which the action, suit, or proceeding referred to in division (E)(1) or (2) of this section was brought.
Any determination made by the disinterested directors under division (E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this section shall be promptly communicated to the person who threatened or brought the action or suit by or in the right of the corporation under division (E)(2) of this section, and, within ten days after receipt of suchthat notification, suchthe person shall have the right to petition the court of common pleas or the court in which suchthe action or suit was brought to review the reasonableness of suchthat determination.
(5)(a) Unless at the time of a director’s act or omission that is the subject of an action, suit, or proceeding referred to in division (E)(1) or (2) of this section, the articles or the regulations of a corporation state, by specific reference to this division, that the provisions of this division do not apply to the corporation and unless the only liability asserted against a director in an action, suit, or proceeding referred to in division (E)(1) or (2) of this section is pursuant to section 1701.95 of the Revised Code, expenses, including attorney’s fees, incurred by a director in defending the action, suit, or proceeding shall be paid by the corporation as they are incurred, in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director in which hethe director agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing evidence in a court of competent jurisdiction that histhe director’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the corporation or undertaken with reckless disregard for the best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the action, suit, or proceeding.
(b) Expenses, including attorney’s fees, incurred by a director, trustee, officer, employee, member, manager, or agent in defending any action, suit, or proceeding referred to in division (E)(1) or (2) of this section, may be paid by the corporation as they are incurred, in advance of the final disposition of the action, suit, or proceeding, as authorized by the directors in the specific case, upon receipt of an undertaking by or on behalf of the director, trustee, officer, employee, member, manager, or agent to repay suchthat amount, if it ultimately is determined that hethe person is not entitled to be indemnified by the corporation.
(6) The indemnification or advancement of expenses authorized by this section shall not be exclusive of, and shall be in addition to, any other rights granted to those seeking indemnification or advancement of expenses under the articles, the regulations, any agreement, a vote of shareholders or disinterested directors, or otherwise, both as to action in their official capacities and as to action in another capacity while holding their offices or positions, and shall continue as to a person who has ceased to be a director, trustee, officer, employee, member, manager, or agent and shall inure to the benefit of the heirs, executors, and administrators of suchthat person. A right to indemnification or to advancement of expenses arising under a person.
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not be eliminated or impaired by an amendment to that provision after the occurrence of the act or omission that becomes the subject of the civil, criminal, administrative, or investigative action, suit, or proceeding for which the indemnification or advancement of expenses is sought, unless the provision in effect at the time of that act or omission explicitly authorizes that elimination or impairment after the act or omission has occurred.
(7) A corporation may purchase and maintain insurance or furnish similar protection, including, but not limited to, trust funds, letters of credit, or self-insurance, on behalf of or for any person who is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, against any liability asserted against himthe person and incurred by himthe person in any such capacity, or arising out of histhe person’s status as such, whether or not the corporation would have the power to indemnify himthe person against such liability under this section. Insurance may be purchased from or maintained with a person in which the corporation has a financial interest.
(8) The authority of a corporation to indemnify persons pursuant to division (E)(1) or (2) of this section does not limit the payment of expenses as they are incurred, indemnification, insurance, or other protection that may be provided pursuant to divisions (E)(5), (6), and (7) of this section. Divisions (E)(1) and (2) of this section do not create any obligation to repay or return payments made by the corporation pursuant to division (E)(5), (6), or (7).
(9) As used in division (E) of this section, “corporation” includes all constituent entities in a consolidation or merger and the new or surviving corporation, so that any person who is or was a director, officer, employee, trustee, member, manager, or agent of such a constituent entity, or is or was serving at the request of such constituent entity as a director, trustee, officer, employee, member, manager, or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, shall stand in the same position under this section with respect to the new or surviving corporation as hethe person would if hethe person had served the new or surviving corporation in the same capacity.
| |
(b) | Articles of Incorporation of First Citizens |
(b) Amended and Restated Articles of Incorporation and Amended and Restated Regulations of Civista
The Amended and Restated Articles of Incorporation of First Citizens provide that First Citizens shall haveCivista and Amended and Restated Regulations of Civista contain the following provisions with respect to the indemnification of directors and officers:
Pursuant to Article EIGHTH of the amended and restated articles of incorporation, Civista has the power to indemnify its present and past directors, officers, employees and agents to the fullest extent permitted under the Ohio Revised Code. Article VIII of the amended and such other persons as it shall have powers torestated code of regulations provides that Civista will indemnify, to the fullfullest extent permitted or authorized by applicable law, any person made or threatened to be made a party to any suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer or employee of Civista, or is or was serving at the request of Civista as a director, trustee, officer, or employee of a bank, or other corporation, partnership, joint venture, trust or other enterprise. In order to receive indemnification, the person must have acted in good faith and in a manner that he or she reasonably believed to be in and not opposed to the best interest of Civista. With regard to any criminal action or proceeding, Civista will indemnify the person if he or she had no reasonable cause to believe his or her conduct was unlawful. Civista will not indemnify a person with respect to such person’s willful misconduct.
As a condition precedent to Civista providing such indemnification, the person to be indemnified must (i) promptly notify Civista of any actual or potential action, suit or proceeding, (ii) except with respect to a criminal proceeding, authorize and permit Civista, in its sole discretion, to choose any legal counsel to defend and otherwise handle the action, suit or proceeding and related matters, (iii) except with respect to a criminal proceeding, permit Civista to assume total, complete and exclusive control of the action, suit or proceedings and
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all related proceedings and matters, and (iv) in all respects, cooperate with Civista and its counsel in the defense and/or settlement of the action, suit or proceeding and in the prosecution and/or settlement of any counterclaims, cross-claims and defenses.
The indemnification provided by Civista’s amended and restated code of regulations is not exclusive of any other rights to which any person seeking indemnification may be entitled, both as to action in his or her official capacity and as to action in another capacity while holding such office. In addition, such indemnification will continue as to a person who has ceased to be a director, trustee, officer or employee and will inure to the benefit of such person’s heirs, executors and administrators.
(c) Insurance
Civista maintains insurance policies under which directors and officers of Civista are insured, within the limits and subject to the limitations of Title 17such policies, against expenses in connection with the defense of the Ohio Revised Code.
The Articles of Incorporation of First Citizens provide that First Citizens may, upon the affirmative vote of a majority of its Board of Directors, purchase insurance for the purpose of indemnifying its directors, officers, employeesactions, suits or proceedings, and agents to the extent that such indemnification is allowed by the Articles of Incorporation. First Citizens has purchased insurance coverage under policies that insure directors and officers against certain liabilities that might be incurredimposed as a result of such actions, suits or proceedings, to which they are parties by them in their capacities asreason of being or having been directors and officers.
or officers of Civista. | |
| Item 21. | Exhibits and Financial Statement Schedules |
| | | | | |
Exhibit No. | | Description of Exhibit |
| |
| | 2 | .1 | | Agreement and Plan of Merger, dated as of June 7, 2007, by and between First Citizens Banc Corp (‘First Citizens‘) and Futura Banc Corp. (the “Merger Agreement”) (included in Part I as Annex A to the Prospectus/Proxy Statement included in this Registration Statement) |
| | 3 | .1 | | Articles of Incorporation, as amended, of First Citizens (incorporated herein by reference to Exhibit 3.1 to First Citizens’ Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25980)) |
| | 3 | .2 | | Amended and Restated Code of Regulations of First Citizens (incorporated herein by reference to Exhibit 3.2 to First Citizens’ Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25980)) |
| | 4 | | | Certificate for First Citizens’ Common Stock (incorporated herein by reference to Exhibit 4.1 to First Citizens’ Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25980)) |
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See Index to Exhibits below.| | | | | |
Exhibit No. | | Description of Exhibit |
| |
| | 5 | | | Opinion of Vorys, Sater, Seymour and Pease LLP as to the legality of the securities being registered (filed herewith) |
| | 8 | | | Opinion of Vorys, Sater, Seymour and Pease LLP as to tax matters (filed herewith) |
| | 21 | | | Subsidiaries of First Citizens (incorporated herein by reference to Exhibit 21 to First Citizens’ Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 0-25980)) |
| | 23 | .1 | | Consent of Crowe Chizek and Company LLC — First Citizens (filed herewith) |
| | 23 | .2 | | Consent of Crowe Chizek and Company LLC — Futura Banc Corp. (filed herewith) |
| | 23 | .3 | | Consent of KeyBanc Capital Markets Inc. (filed herewith) |
| | 23 | .4 | | Consent of Keefe, Bruyette & Woods, Inc. (filed herewith) |
| | 23 | .5 | | Consent of Vorys, Sater, Seymour and Pease LLP relating to opinion as to the legality of the securities being registered (included in Exhibit 5) |
| | 23 | .6 | | Consent of Vorys, Sater, Seymour and Pease LLP relating to opinion as to tax matters (included in Exhibit 8) |
| | 24 | | | Power of Attorney (included on signature page) |
| | 99 | .1 | | Form of Revocable Proxy for special meeting of shareholders of First Citizens (filed herewith) |
| | 99 | .2 | | Form of Revocable Proxy for special meeting of shareholders of Futura Banc Corp. (filed herewith) |
(b) Financial Statement Schedules
Not applicable.
(c)Report, Opinion or Appraisal
The opinion of Keefe, Bruyette & Woods, Inc.All schedules for which provision is included as Annex C to the prospectus/proxy statement, and the opinion of KeyBanc Capital Markets Inc. is included as Annex D to the prospectus/proxy statement.
(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 Securities and Exchange Commission 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.
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(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) The undersigned Registrant hereby undertakes 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 initialbona fide offering thereof.
(c)(1) The undersigned Registrant hereby undertakes as follows: 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.
(2) The undersigned Registrant hereby undertakes that every prospectus (i) that is filed pursuant to paragraph (1) 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 initialbona fideoffering thereof.
(d) 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 opinionaccounting regulations of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act of 1933are not required under related instructions or are inapplicable 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 hashave 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.omitted.| (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. |
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(e) The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus/proxy statement 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.
(f) 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.
| (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. |
| (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. |
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INDEX TO EXHIBITS
| | | | |
Exhibit
Number | | Description | | Exhibit Location |
| | |
| 2.1 | | Agreement and Plan of Merger, dated as of January 10, 2022, as amended, by and between Civista Bancshares, Inc. and Comunibanc Corp. | | Included as Annex A to the proxy statement/prospectus, which forms a part of this Registration Statement on Form S-4. |
| | |
| 3.1 | | Second Amended and Restated Articles of Incorporation of Civista Bancshares, Inc., as filed with the Ohio Secretary of State on November 15, 2018. | | Filed as Exhibit 3.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on November 16, 2018 and incorporated herein by reference (File No. 001-36192). |
| | |
| 3.2 | | Amended and Restated Code of Regulations of Civista Bancshares, Inc. (adopted April 15, 2008). | | Filed as Exhibit 3.2 to Civista Bancshares, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed on November 8, 2017 and incorporated herein by reference. (File No. 001-36192). |
| | |
| 4.1 | | Indenture dated November 30, 2021, by and between Civista Bancshares, Inc. and UMB Bank, National Association, as Trustee. | | Filed as Exhibit 4.1 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on March 15, 2022 and incorporated herein by reference (File No. 001-36192). |
| | |
| 4.2 | | Forms of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031. | | Filed as Exhibit 4.2 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on March 15, 2022 and incorporated herein by reference (File No. 001-36192). |
| | |
| 4.3 | | Agreement to furnish instrument and agreements defining rights of holders of long-term debt. | | Filed as Exhibit 4.3 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on March 15, 2022 and incorporated herein by reference (File No. 001-36192). |
| | |
| 4.4 | | Description of Capital Stock of Civista Bancshares, Inc. | | Filed as Exhibit 4.2 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed on March 15, 2021 and incorporated herein by reference. (File No. 001-36192). |
| | |
| 4.5 | | Form of Registration Rights Agreement dated November 30, 2021, by and among Civista Bancshares, Inc. and the Purchasers thereto. | | Filed as Exhibit 4.3 to Civista Bancshares, Inc.’s Registration Statement on Form S-4 filed on February 2, 2022 and incorporated herein by reference (File No. 333-262907). |
| | |
| 5.1 | | Opinion of Dinsmore & Shohl LLP regarding the legality of the securities being registered. | | Filed herewith. |
| | |
| 8.1 | | Opinion of Dinsmore & Shohl LLP regarding certain tax matter. | | Filed herewith. |
| | |
| 8.2 | | Opinion of Shumaker, Loop & Kendrick LLP regarding certain tax matter. | | Filed herewith. |
| | |
| 10.1* | | Form of Change of Control Agreement by and among Civista Bancshares, Inc., Civista Bank and certain executive officers. | | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on March 8, 2019 and incorporated herein by reference. (File No. 001-36192). |
| | | | |
| 10.2* | | Form of Amended and Restated Change of Control Agreement by and among Civista Bancshares, Inc., Civista Bank and certain executive officers. | | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on March 8, 2019 and incorporated herein by reference. (File No. 001-36192). |
| | |
| 10.3* | | Form of Pension Shortfall Agreement by and among Civista Bancshares, Inc., Civista Bank and certain executive officers. | | Filed as Exhibit 10.2 to Civista Bancshares, Inc.’s Current Report on Form 8-K dated and filed on October 29, 2015 and incorporated herein by reference. (File No. 001-36192). |
| | |
| 10.4* | | Supplemental Nonqualified Executive Retirement Plan. | | Filed as Exhibit 10.12 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011, filed on March 15, 2012 and incorporated herein by reference (File No. 0-25980). |
| | |
| 10.5* | | Amendment to Supplemental Nonqualified Executive Retirement Plan. | | Filed as Exhibit 10.13 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011, filed on March 15, 2012 and incorporated herein by reference (File No. 0-25980). |
| | |
| 10.6* | | Second Amendment to Supplemental Nonqualified Executive Retirement Plan. | | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, filed on August 9, 2016 and incorporated herein by reference (File No. 1-36192). |
| | |
| 10.7* | | 2018 Amendment to Supplemental Nonqualified Executive Retirement Plan. | | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, filed on August 8, 2018 and incorporated herein by reference (File No. 1-36192). |
| | |
| 10.8* | | Civista Bancshares, Inc. 2014 Incentive Plan. | | Filed as Exhibit 10.1 to Civista Bancshares, Inc.’s Registration Statement on Form S-8 filed on February 26, 2015 and incorporated herein by reference (File No. 333-202316). |
| | |
| 10.9* | | Form of Restricted Stock Award Agreement under Civista Bancshares, Inc. 2014 Incentive Plan. | | Filed as Exhibit 10.8 to Civista Bancshares, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018, filed on March 15, 2019 and incorporated herein by reference. (File No. 1-36192). |
| | |
| 13.1 | | Civista Bancshares, Inc. 2020 Annual Report to Shareholders (not deemed filed except for portions which are specifically incorporated by reference in the Annual Report on Form 10-K filed March 15, 2022). | | Filed as Exhibit 13.1 to Civista Bancshares, Inc.’s Annual Report on Form 10-K filed March 15, 2022. (File No. 1-36192). |
| | |
| 21.1 | | Subsidiaries of Civista. | | Filed as Exhibit 21.1 to Civista Bancshares, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on March 15, 2022 and incorporated herein by reference (File No. 1-36192). |
| | |
| 23.1 | | Consent of Independent Registered Public Accounting Firm – BKD, LLP. | | Filed herewith. |
| * | Management Compensation Plan or Agreement |
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 Sandusky, State of Ohio, on September 7, 2007.
FIRST CITIZENS BANC CORP
| | |
| CIVISTA BANCSHARES, INC. |
| |
| By: | | /s/ David A. VoightDennis G. Shaffer |
| | Dennis G. Shaffer President and Chief Executive Officer |
David A. Voight
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of First Citizens Banc Corp (the “Company”), and each of us, do hereby constitute and appoint David A. Voight and James O. Miller, or either of them, our true and lawful attorneys and agents, each with full power of substitution, to do any and all acts and things in our name and on our behalf in our capacities as directors and officers of the Company and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys or agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the filing of this Registration Statement onForm S-4, including specifically but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below for the Company, any and all amendments (including post-effective amendments) to such Registration Statement and any related registration statements filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended; and we do hereby ratify and confirm all that said attorneys and agents, or their substitute or substitutes, or any of them, shall do or cause to be done by virtue hereof.
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/ Thomas A. Deplar* Thomas A. Deplar | | |
Name
| | Date
| | Capacity
|
|
/s/ David A. Voight
David A. Voight | | September 7, 2007 | | President, Chief Executive Officer and Director (Principal Executive Officer) |
/s/ Todd A. Michel
Todd A. Michel | | September 7, 2007 | | Senior Vice President (Principal Financial and Accounting Officer) |
/s/ John O. Bacon
John O. Bacon | | September 7, 2007 | | Director |
| | |
/s/ LaurenceJulia A. Bettcher
LaurenceMattlin*Julie A. BettcherMattlin | | September 7, 2007 | | Director |
| | |
/s/ ThomasTodd A. Depler
ThomasMichel*Todd A. DeplerMichel | | September 7, 2007 | | Senior Vice President (Principal Financial and Accounting Officer) |
| | |
/s/ James O. Miller* James O. Miller | | | | Director and Chairman of the Board |
| | |
/s/ Dennis E. Murray Jr.* Dennis E. Murray Jr. | | | | Director |
| | |
/s/ Blythe A. Friedley
Blythe A. FriedleyAllen R. Nickles*Allen R. Nickles | | September 7, 2007 | | Director |
| | |
/s/ James D. Heckelman
James D. HeckelmanM. Patricia Oliver*M. Patricia Oliver | | September 7, 2007 | | Director |
| | |
/s/ William F. Ritzmann* William F. Ritzmann | | | | Director |
| | |
/s/ Dennis G. Shaffer Dennis G. Shaffer | | | | Director, President and Chief Executive Officer |
| | |
/s/ Harry Singer* Harry Singer | | | | Director |
| | |
/s/ Daniel J. White* Daniel J. White | | | | Director |
II-6
| * | The above-named directors and officers of the Registrant sign this Registration Statement on Form S-4 by Dennis G. Shaffer their attorney-in-fact, pursuant to Power of Attorney signed by the above-named directors and officer, which Power of Attorney is filed with this Registration Statement on Form S-4 as Exhibit 24.1 |
| | |
| By: | | /s/ Dennis G. Shaffer |
| | Dennis G. Shaffer |
| | |
Name
| | Date
| | Capacity
|
|
/s/ James O. Miller
James O. Miller | | September 7, 2007 | | Director |
/s/ W. Patrick Murray
W. Patrick Murray | | September 7, 2007 | | Director |
/s/ Allen R. Nickles
Allen R. Nickles | | September 7, 2007 | | Director |
/s/ John P. Pheiffer
John P. Pheiffer | | September 7, 2007 | | Director |
/s/ J. William Springer
J. William Springer | | September 7, 2007 | | Director |
/s/ Daniel J. White
Daniel J. White | | September 7, 2007 | | Director |
/s/ J. George Williams
J. George Williams | | September 7, 2007 | | Director |
/s/ Gerald B. Wurm
Gerald B. Wurm | | September 7, 2007 | | DirectorPresident and Chief Executive Officer Attorney-in-Fact |
II-7
INDEX TO EXHIBITS
| | | | | |
Exhibit No. | | Description of Exhibit |
| |
| | 2 | .1 | | Agreement and Plan of Merger, dated as of June 7, 2007, by and between First Citizens Banc Corp (‘First Citizens‘) and Futura Banc Corp. (the ‘‘Merger Agreement”) (included in Part I as Annex A to the Prospectus/Proxy Statement included in this Registration Statement) |
| | 3 | .1 | | Articles of Incorporation, as amended, of First Citizens (incorporated herein by reference to Exhibit 3.1 to First Citizens’ Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25980)) |
| | 3 | .2 | | Amended and Restated Code of Regulations of First Citizens (incorporated herein by reference to Exhibit 3.2 to First Citizens’ Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25980)) |
| | 4 | | | Certificate for First Citizens’ Common Stock (incorporated herein by reference to Exhibit 4.1 to First Citizens’ Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25980)) |
| | 5 | | | Opinion of Vorys, Sater, Seymour and Pease LLP as to the legality of the securities being registered (filed herewith) |
| | 8 | | | Opinion of Vorys, Sater, Seymour and Pease LLP as to tax matters (filed herewith) |
| | 21 | | | Subsidiaries of First Citizens (incorporated herein by reference to Exhibit 21 to First Citizens’ Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 0-25980)) |
| | 23 | .1 | | Consent of Crowe Chizek and Company LLC — First Citizens (filed herewith) |
| | 23 | .2 | | Consent of Crowe Chizek and Company LLC — Futura Banc Corp. (filed herewith) |
| | 23 | .3 | | Consent of KeyBanc Capital Markets Inc. (filed herewith) |
| | 23 | .4 | | Consent of Keefe, Bruyette & Woods, Inc. (filed herewith) |
| | 23 | .5 | | Consent of Vorys, Sater, Seymour and Pease LLP relating to opinion as to the legality of the securities being registered (included in Exhibit 5) |
| | 23 | .6 | | Consent of Vorys, Sater, Seymour and Pease LLP relating to opinion as to tax matters (included in Exhibit 8) |
| | 24 | | | Power of Attorney (included on signature page) |
| | 99 | .1 | | Form of Revocable Proxy for special meeting of shareholders of First Citizens (filed herewith) |
| | 99 | .2 | | Form of Revocable Proxy for special meeting of shareholders of Futura Banc Corp. (filed herewith) |
II-8
