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Item 1.01
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Entry Into a Material Definitive Agreement
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On July 11, 2018, City
Holding Company (“City”) and Poage Bankshares, Inc. (“Poage”) entered into an Agreement and Plan of Merger
(the “Merger Agreement”), pursuant to which City will acquire Poage.
Under the terms of
the Merger Agreement, each outstanding share of Poage common stock will be converted into the right to receive 0.335 shares of
City common stock. In addition, each outstanding option to acquire shares of Poage common stock will convert into the right to
receive a cash payment equal to the product of (i) the number of shares of Poage common stock subject to the stock option and (ii)
the amount by which the per-share merger consideration exceeds the exercise price.
City and City National
will increase the size of their respective Board of Directors by one member and will appoint Thomas L. Burnette, current Chairman
of the Poage Board of Directors, to the Board of Directors of each of City and City National.
Following the acquisition
of Poage by City, Town Square Bank, the wholly-owned subsidiary of Poage (“Town Square”), will merge with and into,
City National Bank of West Virginia (“City National”), the wholly-owned subsidiary of City, with City National being
the surviving institution.
The Merger Agreement
contains customary representations and warranties from Poage and City, and each party has agreed to customary covenants, including,
among others, covenants relating to (1) the conduct of Poage’s businesses during the interim period between the execution
of the Merger Agreement and the closing of the merger, (2) Poage’s obligations to facilitate its shareholders’ consideration
of, and voting upon, the merger, (3) the recommendation by the Board of Directors of Poage in favor of approval of the merger by
its shareholders, and (4) Poage’s non-solicitation obligations relating to alternative business combination transactions.
The merger was unanimously
approved by the Board of Directors of each of City and Poage and is expected to close in the fourth quarter of 2018.
Consummation of the
merger is subject to certain customary conditions, including, among others, approval of the merger by Poage’s shareholders,
the receipt of all required regulatory approvals and expiration of applicable waiting periods, accuracy of specified representations
and warranties of each party, the performance in all material respects by each party of its obligations under the Merger Agreement
and the absence of any injunctions or other legal restraints.
The Merger Agreement
provides certain termination rights for both City and Poage and further provides that, upon termination of the Merger Agreement
under certain circumstances, Poage is obligated to pay City a termination fee of $4.0 million.
In connection with
the execution of the Merger Agreement, all Poage directors entered into a voting agreement with City and Poage pursuant to which
such individuals, in their capacities as shareholders, have agreed, among other things, to vote their respective shares of Poage
common stock in favor of the approval of the merger.
The foregoing summary
is qualified in its entirety by reference to the complete text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current
Report on Form 8-K and which is incorporated herein by reference.