UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 20, 2021
GERMAN AMERICAN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Indiana
(State or other jurisdiction of incorporation)
001-15877
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35-1547518
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(Commission File Number)
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(IRS Employer Identification No.)
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711 Main Street
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Jasper, Indiana
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47546
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including
area code: (812) 482-1314
Not Applicable
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR 230.405) or Rule 12b-2 under the Exchange
Act (17 CFR 240.12b-2).
Emerging growth company ¨
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act ¨
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
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Trading Symbol(s)
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Name of each exchange
on which registered
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Common Stock, no par value
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GABC
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Nasdaq Global Select Market
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Item 1.01.
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Entry into a Material Definitive Agreement.
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Merger Agreement
On September 20, 2021, German American Bancorp,
Inc., an Indiana corporation (“German American”), and Citizens Union Bancorp of Shelbyville, Inc., a Kentucky corporation
(“CUB”), entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) pursuant to which CUB agreed
to merge with and into German American (the “Merger”). The Merger Agreement provides that CUB’s wholly-owned banking
subsidiary, Citizens Union Bank of Shelbyville, Inc. will be merged with and into German American’s wholly-owned banking subsidiary,
German American Bank, shortly following the Merger.
Under the terms of the Merger Agreement, each
record holder of CUB common stock (other than “Dissenting Shares” (as defined in the Merger Agreement) will receive, for each
share of CUB common stock, (a) a 0.7739 (the “Exchange Ratio”) share of German American common stock in a tax-free exchange,
plus (b) a cash payment of $13.44 (the “Cash Payment”). Any option to acquire a share of CUB common stock outstanding at the
closing of the Merger will be cancelled in exchange for the cash payment of a “Cancellation Amount” equal to (i) the Cash
Payment, plus (ii) the Exchange Ratio multiplied by the volume-weighted average price of German American’s common shares over the
ten (10) consecutive trading days ending on the trading day that is the fourth business day preceding the Merger closing date, less (iii)
the option exercise price per share, and less (iv) any applicable withholding taxes. The Cash Payment and the Cancellation Amount are
subject to reduction in the event the “Effective Time Book Value” (as defined in and calculated pursuant to the Merger Agreement)
of CUB, at the time of closing of the Merger, falls below the target threshold set forth in the Merger Agreement.
Based on the number of shares of CUB common stock
currently outstanding, German American expects to issue approximately 2.9 million shares of its common stock, and pay approximately $50.7
million in cash, in exchange for all of the issued and outstanding shares of CUB common stock and in cancellation of all outstanding options
to acquire CUB common stock.
The Boards of Directors of both German American
and CUB have approved the Merger Agreement. Consummation of the Merger is subject to approval by federal and state banking regulatory
authorities, approval by the shareholders of CUB and certain other conditions set forth in the Merger Agreement. Assuming such approvals
are timely secured, German American expects that the Merger will be completed in the first quarter of 2022.
The Merger Agreement contains (a) customary representations
and warranties of German American and CUB, including, among others, with respect to corporate organization, capitalization, corporate
authority, third party and governmental consents and approvals, financial statements, and compliance with applicable laws, (b) covenants
of CUB to conduct its business in the ordinary course until the Merger is completed, (c) covenants of CUB to use reasonable efforts to
preserve intact its business organization and assets and maintain its rights and franchises, and (d) covenants of German American and
CUB to take, or not to take, certain actions during the term of the Merger Agreement. CUB has also agreed not to (y) solicit proposals
relating to alternative business combination transactions or (z) maintain discussions concerning, or provide confidential information
in connection with, any proposals for alternative business combination transactions.
Each party’s obligation to consummate
the Merger is subject to various conditions, including (a) approval of the Merger by holders of a majority of the issued and
outstanding shares of CUB common stock, (b) receipt of regulatory approvals, (c) effectiveness of the registration statement to be
filed by German American with respect to the German American common stock to be issued in the Merger, (d) the accuracy of the
representations and warranties of the other party, (e) compliance by the other party with its covenants in all material respects,
and (f) the absence of a material adverse effect as to the other party.
The Merger Agreement contains certain termination
rights for German American and CUB, as the case may be, applicable upon: (i) certain adverse regulatory decisions in relation to the Merger,
(ii) if the Merger has not been closed by April 1, 2022; (iii) a failure of the other party to comply with such party’s covenants
(subject to certain rights to cure in certain cases) or a breach of the representations and warranties by the other party that would have
a material adverse effect on such party; or (iv) if the CUB shareholders fail to approve the Merger by the required vote. Under certain
circumstances, termination of the Merger Agreement may result in the payment of a termination fee of $6.5 million by CUB to German American,
as more fully described in the Merger Agreement.
The foregoing description of the Merger Agreement
does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed
as Exhibit 2.1 to this Current Report on Form 8-K (this “Report”) and is incorporated herein by reference.
Voting Agreement
In connection with the Merger Agreement,
German American entered into a voting agreement (the “Voting Agreement”) with the members of the board of directors of
CUB and with certain other CUB shareholders, all of whom collectively held approximately 60% of the outstanding shares of CUB
common stock as of September 20, 2021. Subject to the terms and conditions of the Voting Agreement, the shareholders who are parties
thereto have agreed to vote their shares in favor of the transactions contemplated by the Merger Agreement and against any
alternative acquisition proposal. The Voting Agreement automatically terminates upon any termination of the Merger Agreement.
The foregoing summary of the Voting Agreement
does not purport to be complete and is qualified in its entirety by reference to the full text of the Voting Agreement, which is filed
as Exhibit 10.1 to this Report and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On September 20, 2021, German American and CUB
issued a joint press release announcing the execution of the Merger Agreement. A copy of the press release is attached hereto as Exhibit
99.1 and incorporated by reference herein.
In addition, on September 21, 2021, German American
will begin conducting a series of meetings with analysts and investors, providing supplemental information regarding the Merger to the
meeting participants. A copy of the slides that will be made available in connection with the meetings is attached hereto as Exhibit 99.2
and incorporated herein by reference.
Cautionary Note Regarding Forward-Looking Statements
This Report contains forward-looking
statements made pursuant to the safe-harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements can often, but not always, be identified by the use of words like “believe”, “continue”,
“pattern”, “estimate”, “project”, “intend”, “anticipate”,
“expect” and similar expressions or future or conditional verbs such as “will”, “would”,
“should”, “could”, “might”, “can”, “may”, or similar expressions. These
forward-looking statements include, but are not limited to,
statements relating to the expected timing and benefits of the Merger, including future financial and operating results, cost
savings, enhanced revenues, and accretion/dilution to reported earnings that may be realized from the Merger, as well as other
statements of expectations regarding the Merger, and other statements of German American’s goals, intentions and expectations;
statements regarding German American’s business plan and growth strategies; statements regarding the asset quality of German
American’s loan and investment portfolios; and estimates of German American’s risks and future costs and benefits,
whether with respect to the Merger or otherwise.
These forward-looking
statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set
forth in forward-looking statements, including, among other things:
the risk that the businesses of German American and CUB will not be integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; expected revenue synergies
and cost savings from the Merger may not be fully realized or realized within the expected time frame; revenues following the Merger may
be lower than expected; customer and employee relationships and business operations may be disrupted by the Merger; the ability to obtain
required regulatory approvals and the approval of CUB’s shareholders, and the ability to complete the Merger on the expected timeframe;
the costs and effects of litigation and the possible unexpected or adverse outcomes of such litigation; the ability of German American
to complete integration and attract new customers; possible changes in economic and business conditions; the severity and duration of
the COVID-19 pandemic and its impact on general economic and financial market conditions and our business, results of operations and financial
condition; the existence or exacerbation of general geopolitical instability and uncertainty; possible changes in monetary and fiscal
policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and
other effects of legal and administrative cases; possible changes in the creditworthiness of customers and the possible impairment of
collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking
legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like German American’s
affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends;
changes in market, economic, operational, liquidity, credit and interest rate risks associated with German American’s business;
and other risks and factors identified in German American’s filings with the Securities and Exchange Commission (the “SEC”).
German American does not undertake any obligation to update any forward-looking
statement, whether written or oral, relating to the matters discussed in this Report. In addition, German American’s and CUB’s
past results of operations do not necessarily indicate either of their anticipated future results, whether the Merger is effectuated or
not.
Additional Information
Communications in this Report do not
constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy vote or approval.
The Merger will be submitted to the CUB shareholders for their consideration. In connection therewith, German American will file a
Registration Statement on Form S-4 with the SEC that will include a proxy statement for CUB and a prospectus for German American, as
well as other relevant documents concerning the Merger. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE CORRESPONDING
PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC, TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS TO THOSE DOCUMENTS, AS THEY WILL CONTAIN IMPORTANT INFORMATION. You will be able
to obtain a copy of the proxy statement/prospectus (once filed), as well as other filings containing information about German
American, without charge, at the SEC’s website (http://www.sec.gov) or by accessing German American’s website
(http://www.germanamerican.com) under the tab “Investor Relations” and then under the heading “Financial
Information.” Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in
the proxy statement/prospectus can also be obtained, without charge, by directing a request to Terri A. Eckerle, Shareholder
Relations, German American Bancorp, Inc., 711 Main Street, Box 810, Jasper, Indiana 47546, telephone 812-482-1314 or to David M.
Bowling, Chief Executive Officer, Citizens Union Bancorp of Shelbyville, Inc., 1854 Midland Trail, Shelbyville, Kentucky 40065,
telephone 866-633-4450.
German American and CUB and certain of their directors
and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of CUB in connection with
the proposed Merger. Information about the directors and executive officers of German American is set forth in the proxy statement for
German American’s 2021 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 30, 2021, which information
has been updated by German American from time to time in subsequent filings with the SEC. Information about the directors and executive
officers of CUB will be set forth in the proxy statement/prospectus relating to the proposed merger. Additional information about the
interests of those participants and other persons who may be deemed participants in the transaction may also be obtained by reading the
proxy statement/prospectus relating to the proposed merger when it becomes available. Free copies of this document may be obtained as
described above.
Item 9.01. Financial Statements and Exhibits.
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*
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Schedules to the subject agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy
of any omitted schedule will be furnished to the Securities and Exchange Commission upon request.
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* * * * * *
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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GERMAN AMERICAN BANCORP, INC.
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Date: September 20, 2021
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By:
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/s/ Mark A. Schroeder
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Mark A. Schroeder, Chairman and Chief Executive Officer
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Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
CITIZENS UNION BANCORP OF SHELBYVILLE, INC.,
a Kentucky corporation,
CITIZENS UNION BANK OF SHELBYVILLE, INC.,
a Kentucky bank,
GERMAN AMERICAN BANCORP, INC.,
an Indiana corporation,
and
GERMAN AMERICAN BANK,
an Indiana bank
September 20, 2021
TABLE OF CONTENTS
Article I
TERMS OF THE MERGERS & CLOSING
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2
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Section 1.01.
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The Holding Company Merger.
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2
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Section 1.02.
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Effect of the Holding Company Merger.
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2
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Section 1.03.
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The Holding Company Merger – Conversion of Shares.
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2
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Section 1.04.
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The Holding Company Merger – Cancellation of Options.
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6
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Section 1.05.
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The Bank Merger.
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6
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Section 1.06.
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The Closing.
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6
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Section 1.07.
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Exchange Procedures; Surrender of Certificates.
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7
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Section 1.08.
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The Closing Date.
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8
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Section 1.09.
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Actions At Closing.
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8
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Article II
REPRESENTATIONS AND WARRANTIES OF CUB AND CITIZENS
UNION
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10
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Section 2.01.
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Organization and Capital Stock.
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10
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Section 2.02.
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Authorization; No Defaults.
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14
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Section 2.03.
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Subsidiaries.
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16
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Section 2.04.
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Financial Information.
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16
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Section 2.05.
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Absence of Changes.
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17
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Section 2.06.
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Absence of Agreements with Banking Authorities.
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17
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Section 2.07.
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Tax Matters.
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17
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Section 2.08.
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Absence of Litigation.
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20
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Section 2.09.
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Employment Matters.
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20
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Section 2.10.
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Reports.
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21
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Section 2.11.
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Investment Portfolio.
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21
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Section
2.12.
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Loan Portfolio.
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22
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Section 2.13.
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ERISA.
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23
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Section 2.14.
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Title to Properties; Insurance.
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26
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Section 2.15.
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Environmental Matters.
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27
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Section 2.16.
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Compliance with Law.
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28
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Section 2.17.
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Brokerage.
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28
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Section 2.18.
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Material Contracts.
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29
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Section 2.19.
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Compliance with Americans with Disabilities Act.
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29
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Section 2.20.
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Absence of Undisclosed Liabilities.
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29
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Section 2.21.
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Deposit Insurance.
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30
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Section 2.22.
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Absence of Defaults.
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30
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Section 2.23.
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Tax and Regulatory Matters.
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30
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Section 2.24.
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Securities Law Compliance.
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30
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Section 2.25.
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Shareholder Rights Plan.
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30
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Section 2.26.
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Indemnification Agreements.
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30
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Section 2.27.
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Statements True and Correct.
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30
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Section 2.28.
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CUB’s Knowledge.
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31
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Section 2.29.
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Nonsurvival of Representations and Warranties.
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31
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Article III
REPRESENTATIONS AND WARRANTIES OF GABC AND GERMAN
AMERICAN
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31
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Section 3.01.
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Organization and Capital Stock.
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31
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Section 3.02.
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Authorization.
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32
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Section 3.03.
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Subsidiaries.
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32
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Section 3.04.
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Financial Information.
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32
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Section 3.05.
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Absence of Changes.
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33
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Section 3.06.
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Reports.
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33
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Section
3.07.
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Absence of Litigation.
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33
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Section 3.08.
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Absence of Agreements with Banking Authorities.
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33
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Section 3.09.
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Environmental Matters.
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34
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Section 3.10.
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Compliance with Law.
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34
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Section 3.11.
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Brokerage.
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34
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Section 3.12.
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Sufficient Financial Resources.
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35
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Section 3.13.
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Tax and Regulatory Matters.
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35
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Section 3.14.
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Securities Law Compliance.
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35
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Section 3.15.
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Statements True and Correct.
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35
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Section 3.16.
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GABC’s Knowledge.
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35
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Section 3.17.
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Nonsurvival of Representations and Warranties.
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35
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Article IV
COVENANTS OF CUB AND CITIZENS UNION
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35
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Section 4.01.
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Conduct of Business.
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35
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Section 4.02.
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Subsequent Discovery of Events or Conditions.
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40
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Section 4.03.
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Shareholder and Other Approvals; Cooperation.
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40
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Section 4.04.
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SEC Registration Matters.
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41
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Section 4.05.
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Environmental Reports.
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41
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Section 4.06.
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Access to Information.
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43
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Section 4.07.
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Title to Real Estate.
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44
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Section 4.08.
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Confidentiality.
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45
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Section 4.09.
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Fairness Opinion.
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45
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Section 4.10.
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Additional Financial Information.
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45
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Section 4.11.
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Termination of 401(k) and ESOP.
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45
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Article V
COVENANTS OF GABC AND GERMAN AMERICAN
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45
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Section 5.01.
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Regulatory Approvals and Registration Statement.
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45
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Section
5.02.
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Subsequent Discovery of Events or Conditions.
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46
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Section 5.03.
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Consummation of Agreement.
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47
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Section 5.04.
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Preservation of Business.
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47
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Section 5.05.
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Employee Benefit Plans and Employee Payments.
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47
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Section 5.06.
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Indemnification and Insurance.
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49
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Section 5.07.
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Confidentiality.
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50
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Section 5.08.
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Updated GABC Disclosure Schedules.
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51
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Section 5.09.
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Trust Preferred Securities.
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51
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Article VI
CONDITIONS PRECEDENT TO THE MERGER
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51
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Section 6.01.
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Conditions of GABC’s and German American’s Obligations.
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51
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Section 6.02.
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Conditions of CUB’s and Citizens Union’s Obligations.
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53
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Article VII
TERMINATION OR ABANDONMENT
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54
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Section 7.01.
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Mutual Agreement.
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54
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Section 7.02.
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By Unilateral Action.
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54
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Section 7.03.
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Shareholder Approval Denial; Dissenting Shareholders.
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54
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Section 7.04.
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Adverse Environmental Reports; Title Defects.
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55
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Section 7.05.
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Termination Upon Adverse Regulatory Determination.
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55
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Section 7.06.
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Regulatory Enforcement Matters.
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55
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Section 7.07.
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Lapse of Time.
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55
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Section 7.08.
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Lack of Exclusivity.
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56
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Section 7.09.
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Effect of Termination.
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56
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Article VIII
MISCELLANEOUS
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56
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Section 8.01.
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Liabilities.
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56
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Section 8.02.
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Expenses.
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57
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Section 8.03.
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Notices.
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57
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Section
8.04.
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Non-survival of Representations, Warranties and Agreements.
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57
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Section 8.05.
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Representations Not Affected by Review.
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58
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Section 8.06.
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Press Releases.
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58
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Section 8.07.
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Entire Agreement.
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58
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Section 8.08.
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Headings and Captions.
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58
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Section 8.09.
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Waiver, Amendment or Modification.
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58
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Section 8.10.
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Rules of Construction.
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58
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Section 8.11.
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Counterparts/Facsimiles.
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58
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Section 8.12.
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Successors.
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59
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Section 8.13.
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Governing Law; Assignment; Specific Performance.
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59
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Section 8.14.
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Securityholder Litigation.
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59
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AGREEMENT AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF
REORGANIZATION (this “Agreement”) is made as of September 20, 2021, by and among CITIZENS UNION BANCORP OF SHELBYVILLE,
INC., a Kentucky corporation (“CUB”), CITIZENS UNION BANK OF SHELBYVILLE, INC., a Kentucky bank (“Citizens Union”),
GERMAN AMERICAN BANCORP, INC., an Indiana corporation (“GABC”), and GERMAN AMERICAN BANK, an Indiana bank (“German American”).
Recitals
A. CUB
is a corporation duly organized and existing under the Kentucky Business Corporation Act (“KBCA”) that is duly registered
with the Board of Governors of the Federal Reserve System (“FRB”) as a bank holding company under the Bank Holding Company
Act of 1956, as amended (the “BHC Act”). CUB owns all of the outstanding capital stock of Citizens Union, which is duly organized
and existing as a bank under the Kentucky Financial Services Code (“KFSC”) and operates fifteen (15) banking offices in eight
(8) counties in Kentucky (namely Shelby, Jefferson, Bullitt, Gallatin, Hardin, Oldham, Owen and Spencer). CUB Investments, Inc., a Kentucky
corporation (“CUB Investments”), is a wholly-owned subsidiary of CUB. CUB Title Company LLC (“CUB Title”), CUB
St. Denis, LLC (“St. Denis”) and SM 2013, LLC (“Sammy’s”) are each a Kentucky limited liability company
and wholly-owned by Citizens Union. Citizens Union also holds a fifty percent (50%) interest in EQP 2011, LLC, a Kentucky limited liability
company (“Equestrian Park”). CUB Investments holds a forty percent (40%) interest in Roberts and Smith, LLC, a Kentucky limited
liability company (“R&S”). Citizens Union, CUB Investments, CUB Title, St. Denis, Sammy’s, Equestrian Park and R&S
are sometimes referred to as the “Subsidiaries” herein. All of the common securities of each of CUB Capital Trust I, a Delaware
statutory business trust (“CUB Capital I”), and CUB Capital Trust II, a Delaware statutory business trust (“CUB Capital
II” and together with CUB Capital I, the “Trusts”), are held by CUB.
B. GABC
is a corporation duly organized and existing under Indiana Business Corporation Law (“IBCL”) that is duly registered with
the FRB as a bank holding company under the BHC Act. GABC owns all of the outstanding capital stock of German American, which is duly
organized as a bank under the Indiana Financial Institutions Act (“IFIA”) and operates sixty-eight (68) banking offices in
nineteen (19) counties in Indiana and eight (8) counties in Kentucky.
C. The
parties desire to effect transactions whereby, in consideration of the payment of cash and the issuance of shares of common stock, without
par value, of GABC (such shares being hereafter referred to as “GABC Common”) to the shareholders of CUB in exchange for their
shares of common stock, without par value, of CUB (“CUB Common”), CUB will be merged with and into GABC and, immediately thereafter,
Citizens Union will be merged with and into German American (the “Mergers”).
D. The
parties intend for the Mergers to qualify as a reorganization within the meaning of Section 368 and related sections of the Internal Revenue
Code of 1986, as amended (the “Code”), and agree to cooperate and take such actions as may be reasonably necessary to assure
such result.
Agreements
In consideration of the premises
and the mutual terms and provisions set forth in this Agreement, the parties agree as follows:
Article
I
TERMS OF THE MERGERS
& CLOSING
Section
1.01. The Holding Company Merger. Pursuant to the terms and provisions of this Agreement, the IBCL, the KBCA and the Plan of Merger attached hereto as Exhibit
1.01 and incorporated herein by this reference (the “Holding Company Plan of Merger”), CUB shall merge with and into GABC
(the “Holding Company Merger”). CUB shall be the “Merging Corporation” in the Holding Company Merger and its
corporate identity and existence, separate and apart from GABC, shall cease on consummation of the Holding Company Merger. GABC shall
be the “Surviving Corporation” in the Holding Company Merger, and its name shall not be changed pursuant to the Holding Company
Merger.
Section
1.02. Effect of the Holding Company
Merger. The Holding Company Merger shall have all the effects provided with respect to the merger of a corporation with and into
an Indiana corporation under the IBCL and all the effects provided with respect to a merger of a Kentucky corporation with and into a
foreign corporation under the KBCA.
Section
1.03. The Holding Company Merger –
Conversion of Shares.
(a)
At the time of filing with the Indiana Secretary of State and the Kentucky Secretary of State of appropriate Articles of
Merger with respect to the Holding Company Merger, or at such later time as shall be specified by such Articles of Merger (the “Effective
Time”), all of the shares of CUB Common that, immediately prior to the Effective Time, are issued and outstanding (except for “Dissenting
Shares” as provided in Section 1.03(j) below) shall, by virtue of the Merger and without any action on the part of the holders thereof,
be converted in accordance with subsections (b) and (c) of this Section 1.03 into the right to receive, subject to the provisions set
forth in this Agreement, (i) a cash payment, and (ii) newly-issued shares of GABC Common (together, such cash and GABC Common is sometimes
collectively referred to in this Agreement as the “Merger Consideration”) pursuant to this Section 1.03.
(b) Each
record holder of CUB Common (other than Dissenting Shares) immediately prior to the Effective Time shall be entitled to receive from
GABC for each of such holder’s shares of CUB Common then held of record by such record holder (i) a cash payment in the amount
of Thirteen and 44/100 Dollars ($13.44) or such lesser amount, but not less than zero, as may be determined by operation of
subsection (c) of this Section 1.03 (the “Cash Payment”), and (ii) 0.7739 (the “Exchange Ratio”) of a
newly-issued share of GABC Common. The Citizens Union Bancorp of Shelbyville, Inc. Employee Stock Ownership Trust (with 401(k)
Provisions), as the record holder of shares of CUB Common held in the Citizens Union Bancorp of Shelbyville, Inc. Employee Stock
Ownership Plan (with 401(k) Provisions) (the “401(k) and ESOP”), shall be entitled to receive from GABC on the business
day on which the Effective Time occurs, on behalf of the beneficial owners of shares of CUB Common held therein, the Merger
Consideration. The Exchange Ratio shall be subject to adjustment in accordance with the provisions of Section 1.03(i) of this
Agreement.
(c)
If CUB’s Effective Time Book Value (as defined by and calculated in accordance with this subparagraph) shall be less
than the Target Book Value (as defined below) (the dollar amount of such shortfall is referred to in this Agreement as the “Shortfall”),
then each of (i) the Cash Payment component of the Merger Consideration, payable with respect to each share of CUB Common that is eligible
to receive such Cash Payment, and (ii) the Cancellation Payment (as further described in Section 1.03(d) below), payable with respect
to each share of CUB Common subject to an Option (as further described in Section 1.03(d) below), shall be reduced by a per share amount
(rounded to the nearest whole cent) equal to the quotient obtained by dividing the dollar amount of the Shortfall by (x) the number of
shares of CUB Common outstanding that is eligible to receive a Cash Payment, plus (y) the number of unissued shares of CUB Common subject
to an Option that is eligible to receive a Cancellation Payment (the “Shortfall Adjustment”).
For purposes of this subparagraph
(c), “Effective Time Book Value” shall be calculated as the estimated shareholders’ equity of CUB as of the Effective
Time determined in accordance with United States generally accepted accounting principles (“GAAP”) to the reasonable satisfaction
of GABC, to be delivered by CUB to GABC no later than five (5) business days prior to the Closing Date, and which shall reflect an allowance
for loan and lease losses calculated in a manner consistent with Citizens Union’s historical practices. For purposes of computing,
“Effective Time Book Value,” in no event shall the assumed provision for loan and lease losses be less than zero for any period
after April 30, 2021. For the purposes of this subparagraph (c), “Target Book Value” shall be an amount equal to One Hundred
Three Million Three Hundred Ninety-Four Thousand and 00/100 Dollars ($103,394,000.00) adjusted (1) downward by the product of Twenty-Eight
Thousand and 00/100 Dollars ($28,000.00) (the “Per Diem Factor”) and the number of days the Effective Time is before
January 1, 2022, or (2) upward by the product of the Per Diem Factor and the number of days the Effective Time is after
January 1, 2022.
Notwithstanding the
foregoing, the “Effective Time Book Value” shall reflect all after-tax accruals for all of CUB’s and Citizens
Union’s fees, expenses and costs relating to the Mergers (regardless of whether GAAP would require that such obligations be
accrued as liabilities as of the Effective Time), including but not limited to those incurred by CUB or Citizens Union in
negotiating the terms of the Mergers, preparing, executing and delivering this Agreement, obtaining shareholder and regulatory
approvals, and closing the Mergers, retention bonuses authorized by Section 4.01(a)(vi) of this Agreement, change of control or
success bonuses, if any, to officers or directors as a result of the Mergers, additional accruals required pursuant to any director
deferred compensation agreements, if any, costs of taking reasonable remedial and corrective actions and measures pursuant to
Section 4.05, costs to cure or remove any material defects that GABC deems unacceptable other than Standard Permitted Exceptions
pursuant to Section 4.07, termination, deconversion, liquidated damage, upfront payment recapture, and other similar costs, fees and
expenses, in excess of the amount set forth in clause (4) below, payable upon the termination of any contracts contemplated by such
clause (4), and including fees, expenses and costs that might not be deemed earned or become payable until after the Effective Time,
such as, but not limited to, investment banking fees and similar payments for services performed prior to the Effective Time that
may not be deemed earned unless and until the Mergers have become effective; provided, however, that in calculating the Effective
Time Book Value for purposes of this Section, none of the following will be considered: (1) gains or losses on sales of securities
by CUB or Citizens Union incurred after April 30, 2021; (2) any increase in assets or decrease in liabilities resulting from the
issuance or redemption of shares of capital stock or other equity interests of CUB, including, but not limited to, CUB making the
Cancellation Payment set forth in subparagraph (d) below; (3) any changes to the value of CUB’s investment portfolio
attributed to ASC 320, whether upward or downward from April 30, 2021 until the measurement date; (4) up to an aggregate of
$3,365,000 in termination, deconversion, liquidated damage, upfront payment recapture, and other similar costs, fees and expenses
payable upon the termination of any contracts (including, but not limited to, the CUB data processing and branded debit card
incentive contracts) set forth on Section 2.18 of the CUB Disclosure Schedule or otherwise; (5) expenses relating to any litigation
arising out of or in connection with this Agreement, the Mergers or any of the transactions contemplated hereby; and (6) severance
and other payments pursuant to Section 5.05(e) of this Agreement (exclusive of any change of control payments, success bonuses or
settlement payments payable to officers or directors as a result of the Mergers).
(d) To
the extent that the holders of any options to purchase CUB Common granted by CUB (“Options”) under the Citizens Union
Bancorp of Shelbyville, Inc. 2010 Stock Option Plan or the Citizens Union Bancorp of Shelbyville, Inc. 2017 Stock Option Plan (the
“CUB Stock Option Plan”) are then validly exercisable (except for the satisfaction of any minimum vesting requirement,
and provided that CUB’s Board of Directors will accelerate vesting of any unvested options in accordance with the terms of the
CUB Stock Option Plan prior to the Effective Time) by the holders thereof but have not been validly exercised on or before the
Effective Time (“Cancelled Rights”), and subject to any action required by CUB’s Board of Directors and any
consent required by any holder of a stock option, such Cancelled Rights (i) shall, at the Effective Time, be deemed to have been
cancelled and shall no longer be deemed to represent the right to receive shares of CUB Common on any terms or conditions, and shall
not be converted into the right to receive shares of GABC Common or other equity-based consideration pursuant to the Merger, and
(ii) shall be deemed at all times at and after the Effective Time to represent only the right to receive, subject to compliance by
the holders thereof with this Section 1.03(d), a cash payment in cancellation of the rights of the holders thereof (the
“Cancellation Payment”). The Cancellation Payment for each stock option for a share of CUB Common shall be equal to an
amount payable in cash equal to the sum of (i) the Cash Payment (reflecting any Shortfall Adjustment under Section 1.03(c), plus
(ii) the Exchange Ratio multiplied by the volume weighted average of the trading prices of GABC Common, rounded to the nearest cent,
during the ten (10) consecutive trading days ended on the trading day that is the fourth business day preceding the Closing Date, as
reported by Bloomberg L.P. (or, if not reported therein, in another authoritative source mutually selected by the parties), less
(iii) the Option exercise price per share, and less (iv) any applicable withholding taxes (the “Cancellation Amount”).
As a condition to its obligation to pay the Cancellation Payment to any holder of Cancelled Rights pursuant to this Section 1.03(d),
GABC shall be entitled to require from each such holder an agreement, in form and substance reasonably acceptable to CUB, agreeing
to accept such Cancellation Payment in complete cancellation, satisfaction and release of all claims of such holder in respect
thereof (the “Cancellation Agreement”) plus the surrender of the original stock option agreement evidencing such
unexercised Options (the “Cancellation Documentation”). It shall be a condition of payment of the Cancellation Payment
that the Cancellation Agreement shall be properly executed and that the underlying stock option agreement that evidences the
Cancelled Right shall be in proper form for cancellation and that the person requesting such Cancellation Payment shall pay to GABC
any required transfer or other taxes or establish to the satisfaction of GABC that such tax has been paid or is not subject to
withholding by GABC. Subject to the terms and conditions of such Cancellation Agreement, including, without limitation the prior
completion of the Holding Company Merger, GABC shall be required to pay promptly the Cancellation Amount (without interest) to any
such holder upon the delivery of such Cancellation Agreement and Cancellation Documentation to GABC at the principal offices of GABC
in Jasper, Indiana, on any trading day after the date on which the Effective Time occurs, subject to applicable unclaimed property
laws. If any holder of an Option does not consent to the treatment of his or her Options under this Section 1.03(d), his or her
Options will be converted to stock options to purchase the Merger Consideration or the value thereof in accordance with the terms of
the applicable CUB Stock Option Plan.
(e)
The shares of GABC Common issued and outstanding immediately prior to the Effective Time shall continue to be issued and
outstanding shares of GABC.
(f)
No fractional shares of GABC Common shall be issued and, in lieu thereof, holders of shares of CUB Common who would otherwise
be entitled to a fractional share interest (after taking into account all shares of CUB Common held by such holder) shall be paid an amount
in cash equal to the product of such fractional share and the volume weighted average of the trading prices of GABC Common, rounded to
the nearest cent, during the twenty (20) consecutive trading days ended on the trading day that is the second business day preceding the
Closing Date, as reported by Bloomberg L.P. (or, if not reported therein, in another authoritative source mutually selected by the parties).
(g)
At the Effective Time, each share of CUB Common, if any, held in the treasury of CUB or by any direct or indirect subsidiary
of CUB (other than shares held in trust accounts for the benefit of others or in other fiduciary, nominee or similar capacities) immediately
prior to the Effective Time shall be canceled and shall cease to exist, and no consideration shall be delivered in exchange therefor.
(h)
At the Effective Time, all of the outstanding shares of CUB Common, by virtue of the Holding Company Merger and without
any action on the part of the holders thereof, shall no longer be outstanding and shall be canceled and retired and shall cease to exist,
and each holder of any certificate or certificates which immediately prior to the Effective Time represented outstanding shares of CUB
Common (“Certificates”) shall thereafter cease to have any rights with respect to such shares, except: (i) the right of such
holders to receive, without interest, the cash payment and the certificates for the shares of GABC Common upon the surrender of such Certificate
or Certificates in accordance with Section 1.07; or (ii) the right to receive payment of the fair value of Dissenting Shares in accordance
with the provisions of the KBCA and Section 1.03(j).
(i) If
(i) GABC shall hereafter declare a stock dividend or other distribution of property or securities (other than a cash dividend) upon
the GABC Common or shall subdivide, split up, reclassify or combine the GABC Common, and (ii) the record date for such transaction
is prior to the date on which the Effective Time occurs, appropriate adjustment or adjustments will be made to the Exchange
Ratio.
(j)
Shares of CUB Common which are issued and outstanding immediately prior to the Effective Time 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 KBCA will not be converted into the right to receive the Merger Consideration, but will be entitled in lieu thereof, to receive
payment of the fair value of such Dissenting Shares in accordance with the provisions of the KBCA unless and until such holders fail to
perfect or effectively withdraw or lose their rights to appraisal and payment under the KBCA. If, after the Effective Time, any such holder
fails to perfect or effectively withdraws or loses such right, such shares of CUB Common will thereupon be treated as if they had been
converted at the Effective Time into the right to receive the Merger Consideration, without any interest thereon. CUB will give GABC prompt
notice of any notices of intent to demand payment received by CUB with respect to shares of CUB Common. Prior to the Effective Time, CUB
will not, except with the prior written consent of GABC, make any payment with respect to, or settle or offer to settle, any such demands.
Section
1.04. The Holding Company Merger
– Cancellation of Options. To the extent that, immediately prior to the Effective Time, there are (even though CUB has
represented and warranted pursuant to Section 2.01(g) that there are at the time of this Agreement no such rights, and that none will
be created during the term of this Agreement) any outstanding stock options (or warrants or other rights to purchase securities issued
by CUB) (whether to employees or directors of CUB, Citizens Union or others) other than the Cancelled Rights that are described by Section
1.03(d) (such rights to purchase or convert, other than the Cancelled Rights, are referred to herein as the “Unscheduled Purchase
Rights”), such Unscheduled Purchase Rights shall as of the Effective Time be deemed to be cancelled without consideration (and
any and all stock option plans, warrant purchase agreements, or other arrangements under which such Unscheduled Purchase Rights shall
have been issued shall at such time be deemed terminated without consideration), and CUB shall not accept any purported notice of exercise
of any such Unscheduled Purchase Right but shall promptly notify GABC of any such purported notice. GABC shall have no obligation to
any employee, director, agent or other person claiming by or through CUB or its predecessor in interest with respect to any claim arising
in respect of any such Unscheduled Purchase Right (or plan or arrangement).
Section
1.05. The Bank Merger. Citizens
Union and CUB shall take all action necessary and appropriate, including entering into an agreement and plan of merger (the “Bank
Merger Agreement” and collectively with the Holding Company Plan of Merger, the “Plans of Merger”) substantially in
the form attached hereto as Exhibit 1.05, to cause Citizens Union to merge with and into German American (the “Bank Merger”)
in accordance with all applicable laws and regulations, effective immediately after the Effective Time after the consummation of the
Holding Company Merger.
Section
1.06. The
Closing. The closing of the Mergers (the “Closing”) shall take place on the Closing Date described in Section 1.08
of this Agreement, and at such time and at such place as determined in accordance with Section 1.08.
Section
1.07. Exchange Procedures;
Surrender of Certificates.
(a)
GABC shall appoint an exchange agent for the surrender of Certificates (or book entry of shares) formerly representing CUB
Common (other than Dissenting Shares) in exchange for the Merger Consideration, which may be a third party, GABC or German American (such
agent is referred to herein as the “Exchange Agent”).
(b)
At least one business day prior to the Effective Time, GABC shall provide to the Exchange Agent the aggregate number of
GABC Common and an amount in cash representing the aggregate cash component of the Merger Consideration, together with aggregate cash
to be paid in lieu of fractional shares pursuant to Section 1.03(f) hereto, all of which shall be held by the Exchange Agent in trust
for the holders of CUB Common (collectively, the “Exchange Fund”). The Exchange Fund shall not be used for any purpose other
than as set forth in this Section 1.07.
(c)
Within five (5) business days after the date on which the Effective Time occurs, the Exchange Agent shall provide to each
record holder of CUB Common whose shares were converted into the right to receive a pro rata portion of the Merger Consideration, a letter
of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon
the proper delivery of the Certificates (or book entry of shares) to the Exchange Agent and shall be in such form and have such other
provisions as GABC may reasonably specify) (each such letter the “Merger Letter of Transmittal”) and instructions for use
in effecting the surrender of the Certificates in exchange for the Merger Consideration. Except with respect to Dissenting Shares, promptly
after surrender to the Exchange Agent of a Certificate(s) (or book entry of share(s)), together with a Merger Letter of Transmittal duly
executed and any other required documents, the Exchange Agent shall deliver to such surrendering Certificate holder the applicable aggregate
amount of Merger Consideration. No interest on the Merger Consideration payable or issuable upon the surrender of the Certificates shall
be paid or accrued for the benefit of holders of Certificates. If the Merger Consideration is to be issued or paid to a person other than
a person in whose name a surrendered Certificate is registered, it shall be a condition of issuance that the surrendered Certificate shall
be properly endorsed or otherwise in proper form for transfer and that the person requesting such issuance or payment shall pay to the
Exchange Agent any required transfer or other taxes or establish to the reasonable satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. GABC reserves the right in all cases to require that a surety bond on terms and in an amount reasonably
satisfactory to GABC be provided to GABC at the expense of the CUB shareholder in the event that such shareholder claims loss of a Certificate
and requests that GABC waive the requirement for surrender of such Certificate.
(d)
No dividends that are otherwise payable on shares of GABC Common constituting the Merger Consideration shall be paid to
persons entitled to receive such shares of GABC Common until such persons surrender their Certificates. Upon such surrender, there shall
be paid to the person in whose name the shares of GABC Common shall be issued any dividends which shall have become payable with respect
to such shares of GABC Common (without interest and less the amount of taxes, if any, which may have been imposed thereon), between the
Effective Time and the time of such surrender.
Section
1.08. The Closing
Date. Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned and subject to the satisfaction (or waiver, where applicable) of the conditions set forth
in Article VI, the Closing shall take place on the first day of the calendar month (other than a calendar month in which the last day
of a calendar quarter occurs) following each of the conditions in Section 6.01(c) and (e) and Section 6.02(c) and (e) being satisfied,
or on such later or earlier date as CUB and GABC may agree (the “Closing Date”); provided, however, that the Closing shall
only take place prior to January 1, 2022 to the extent that changes to the Code, occurring after the date hereof, make it more advantageous
to CUB shareholders to close during 2021 (subject, in all cases, to the other conditions of this Section). The Closing shall take place
remotely via the electronic exchange of documents and signatures on the Closing Date, unless the parties otherwise agree. The parties
hereto acknowledge and agree that (i) all proceedings at the Closing shall be deemed to have been taken and executed simultaneously,
and no proceedings shall be deemed taken nor any documents executed or delivered until all have been taken, executed and delivered, and
(ii) the Closing shall be deemed to have taken place at the offices of GABC in Jasper, Indiana, at 12:01 A.M. Eastern Time, on the Closing
Date, unless the parties shall mutually otherwise agree.
Section
1.09. Actions At Closing.
(a)
At the Closing, CUB shall deliver to GABC:
(i)
certified copies of the articles of incorporation and bylaws (including any and all amendments thereto) of CUB, Citizens
Union and CUB Investments, certified copies of the articles of organization and operating agreements of CUB Title, St. Denis, Sammy’s,
Equestrian Park and R&S, and the certified organizational documents of each of the Trusts;
(ii)
a certificate signed by the Chief Executive Officer of CUB, dated as of the Effective Time, stating, to the best of his
knowledge and belief, after due inquiry, that: (A) each of the representations and warranties contained in Article II is true and correct
in all material respects at the time of the Closing, subject to the standard specified in Section 6.01(a) hereof, as if such representations
and warranties had been made at Closing, (B) all the covenants of CUB have been complied with in all material respects from the date of
this Agreement through and as of the Effective Time; and (C) CUB and Citizens Union have performed and complied in all material respects,
unless waived by GABC, with all of their obligations and agreements required to be performed hereunder prior to the Closing Date;
(iii)
certified copies of the resolutions of CUB’s Board of Directors and shareholders, approving and authorizing the execution
of this Agreement and the Holding Company Plan of Merger and authorizing the consummation of the Holding Company Merger;
(iv)
a certified copy of the resolutions of the Board of Directors of Citizens Union and of its shareholder, as required for
valid approval of the execution of this Agreement and the consummation of the Bank Merger;
(v)
a certificate of the Kentucky Secretary of State, dated a recent date, stating that CUB is duly incorporated and existing
under Kentucky law;
(vi)
a certificate of the Kentucky Secretary of State, dated a recent date, stating that Citizens Union is duly incorporated
and existing under Kentucky law;
(vii)
a certificate of the Kentucky Secretary of State, dated a recent date, stating that CUB Investments is duly incorporated
and existing under Kentucky law;
(viii)
a certificate of the Kentucky Secretary of State, dated a recent date, stating, respectively, that CUB Title, St. Denis,
Sammy’s, Equestrian Park and R&S are duly organized and in good standing in the Commonwealth of Kentucky;
(ix)
certificates of the Delaware Secretary of State, dated a recent date, stating that each of the Trusts is duly organized
and exists in the State of Delaware;
(x)
any title affidavits or documents required by the Title Company (as defined in Section 4.07) to issue the Title Policies
(as defined in Section 4.07);
(xi)
a certified list of the holders of CUB Common of record as of the close of business on the business day immediately preceding
the Closing Date showing, by holder and in the aggregate, the number of shares of CUB of record as of such time;
(xii)
a certified list of those holders of CUB Common of record as of the close of business on the business day immediately preceding
the Closing Date who are holders of Dissenting Shares and the number of shares of CUB Common as to which each of them are holding Dissenting
Shares; and
(xiii)
third party consents required to consummate the transactions contemplated in this Agreement as set forth in Section 2.02(e)
of the CUB Disclosure Schedule (as defined below).
(b)
At the Closing, GABC shall deliver to CUB:
(i)
a certificate signed by the Chief Executive Officer of GABC, dated as of the Effective Time, stating, to the best of his
knowledge and belief, after due inquiry, that: (A) each of the representations and warranties contained in Article III is true and correct
in all material respects at the time of the Closing, subject to the standard specified in Section 6.02(a) hereof, as if such representations
and warranties had been made at Closing, (B) all the covenants of GABC have been complied with in all material respects from the date
of this Agreement through and as of the Effective Time; and (C) GABC and German American have performed and complied in all material respects,
unless waived by CUB, with all of their obligations and agreements required to be performed hereunder prior to the Closing Date;
(ii)
a certified copy of the resolutions of GABC’s Board of Directors authorizing the execution of this Agreement and the
Holding Company Plan of Merger and the consummation of the Holding Company Merger;
(iii)
a certified copy of the resolutions of German American’s Board of Directors and shareholder, as required for valid
approval of the execution of this Agreement and the consummation of the Bank Merger; and
(iv)
certificates of the Indiana Secretary of State, dated a recent date, stating that GABC and German American each is duly
organized and exists under the IBCL and IFIA, respectively.
(c)
At the Closing, GABC and CUB shall execute and/or deliver to one another such other documents and instruments, and take
such other actions as shall be necessary or appropriate to consummate the Mergers, including the execution and the presentation of executed
Articles of Merger (including the Holding Company Plan of Merger and/or Bank Plan of Merger with the blank provisions completed in accordance
with the provisions of Article I of this Agreement) to the Indiana Secretary of State for filing under the IBCL and the IFIA, and the
Kentucky Secretary of State for filing under the KBCA and KFSC accompanied by the appropriate fees.
Article
II
REPRESENTATIONS AND
WARRANTIES OF
CUB AND CITIZENS UNION
CUB and Citizens Union hereby
jointly and severally make the following representations and warranties to GABC and German American with respect to CUB, the Subsidiaries
and the Trusts:
Section
2.01. Organization
and Capital Stock.
(a)
CUB is a corporation duly organized and validly existing under the KBCA and has the corporate power to own all of its property
and assets, to incur all of its liabilities and to carry on its business as now being conducted. CUB’s only direct wholly-owned
subsidiary is Citizens Union. Except as set forth in Schedule 2.01(a) of the disclosure schedule that has been prepared by CUB and delivered
by CUB to GABC in connection with the execution and delivery of this Agreement (the “CUB Disclosure Schedule”), CUB is not
engaged in any activities that are financial in nature and only permissible for financial holding companies under 12 U.S.C. 1843(k).
(b)
Citizens Union is a Kentucky commercial bank duly organized and validly existing under the KBCA and has the corporate power
to own all of its property and assets, to incur all of its liabilities and to carry on its business as now being conducted. All of the
issued and outstanding capital stock of Citizens Union is owned by CUB. Citizens Union is subject to primary federal supervision and regulation
by the Federal Deposit Insurance Corporation (“FDIC”).
(c)
CUB Investments is a Kentucky corporation duly organized and validly existing under the KBCA and has the corporate power
to own all of its property and assets, to incur all of its liabilities and to carry on its business as now being conducted. All of the
issued and outstanding capital stock of CUB Investments is owned by CUB.
(d) CUB
Title, St. Denis, Sammy’s, Equestrian Park and R&S are each a limited liability company duly organized and in good
standing under the laws of the Commonwealth of Kentucky, and each have the limited liability company power to own all of its assets,
to incur all of its liabilities and to carry on its business as now being conducted. All of the membership interests of CUB Title,
St. Denis, and Sammy’s are owned by Citizens Union. Citizens Union holds fifty percent (50%) of the membership interests in
Equestrian Park. CUB Investments holds forty percent (40%) of the membership interests in R&S.
(e)
Each of the Trusts is a statutory business trust duly organized and validly existing under the laws of the State of Delaware
and has the trust power to own all of its assets, to incur all of its liabilities and to carry on its business as now being conducted.
All of the common securities of each of the Trusts are owned by CUB. The Trusts have no subsidiaries.
(f)
CUB has authorized five million (5,000,000) shares of no par common stock (“CUB Common,” as previously referenced).
As of the date of this Agreement, 3,706,299 shares of CUB Common are issued and outstanding. All such outstanding shares of CUB Common
are duly and validly issued and outstanding, fully paid and non-assessable. None of the outstanding shares of CUB Common has been issued
in violation of any preemptive rights of the current or past shareholders of CUB or in violation of any applicable federal or state securities
laws or regulations. CUB has no capital stock authorized, issued or outstanding other than as described in this paragraph of Section 2.01
and, except as set forth in Section 2.01(f) of the CUB Disclosure Schedule, CUB has no intention or obligation to authorize or issue additional
shares of its capital stock.
(g)
Citizens Union has authorized common stock of twelve thousand (12,000) shares, $50 par value per share (“Citizens
Union Common”). As of the date of this Agreement, 9,956 shares of Citizens Union Common are issued and outstanding. All of such
shares of Citizens Union Common are duly and validly issued and outstanding, are fully paid and nonassessable and are owned by CUB. None
of the outstanding shares of Citizens Union Common has been issued in violation of any preemptive rights of the current or past shareholders
of Citizens Union or in violation of any applicable federal or state securities laws or regulations. All of the shares of Citizens Union
Common are owned by CUB free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security interests, options
and preemptive rights and of all other rights of any other person, corporation or entity with respect thereto. Citizens Union has no capital
stock authorized, issued or outstanding other than as described in this paragraph of Section 2.01 and has no intention or obligation to
authorize or issue any other shares of capital stock.
(h)
CUB Investments has authorized common stock of two thousand (2,000) shares, no par value (“CUB Investments Common”).
As of the date of this Agreement, 10 shares of CUB Investments Common are issued and outstanding. All of such shares of CUB Investments
Common are duly and validly issued and outstanding, are fully paid and nonassessable and are owned by CUB. None of the outstanding shares
of CUB Investments Common has been issued in violation of any preemptive rights of the current or past shareholders of CUB Investments
or in violation of any applicable federal or state securities laws or regulations. All of the shares of CUB Investments Common are owned
by CUB free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security interests, options and preemptive rights
and of all other rights of any other person, corporation or entity with respect thereto. CUB Investments has no capital stock authorized,
issued or outstanding other than as described in this paragraph of Section 2.01 and has no intention or obligation to authorize or issue
any other shares of capital stock.
(i)
One hundred percent of the issued and outstanding membership interests of CUB Title is owned by Citizens Union. Such membership
interests have been duly and validly authorized by all necessary limited liability company action of CUB Title and are validly issued,
fully paid and nonassessable, and have not been issued in violation of any preemptive rights of any CUB Title equity owners. Such membership
interests are owned free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security interests, options and
preemptive rights and of all other rights of any other person, corporation or entity with respect thereto. CUB Title has no membership
interests authorized, issued or outstanding other than as described in this paragraph of Section 2.01 and has no intention or obligation
to authorize or issue any other membership interests.
(j)
One hundred percent of the issued and outstanding membership interests of St. Denis is owned by Citizens Union. Such membership
interests have been duly and validly authorized by all necessary limited liability company action of St. Denis and are validly issued,
fully paid and nonassessable, and have not been issued in violation of any preemptive rights of any St. Denis equity owners. Such membership
interests are owned free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security interests, options and
preemptive rights and of all other rights of any other person, corporation or entity with respect thereto. St. Denis has no membership
interests authorized, issued or outstanding other than as described in this paragraph of Section 2.01 and has no intention or obligation
to authorize or issue any other membership interests.
(k)
One hundred percent of the issued and outstanding membership interests of Sammy’s is owned by Citizens Union. Such
membership interests have been duly and validly authorized by all necessary limited liability company action of Sammy’s and are
validly issued, fully paid and nonassessable, and have not been issued in violation of any preemptive rights of any Sammy’s equity
owners. Such membership interests are owned free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security
interests, options and preemptive rights and of all other rights of any other person, corporation or entity with respect thereto. Sammy’s
has no membership interests authorized, issued or outstanding other than as described in this paragraph of Section 2.01 and has no intention
or obligation to authorize or issue any other membership interests.
(l)
Fifty percent (50%) of the issued and outstanding membership interests of Equestrian Park is owned by Citizens Union, and
fifty percent (50%) of the issued and outstanding membership interests of Equestrian Park is owned by KB Special Assets Unit, LLC. Such
membership interests have been duly and validly authorized by all necessary limited liability company action of Equestrian Park, and are
validly issued, fully paid and nonassessable, and have not been issued in violation of any preemptive rights of any Equestrian Park equity
owners. Such membership interests are owned free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security
interests, options and preemptive rights and of all other rights of any other person, corporation or entity with respect thereto. Equestrian
Park has no membership interests authorized, issued or outstanding other than as described in this paragraph of Section 2.01 and has no
intention or obligation to authorize or issue any other membership interests.
(m) Forty
percent (40%) of the issued and outstanding membership interests of R&S is owned by CUB Investments, and sixty percent (60%) of
the issued and outstanding membership interests of R&S is owned by H. Barry Smith (ten percent (10%)), Carolyn Hundley-Smith
(ten percent (10%)), Odyssey Land, Inc. (twenty percent (20%)), and T&T Land Company LLC (twenty percent (20%). Such membership
interests have been duly and validly authorized by all necessary limited liability company action of R&S, and are validly
issued, fully paid and nonassessable, and have not been issued in violation of any preemptive rights of any R&S equity owners.
Such membership interests are owned free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security
interests, options and preemptive rights and of all other rights of any other person, corporation or entity with respect thereto.
R&S has no membership interests authorized, issued or outstanding other than as described in this paragraph of Section 2.01 and
has no intention or obligation to authorize or issue any other membership interests.
(n)
CUB Capital I has 310 shares of common securities authorized and outstanding, $1,000 per share liquidation value, and 10,000
capital securities authorized and outstanding, $1,000 per share liquidation value. All of the common securities of CUB Capital I are held
beneficially and of record by CUB. Such issued and outstanding trust securities have been duly and validly authorized by all necessary
corporate action of CUB Capital I, are validly issued, fully paid and nonassessable, and have not been issued in violation of any preemptive
rights of any security holders of CUB Capital I. All of the issued and outstanding common securities of CUB Capital I are owned by CUB
free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security interests, options and preemptive rights and
of all other rights of any other person, corporation or entity with respect thereto. CUB Capital I has no capital securities authorized,
issued or outstanding other than as described in this paragraph of Section 2.01 and has no intention or obligation to authorize or issue
any other shares of capital securities.
(o)
CUB Capital II has 310 shares of common securities authorized and outstanding, $1,000 per share liquidation value, and 10,000
capital securities authorized and outstanding, $1,000 per share liquidation value. All of the common securities of CUB Capital II are
held beneficially and of record by CUB. Such issued and outstanding trust securities have been duly and validly authorized by all necessary
corporate action of CUB Capital II, are validly issued, fully paid and nonassessable, and have not been issued in violation of any preemptive
rights of any security holders of CUB Capital II. All of the issued and outstanding common securities of CUB Capital II are owned by CUB
free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security interests, options and preemptive rights and
of all other rights of any other person, corporation or entity with respect thereto. CUB Capital II has no capital securities authorized,
issued or outstanding other than as described in this paragraph of Section 2.01 and has no intention or obligation to authorize or issue
any other shares of capital securities.
(p) There
are no shares of capital stock or other equity securities of CUB, the Subsidiaries or the Trusts authorized, issued or outstanding
(except as set forth in this Section 2.01) and, except as set forth in Section 2.01 of the CUB Disclosure Schedule, there are no
outstanding options, warrants, rights to subscribe for, calls, puts, or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital stock of CUB, the Subsidiaries or the Trusts, or
contracts, commitments, understandings or arrangements by which CUB, the Subsidiaries or the Trusts are or may be obligated to issue
additional shares of its capital stock, other equity interests, or options, warrants or rights to purchase or acquire any additional
shares of its capital stock or equity interests (and none will be created during the term of this Agreement). Except for the Amended
and Restated Stock Restriction and Purchase Agreement, dated as of September 22, 2015, as amended by a First Amendment thereto
effective as of July 20, 2021 (the “CUB Shareholder Agreement”), by and among CUB and the shareholders listed therein,
and the Voting Agreement (as defined in Section 2.02(a)), there are no voting agreements, shareholder agreements, proxies or other
agreements in effect pursuant to which CUB, the Subsidiaries or the Trusts, or any of their respective shareholders, members,
securities holders or trustees, has a contractual obligation with respect to the voting or transfer of capital stock or other equity
securities of CUB, the Subsidiaries or the Trusts. The CUB Shareholder Agreement shall terminate at the Effective Time pursuant to
Section 4(d) thereof and, as a result, GABC shall have no obligations or liability with respect thereto.
Section
2.02. Authorization;
No Defaults.
(a)
All of the members of the Board of Directors of CUB and certain shareholders of CUB entered into a Voting Agreement, dated
as of the date of this Agreement, pursuant to which they agreed to vote their shares of CUB Common in favor of the Holding Company Merger
(the “Voting Agreement”). The Boards of Directors of CUB and Citizens Union have, by all appropriate action, approved this
Agreement and the Holding Company Merger or Bank Merger, as applicable and contemplated hereby, and have authorized the execution of this
Agreement and the applicable Plan of Merger on CUB’s or Citizens Union’s behalf by their respective duly authorized officers
and the performance by CUB and Citizens Union of their respective obligations hereunder. Prior to the execution of this Agreement, the
Board of Directors of CUB received an opinion (which, if initially rendered verbally, has been or will be confirmed by a written opinion,
dated the same date) of ProBank Austin to the effect that, as of the date of such opinion, and based upon and subject to the factors,
assumptions, and limitations set forth therein, the Merger Consideration is fair, from a financial point of view, to the holders of CUB
Common (the “CUB Fairness Opinion”). Except as provided in Section 2.02(a) of the CUB Disclosure Schedule, nothing in the
Articles of Incorporation or Bylaws of CUB, as amended, or the Articles of Incorporation or Bylaws of Citizens Union, as amended, or in
any material agreement or instrument, or any decree, proceeding, law or regulation (except as specifically referred to in or contemplated
by this Agreement) by or to which CUB or Citizens Union is bound or subject, would prohibit CUB or Citizens Union from consummating, or
would be violated or breached by CUB’s or Citizens Union’s consummation of, this Agreement, the Holding Company Merger or
the Bank Merger and other transactions contemplated herein on the terms and conditions herein contained. This Agreement has been duly
and validly executed and delivered by CUB and Citizens Union and constitutes a legal, valid and binding obligation of CUB and Citizens
Union, enforceable against CUB and Citizens Union in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, and similar laws of general applicability relating to or affecting creditors’ rights or
by general equity principles. No corporate acts or proceedings, other than those already taken and the approval of the Holding Company
Merger by the holders of a majority of the outstanding shares of CUB Common and the Bank Merger by CUB as sole shareholder of Citizens
Union, are required by law to be taken by CUB or Citizens Union to authorize the execution, delivery and performance of this Agreement.
(b) Except
as set forth in Section 2.02(b) of the CUB Disclosure Schedule, none of CUB, the Subsidiaries or the Trusts are, nor will they be by
reason of the consummation of the transactions contemplated herein, in material default under or in material violation of any
provision of, nor will the consummation of the transactions contemplated herein afford any party a right to accelerate any
indebtedness under, CUB’s, the Subsidiaries’ or the Trusts’ organizational documents, any material promissory
note, indenture or other evidence of indebtedness or security therefor, or any material lease, contract, or other commitment or
agreement to which it is a party or by which it or its property is bound.
(c) Except
as set forth in Section 2.02(c) of the CUB Disclosure Schedule, neither the execution of this Agreement, nor the consummation of the
transactions contemplated hereby, does or will (i) result in the creation of, or give any person, corporation or entity the right to
create, any lien, charge, encumbrance, security interest, or any other rights of others or other adverse interest upon any right,
property or asset of CUB, the Subsidiaries or the Trusts; (ii) terminate, or give any person, corporation or entity the right to
terminate, amend, abandon, or refuse to perform, any note, bond, indenture, loan, mortgage, security agreement, contract,
arrangement or commitment to which CUB, the Subsidiaries or the Trusts is subject or bound, the result of which would have a
Material Adverse Effect (as defined below); or (iii) accelerate or modify, or give any party thereto the right to accelerate or
modify, the time within which, or the terms according to which, CUB, the Subsidiaries or the Trusts is to perform any duties or
obligations or receive any rights or benefits under any note, bond, indenture, loan, mortgage, security agreement, contract,
arrangement or commitment. For the purpose of this Agreement, a “Material Adverse Effect” means any effect,
circumstance, occurrence or change that (i) is material and adverse to the financial position, results of operations or business of
CUB, the Subsidiaries and the Trusts taken as a whole, or GABC and German American taken as a whole, as applicable or (ii) would
materially impair the ability of CUB or GABC, as applicable, to perform its obligations under this Agreement; provided, however,
that a Material Adverse Effect shall not be deemed to include the impact of (a) changes in banking and similar laws (including the
Pandemic Measures) of general applicability to banks or their holding companies or interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory accounting requirements applicable to banks or their holding companies generally, (c)
any modifications or changes to valuation policies and practices in connection with the Mergers or restructuring charges taken in
connection with the Mergers, in each case in accordance with GAAP, (d) effects of any action taken with the prior written consent of
the other party hereto, (e) changes in the general level of interest rates (including the impact on the securities portfolios of CUB
and Citizens Union, or GABC and German American, as applicable) or conditions or circumstances relating to or that affect either the
United States economy, financial or securities markets or the banking industry, generally and, in each case, do not specifically
relate to the party or its Subsidiaries (including any such changes, conditions or circumstances arising out of the Pandemic or any
Pandemic Measures), (f) changes resulting from expenses (such as legal, accounting and investment bankers’ fees) incurred in
connection with this Agreement or the transactions contemplated herein, including without limitation payment of any amounts due to,
or the provision of any benefits to, any directors, officers or employees under agreements, plans or other arrangements in existence
of or contemplated by this Agreement and disclosed to GABC, (g) the impact of the announcement of this Agreement and the
transactions contemplated hereby, and compliance with this Agreement on the business, financial condition or results of operations
of CUB, the Subsidiaries and the Trusts, or GABC and German American, as applicable, (h) the occurrence of any military or terrorist
attack within the United States or any of its possessions or offices, and (i) changes, after the date hereof, resulting from
hurricanes, earthquakes, tornados, floods or other natural disasters or from any outbreak of any disease or other public health
event (including the Pandemic); provided that in no event shall a change in the trading price of the GABC Common Stock, by itself,
be considered to constitute a Material Adverse Effect on GABC (it being understood that the foregoing proviso shall not prevent or
otherwise affect a determination that any effect underlying such decline has resulted in a Material Adverse Effect). As used in this
Agreement, the term “Pandemic” means any outbreaks, epidemics or pandemics relating to SARS-CoV-2 or COVID-19, or any
evolutions, variations or mutations thereof, or any other viruses (including influenza), and the governmental and other responses
thereto; and the term “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 the Centers for
Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to the
Pandemic.
(d)
Other than the filing of Articles of Merger with the Indiana Secretary of State and the Kentucky Secretary of State for
the Mergers and in connection or in compliance with the banking regulatory approvals contemplated by Section 5.01, federal and state securities
laws and the rules and regulations promulgated thereunder and rules of NASDAQ, no notice to, filing with, authorization of, exemption
by, or consent or approval of, any public body or authority is necessary for the consummation by CUB or Citizens Union of the transactions
contemplated by this Agreement.
(e)
Other than those filings, authorizations, consents and approvals referenced in Section 2.02(d) above and except as set forth
in Section 2.02(e) of the CUB Disclosure Schedule, no notice to, filing with, authorization of, exemption by, or consent or approval of,
any third party is necessary for the consummation by CUB or Citizens Union of the transactions contemplated by this Agreement, except
for such authorizations, exemptions, consents or approvals, the failure of which to obtain, would not be reasonably likely to result in
a Material Adverse Effect.
(f)
Section 2.02(f) of the CUB Disclosure Schedule contains a description of the business activities
of each of the Subsidiaries, all of which are duly authorized under applicable bank regulatory law.
Section
2.03. Subsidiaries. Except
for the ownership of the Subsidiaries and the Trusts and other matters as disclosed in Section 2.03 of the CUB Disclosure Schedule, neither
CUB nor Citizens Union has (or has had at any time in the last five (5) years) any direct or indirect ownership interest in any corporation,
partnership, limited liability company, joint venture or other business.
Section
2.04. Financial Information.
(a) The
consolidated balance sheet of CUB and its subsidiaries as of December 31, 2020 and 2019 and related consolidated statements of
income, changes in shareholders’ equity and cash flows for the three (3) years ended December 31, 2020, together with the
notes thereto, accompanied by the audit report of CUB’s independent public auditors, and the consolidated balance sheets of
CUB as of April 30, 2021 and June 30, 2021, and the related consolidated statements of income and cash flows (together, such
financial statements are referred to herein as the “CUB Financial Statements”) have been provided to GABC and German
American, have been prepared in accordance with GAAP (except as disclosed therein) and fairly present the consolidated financial
position and the consolidated results of operations, changes in shareholders’ equity and cash flows of CUB and its
consolidated subsidiaries as of the dates and for the periods indicated.
(b)
Neither CUB nor Citizens Union has any material liability, fixed or contingent, except to the extent set forth in the CUB
Financial Statements or incurred in the ordinary course of business since December 31, 2020.
(c)
CUB does not engage in the lending business (except by and through Citizens Union) or any other business or activity, and
does not own any investment securities, in each case, other than that which is incident to its direct ownership of all the capital stock
of Citizens Union and CUB Investments, and the common securities of each the Trusts, and its indirect ownership of CUB Title, St. Denis,
Sammy’s, Equestrian Park and R&S.
(d)
As of the date hereof, each of CUB and Citizens Union is “well-capitalized” under applicable regulatory definitions.
Section
2.05. Absence of Changes.
Except for events and conditions relating to the business and interest rate environment in general, the accrual or payment of Merger-related
expenses, or as set forth in the CUB Disclosure Schedule, since December 31, 2020, no events have occurred which could reasonably be
expected to have a Material Adverse Effect. Except as set forth in the CUB Disclosure Schedule, between the period from December 31,
2020 to the date of this Agreement, CUB, the Subsidiaries and the Trusts have carried on their respective businesses in the ordinary
and usual course consistent with their past practices (excluding the incurrence of fees and expenses of professional advisors related
to this Agreement and the transactions contemplated hereby) and there has not been any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect to CUB Common (other than normal quarterly cash dividends) or
any split, combination or reclassification of any stock or equity interest of CUB, the Subsidiaries or the Trusts or, with the exception
of the issuance of shares in connection with the exercise of stock options, any issuance or the authorization of any issuance of any
securities in respect of, or in lieu of, or in substitution for CUB’s, the Subsidiaries’, or the Trusts’ securities.
For purposes of the above, the phrase “ordinary and usual course consistent with their past practices” shall take into account
the commercially reasonable actions taken by each of CUB, the Subsidiaries and the Trusts in response to the Pandemic and the Pandemic
Measures.
Section
2.06. Absence of Agreements with
Banking Authorities. Except as set forth in Section 2.06 of the CUB Disclosure Schedule, CUB, the Subsidiaries and the Trusts
are not subject to any order (other than orders applicable to bank holding companies or banks generally) and neither is a party to any
agreement or memorandum of understanding with (or resolution of its Board of Directors adopted at the suggestion of) any federal or state
agency charged with the supervision or regulation of banks or bank holding companies, including without limitation, the FDIC, the FRB
and the Kentucky Department of Financial Institutions (“KDFI”), in each case that has been issued, executed or delivered
on or after January 1, 2015.
Section
2.07. Tax Matters.
(a) Each
of CUB, the Subsidiaries and the Trusts has timely filed all material Tax Returns (as defined below) that are required to be filed
and all such Tax Returns are true, correct and complete in all material respects. All material Taxes that are due and payable by
CUB, the Subsidiaries or the Trusts (whether or not shown on any Tax Return) have been paid. All material Taxes that were properly
accruable as of any applicable balance sheet or call report date (but that were not then due and payable) are reflected as
liabilities in the CUB Financial Statements as of that date (other than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income). CUB has delivered to GABC correct and complete copies of all Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by CUB, the Subsidiaries or the Trusts. There are no liens for
Taxes upon the assets of CUB, the Subsidiaries or the Trusts except liens for current Taxes not yet due and payable.
(b)
CUB, the Subsidiaries and the Trusts have not requested any extension of time within which to file any Tax Return which
request is currently pending or has been granted and is in effect and CUB, the Subsidiaries and the Trusts have not waived any statute
of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax (as defined below) audit, review or other
assessment or deficiency.
(c)
No claim has ever been made by a Tax Authority (as defined below) in a jurisdiction wherein CUB, the Subsidiaries or the
Trusts do not file Tax Returns that CUB, the Subsidiaries or the Trusts is or may be subject to taxation by that jurisdiction.
(d)
CUB, the Subsidiaries and the Trusts have made all withholding of Taxes required to be made under all applicable laws, in
connection with any compensation paid to any employee, independent contractor or creditor or other third-party except for such failures
to withhold as would not reasonably be expected to have a Material Adverse Effect on CUB, the Subsidiaries or the Trusts, and the amounts
of Tax withheld have been properly and timely paid over to the appropriate Tax Authorities.
(e)
There is no Tax deficiency or claim assessed, proposed, pending or, to the knowledge of CUB, threatened (whether orally
or in writing) against CUB, the Subsidiaries or the Trusts, except to the extent that adequate liabilities or reserves with respect thereto
are accrued by CUB, the Subsidiaries or the Trusts in accordance with GAAP and set forth in the CUB Financial Statements or (i) such deficiency
or claim is being contested in good faith by appropriate proceedings, (ii) no such accrual is required by GAAP and (iii) the nature and
amount of the disputed Tax is set forth in Section 2.07(e) of the CUB Disclosure Schedule. CUB, the Subsidiaries and the Trusts do not
have any income that was realized during a Tax period that began before the Closing Date that is or will be required to be included in
a Tax Return of GABC or German American for a Tax period that begins on or after the Closing Date.
(f)
CUB, the Subsidiaries and the Trusts do not have any requests for a ruling pending with any Tax Authority. CUB, the Subsidiaries
and the Trusts have not agreed to, and are not required to make, any adjustment pursuant to Section 481(a) of the Code by reason of a
change in accounting method initiated by CUB, the Subsidiaries or the Trusts and neither the IRS nor any other Tax Authority has proposed
any such adjustment or change in accounting method.
(g) All
Tax sharing agreements or similar agreements with respect to or involving CUB, the Subsidiaries or the Trusts shall be terminated as
of the Closing Date and, after the Closing Date, CUB, the Subsidiaries and the Trusts shall not be bound thereby or have any
liability thereunder.
(h)
Except as set forth in Section 2.07(h) of the CUB Disclosure Schedule, each of CUB, the Subsidiaries and the Trusts has
not made any payments, is not obligated to make any payments, and is not a party to any agreement, contract, arrangement or plan that
has resulted or would result, separately or in the aggregate, in the payment of (i) any “excess parachute payment” within
the meaning of Section 280G of the Code (or any corresponding provision of state, local or foreign Tax law) and (ii) any amount that will
not be fully deductible as a result of Section 162(m) of the Code (or any corresponding provision of state, local, or foreign Tax law).
(i)
There are no excess loss accounts, deferred intercompany transactions, or other items of income, gain, loss, deduction or
credit of CUB, the Subsidiaries or the Trusts under the federal consolidated return regulations or other comparable or similar provisions
of law that must be recognized or may be triggered as a result of the consummation of the transactions contemplated by this Agreement.
(j)
The following capitalized terms are defined for purposes of this Article II as follows:
(i)
“Governmental Authority” shall mean any local, state, federal or foreign court, regulatory or administrative
agency, department, commission or other governmental authority or instrumentality (including the staff thereof), or any industry self-regulatory
authority (including the staff thereof).
(ii)
“Tax” or “Taxes” means all federal, foreign, state, or local income, net income, intangibles, tangible
asset, alternative or add-on minimum, gross receipt, gains, capital stock, transfer, transactions, stock transfer, registration, payroll,
value added, estimated, stamp, sales, use, ad valorem, franchise, profits, net worth, insurance, license, withholding, payroll, employment,
unemployment, excise, severance, single business tax, processing, production, occupation, premium, property, real estate, occupancy, environmental
(including taxes under Section 59A of the Code), windfall profit, custom, duty and any other taxes, of any kind whatsoever, together with
any interest, penalties and additions imposed with respect to such amounts, imposed or charged by any Governmental Authority or Tax Authority,
including any Social Security charges in any country.
(iii)
“Tax Authority” means any national, federal, state, local or foreign governmental, regulatory or administrative
authority, agency, department or arbitral body of any country or political subdivision thereof having responsibility for the imposition
of any Tax.
(iv)
“Tax Return” means and include all returns, statements, declarations, estimates, reports, information returns,
schedules, forms, exhibits, coupons and any other documents (including all affiliated, consolidated, combined or unitary versions of the
same) including all related or supporting information filed or required to be filed with any Governmental Authority or Tax Authority,
in connection with the determination,assessment, reporting, payment, collection, or administration of any
Taxes, and including any amendment thereof.
Section
2.08.
Absence of Litigation. Except as set forth in Section 2.08 of the CUB Disclosure Schedule, there are no claims of any
kind, nor any action, suits, proceedings, arbitrations or investigations pending or, to the knowledge of CUB, threatened in any court
or before any government agency or body, arbitration panel or otherwise (nor does CUB have any knowledge of a basis for any claim, action,
suit, proceeding, arbitration or investigation) which could reasonably be expected to have a Material Adverse Effect. To the knowledge
of CUB, there are no material uncured violations, criticisms or exceptions, or violations with respect to which material refunds or restitutions
may be required, cited in any report, correspondence or other communication to CUB, the Subsidiaries or the Trusts as a result of an
examination by any regulatory agency or body.
Section
2.09.
Employment Matters.
(a)
Except as disclosed in Section 2.09(a) of the CUB Disclosure Schedule, each of CUB, the Subsidiaries and the Trusts, is
not a party to or bound by any contract, arrangement or understanding (written or otherwise) for the employment, retention or engagement
of any past or present officer or employee that, by its terms, is not terminable by CUB, the Subsidiaries or the Trusts, respectively,
for any reason or for no reason, on thirty (30) days’ written notice or less without the payment of any amount by reason of such
termination.
(b)
CUB, the Subsidiaries and the Trusts are and have been in material 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 limitation, any such laws respecting employment discrimination and occupational safety and health requirements,
and (i) CUB, the Subsidiaries and the Trusts are not engaged in any unfair labor practice or other employment and/or wage-related policy,
practice or action in violation of any federal, state or local law, regulation, ordinance or ruling, including without limitation those
related to wages and hours under the Fair Labor Standards Act (FLSA); (ii) there is no unfair labor practice or employment-related complaint
against CUB, the Subsidiaries or the Trusts pending or, to the knowledge of CUB, threatened before any state or federal court, the National
Labor Relations Board, the Equal Employment Opportunity Commission (EEOC), the Kentucky Commission on Human Rights (“KCHR”),
the Kentucky Labor Cabinet (or Kentucky OSH) or any other federal, state or local administrative body relating to employment or employment-related
policies, practices or conditions; (iii) there is no labor dispute, strike, slowdown or stoppage, or union representation proceedings
or organizing activity actually occurring, pending or, to the knowledge of CUB, threatened against or directly affecting CUB, the Subsidiaries
or the Trusts; and (iv) neither CUB nor the Subsidiaries or the Trusts has experienced any material work stoppage or other material labor
difficulty during the past five (5) years.
(c) Except
as disclosed in Section 2.09(c) of the CUB Disclosure Schedule, neither the execution nor the delivery of this Agreement, nor the
consummation of any of the transactions contemplated hereby, will (i) result in any payment (including without limitation severance,
unemployment compensation or golden parachute payment) becoming due to any director or employee of CUB, the Subsidiaries or the
Trusts from any of such entities, (ii) increase any benefit otherwise payable under any of their respective employee plans or (iii)
result in the acceleration of the time of payment of any such benefit. No amounts paid or payable by CUB, the Subsidiaries or the
Trusts to or with respect to any employee or former employee of CUB, the Subsidiaries or the Trusts will fail to be deductible for
federal income tax purposes by reason of Sections 162(m), 280G or 404 of the Code or otherwise.
(d)
Except as set forth in Section 2.09(d) of the CUB Disclosure Schedule, all accrued obligations and liabilities of CUB, the
Subsidiaries and the Trusts, whether arising by operation of law, by contract or by past custom, for payments to trust or other funds,
to any government agency or body or to any individual director, officer, employee or agent (or his heirs, legatees or legal representative)
with respect to unemployment compensation or social security benefits and all pension, retirement, savings, stock purchase, stock bonus,
stock ownership, stock option, stock appreciation rights or profit sharing plan, any employment, deferred compensation, consultant, bonus
or collective bargaining agreement or group insurance contract or other incentive, welfare or employee benefit plan or agreement maintained
by CUB, the Subsidiaries or the Trusts for their current or former directors, officers, employees and agents have been and are being paid
to the extent required by law or by the plan or contract, and adequate actuarial accruals and/or reserves for such payments have been
and are being made by CUB, the Subsidiaries or the Trusts in accordance with generally accepted accounting and actuarial principles. Except
as set forth in Section 2.09(d) of the CUB Disclosure Schedule, all obligations and liabilities of CUB, the Subsidiaries and the Trusts,
whether arising by operation of law, by contract, or by past custom, for all forms of compensation, including, without limitation, deferred
compensation, which are or may be payable to their current or former directors, officers, employees or agents have been and are being
paid, and adequate accruals and/or reserves for payment therefore have been and are being made in accordance with GAAP. All accruals and
reserves referred to in this Section 2.09(d) are correctly and accurately reflected and accounted for in the books, statements and records
of CUB, the Subsidiaries and the Trusts.
Section
2.10.
Reports. Since January 1, 2017, CUB, the Subsidiaries and the Trusts have timely filed all reports, notices and other
statements, together with any amendments required to be made with respect thereto, if any, that were required to be filed with (i) FRB,
(ii) the FDIC, (iii) the KDFI, and (iv) any other governmental authority with jurisdiction over CUB, the Subsidiaries or the Trusts.
As of their respective dates, each of such reports and documents, including the financial statements, exhibits and schedules thereto,
complied in all material respects with the relevant statutes, rules and regulations enforced or promulgated by the regulatory authority
with which they were filed. Except as set forth in Section 2.10 of the CUB Disclosure Schedule, there is no unresolved violation with
respect to any report or statement filed by, or any examination of, CUB, the Subsidiaries or the Trusts.
Section
2.11.
Investment Portfolio. All United States Treasury securities, obligations of other United States Government agencies
and corporations, obligations of States and political subdivisions of the United States and other investment securities held by Citizens
Union, as reflected in the Citizens Union Call Reports, are carried on the books of Citizens Union in accordance with GAAP. Citizens
Union does not engage in activities that would require that it establish a trading account under applicable regulatory guidelines and
interpretations.
Section
2.12. Loan Portfolio.
(a)
All loans and discounts shown in the Citizens Union Call Reports, or which were entered into after December 31, 2020, but
before the Closing Date, were and will be made in all material respects for good, valuable and adequate consideration in the ordinary
course of the business of Citizens Union, in accordance in all material respects with Citizens Union’s lending policies and practices
unless otherwise approved by Citizens Union’s Board of Directors, and are not subject to any material defenses, set offs or counterclaims,
including without limitation any such as are afforded by usury or truth in lending laws, except as may be provided by bankruptcy, insolvency
or similar laws or by general principles of equity. The notes or other evidences of indebtedness evidencing such loans and all forms of
pledges, mortgages and other collateral documents and security agreements are and will be, in all material respects, enforceable, valid,
true and genuine. Citizens Union has in all material respects complied and will through the Closing Date continue to comply in all material
respects with all laws and regulations relating to such loans, or to the extent there has not been such compliance, such failure to comply
will not materially interfere with the collection of any such loan. Except as disclosed in Section 2.12(a) of the CUB Disclosure Schedule,
Citizens Union has not sold, purchased or entered into any loan participation arrangement except where such participation is on a pro
rata basis according to the respective contributions of the participants to such loan amount. CUB has no knowledge that any condition
of property in which Citizens Union has an interest as collateral to secure a loan or that is held as an asset of any trust violates the
Environmental Laws (as defined in Section 2.15) in any material respect or obligates CUB, or Citizens Union, or the owner or operator
of such property to remedy, stabilize, neutralize or otherwise alter the environmental condition of such property.
(b)
Except as set forth in Section 2.12(b) of the CUB Disclosure Schedule, there is no loan of Citizens Union in excess of One
Hundred Thousand Dollars ($100,000) that has been classified by CUB, applying applicable regulatory examination standards, as “Other
Loans Specially Mentioned,” “Substandard,” “Doubtful” or “Loss,” nor is there any loan of Citizens
Union in excess of One Hundred Thousand Dollars ($100,000) that has been identified by accountants or auditors (internal or external)
as having a significant risk of uncollectability. Citizens Union’s report of classified assets and all loans in excess of One Hundred
Thousand Dollars ($100,000) that the Chief Executive Officer and the Chief Financial Officer of CUB (collectively, “CUB’s
Management”) have determined to be ninety (90) days or more past due with respect to principal or interest or have placed on nonaccrual
status are set forth in the Section 2.12(b) of the CUB Disclosure Schedule.
(c)
The reserves for loan and lease losses and the carrying value for other real estate owned which are shown on each of the
balance sheets contained in the CUB Financial Statements are adequate in the judgment of CUB’s Management and consistent with applicable
bank regulatory standards and under GAAP to provide for losses, net of recoveries relating to loans and leases previously charged off,
on loans and leases outstanding and other real estate owned (including accrued interest receivable) as of the applicable date of such
balance sheet.
(d) Except
as set forth in Section 2.12(d) of the CUB Disclosure Schedule, none of the investments reflected in the CUB Financial Statements
and none of the investments made by CUB, the Subsidiaries or the Trusts since December 31, 2020 is subject to any restrictions,
whether contractual or statutory, which materially impairs the ability of CUB, the Subsidiaries or the Trusts to dispose freely of
such investment at any time. Except as set forth in Section 2.12(d) of the CUB Disclosure Schedule, CUB, the Subsidiaries and the
Trusts are not parties to any repurchase agreements with respect to securities.
Section
2.13.
ERISA.
(a)
Section 2.13 of the CUB Disclosure Schedule lists all “employee benefit plans,” as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and all pension retirement, stock, stock option,
equity compensation, welfare benefit, savings, deferred compensation, incentive compensation, paid time off, severance pay, salary continuation,
disability, fringe benefit and other employee benefit arrangements and plans maintained, established, participated in, sponsored, contributed
to, or required to be contributed to by CUB, Citizens Union or any ERISA Affiliate (as hereinafter defined) or under which any officer
or employee of CUB or Citizens Union or an ERISA Affiliate participates in his or her capacity as such an officer or employee, or with
respect to which CUB, Citizens Union or any ERISA Affiliate may have any liability or obligation (referred to individually as a “Plan”
and collectively as the “Plans,” unless otherwise specifically provided herein). For purposes of this Section 2.13, the term
“ERISA Affiliate” means any person, entity, any trade or business (whether or not incorporated) that is treated as a single
employer with CUB or Citizens Union under Section 414 of the Code. Since December 31, 2018, neither CUB, Citizens Union nor any ERISA
Affiliate has maintained any “employee welfare benefit plan” (within the meaning of Section 3(1) of ERISA) or any “employee
pension benefit plan” (within the meaning of Section 3(2) of ERISA) except for those Plans listed on the Disclosure Schedule. Neither
CUB nor Citizens Union has established, and does not maintain, participate in, sponsor, contribute to, and is not required to contribute
to, any other employee benefit policies or practices, aside from the Plans listed in Section 2.13 of the CUB Disclosure Schedule.
(b) As
applicable, with respect to each of the Plans, CUB has made available to GABC true and complete copies of (i) all Plan documents
(including all amendments and modifications thereof) and in the case of an unwritten Plan, a written description thereof, and in
either case all material related agreements that are currently in force including the trust agreement and amendments thereto,
insurance contracts, administrative services agreements, and investment management agreements; (ii) the last three (3) filed Form
5500 series and all schedules and financial statements attached thereto, if any, required under ERISA or the Code in connection with
each such Plan; (iii) the current summary plan descriptions and all material modifications thereto, if any, required under ERISA in
connection with each such Plan; (iv) the three (3) most recent actuarial reports, financial statements and trustee reports; (v)
copies of all private letter rulings, requests and determination letters issued with respect to the Plans and filings, summaries of
self-corrections or other corrections made under the Employee Plans Compliance Resolution System as set forth in Revenue Procedure
2019-19, and any predecessor or successor thereto (“EPCRS”), or the Voluntary Fiduciary Correction or the Delinquent
Filer Voluntary Compliance programs with respect to the Plans within the past three (3) years; (vi) all material communications to
any employee or employees of CUB or Citizens Union relating to any such Plan and any proposed Plan, in each case, relating to any
amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any liability to CUB or Citizens Union, (vii) all correspondence to or from any governmental agency
relating to any such Plan, (viii) all model COBRA (as hereinafter defined) forms and related notices, (ix) all policies pertaining
to fiduciary liability insurance covering the fiduciaries for each such Plan, (x) all non-discrimination or other testing results
required under the Code with respect to each such Plan for the three (3) most recent plan years, (xi) if applicable, all
registration statements, annual reports (Form 11-K and all attachments thereto) and prospectuses prepared in connection with each
such Plan, (xii) the form of all privacy notices and all business associate agreements to the extent required under the Health
Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”); and (xiii) if applicable, the most recent
Internal Revenue Service determination or opinion letter issued with respect to each such Plan.
(c)
CUB and Citizens Union have performed all material obligations required to be performed by them under, are not in material
default or material violation of, and neither CUB nor Citizens Union has knowledge of any default or violation by any other party to,
any Plan. All Plans listed on the CUB Disclosure Schedule comply in form and in operation in all material respects with all applicable
requirements of law and regulation, including but not limited to the Code and ERISA. Except as listed on Section 2.13 of the CUB Disclosure
Schedule, each “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA (“Pension Plan”),
maintained or contributed to by CUB and Citizens Union and which is intended to meet the qualification requirements of Section 401(a)
of the Code has met such requirements at all times and has been and continues to be tax exempt under Section 501(a) of the Code, has been
timely amended to comply with the latest changes in the law, was timely submitted to the Internal Revenue Service (IRS) for a determination
letter that takes amendments for changes in law into account within the last available remedial amendment period specified by Section
401(b) of the Code (or is entitled to rely on an opinion letter from the IRS), has received a determination letter from the IRS advising
that such Plan is so qualified (or is entitled to rely on an opinion letter from the IRS), and nothing has occurred that could adversely
affect the qualification of such Plan and no such determination letter (or an opinion letter from the IRS) received with respect to any
Plan has been revoked, nor, to the knowledge of CUB, is it reasonably expected that any such letter would be revoked. Except as disclosed
in Section 2.13 of the CUB Disclosure Schedule, neither CUB nor Citizens Union has (i) become subject to any disallowance of deductions
under Sections 419 or 419A of the Code; (ii) incurred any liability for excise tax under Sections 4972, 4975, or 4976 of the Code or any
liability or penalty under ERISA; (iii) has engaged in any prohibited transaction; or (iv) breached any of the duties or failed to perform
any of the obligations imposed upon the fiduciaries or plan administrators under Title I or ERISA.
(d) Except
as disclosed in Section 2.13 of the CUB Disclosure Schedule, each Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without additional liability to CUB or Citizens Union (other than ordinary benefit
claims and administration expenses). Neither CUB nor Citizens Union would have any liability or contingent liability if any Plan
(including without limitation the payment by CUB or Citizens Union of premiums for health care coverage for active employees or
retirees, or the spouses or other family members of such active employees or retirees) were terminated or if CUB or Citizens Union
were to cease its participation therein. Except as disclosed in the CUB Disclosure Schedule, neither CUB nor Citizens Union nor any
of their affiliates or persons acting on their behalf have made any written or oral promises or statements to employees or retirees
or the spouses or other family members of such employees or retirees who are now living which might reasonably have been construed
by them as promising “lifetime” or other vested rights to benefits under any Plan that cannot be unilaterally terminated
or modified by CUB or Citizens Union at their discretion at any time without further obligation.
(e)
Except as disclosed in Section 2.13 of the CUB Disclosure Schedule, in the case of each Plan which is a defined benefit
plan (within the meaning of Section 3(35) of ERISA), the net fair market value of the assets held to fund such Plan equals or exceeds
the present value of all accrued benefits thereunder, both vested and nonvested, on a termination basis, as determined in accordance with
an actuarial costs method acceptable under Section 3(31) of ERISA.
(f)
On a timely basis, CUB and Citizens Union have made all contributions or payments to or under each Plan as required pursuant
to each such Plan, any collective bargaining agreements or other provision for reserves to meet contributions and payments under such
Plans, which have not been made because they are not yet due.
(g)
Except as provided in the CUB Disclosure Schedule, no Plan has ever acquired or held any “employer security”
or “employer real property” (each as defined in Section 407(d) of ERISA).
(h)
Neither CUB nor Citizens Union has ever contributed to or is obligated to contribute under any “multiemployer plan”
(as defined in Section 3(37) of ERISA). Except as disclosed in Section 2.13 of the CUB Disclosure Schedule, neither CUB nor Citizens Union
has ever maintained, established, sponsored, participated in, or contributed to, any pension plan subject to Part 3 of Subtitle B of Title
I of ERISA, Title IV of ERISA or Section 412 of the Code. Except as set forth in Section 2.13 of the CUB Disclosure Schedule, none of
the Plans is a multiple employer plan (as defined in Section 413(c) of the Code) and neither CUB nor Citizens Union has participated in
or been obligated to contribute to a multiple employer plan (as defined in Section 413(c) of the Code). None of the Plans is a “multiple
employer welfare arrangement” within the meaning of Section 3(40) of ERISA.
(i) CUB
and Citizens Union have complied in all material respects with all requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended (“COBRA”), HIPAA, the Family and Medical Leave Act of 1993, as amended, the Women’s Health and
Cancer Rights Act of 1998, the Newborns’ and Mothers’ Health Protection Act of 1996 and any similar provisions of state law
applicable to their employees, to the extent so required. To the extent required under HIPAA and the regulations issued thereunder, CUB
and Citizens Union have, prior to the Effective Time, performed all material obligations under the medical privacy rules of HIPAA (45
C.F.R. Parts 160 and 164), the electronic data interchange requirements of HIPAA (45 C.F.R. Parts 160 and 162), and the security requirements
of HIPAA (45 C.F.R. Part 142). Neither CUB nor Citizens Union has unsatisfied material obligations to any employees or qualified beneficiaries
pursuant to COBRA, HIPAA or any state law governing health care coverage or extension. Except as listed in the CUB Disclosure Schedule,
neither CUB nor Citizens Union provides or is obligated to provide health or welfare benefits to any current or future retired or former
employee, or the spouse or other family member of such retired or former employee, other than any benefits required to be provided under
COBRA. Each Plan is in material compliance with the Patient Protection and Affordable Care Act and its companion bill, the Health Care
and Education Reconciliation Act of 2010, to the extent applicable.
(j)
There are no pending audits or investigations by any governmental agency involving the Plans, and to CUB’s knowledge
no threatened or pending claims (except for individual claims for benefits payable in the normal operation of the Plans), suits or proceedings
involving any Plan, any fiduciary thereof or service provider thereto, nor to CUB’s knowledge is there any reasonable basis for
any such claim, suit or proceeding.
(k)
Since January 1, 2019, there has been no amendment to, announcement by CUB or Citizens Union relating to, or change in employee
participation or coverage under, any Plan which would increase materially the expense of maintaining such Plan above the level of the
expense incurred therefor for the most recent fiscal year, except for increases directly resulting from an increase in the number of persons
employed by CUB or Citizens Union or promotions of existing employees in the ordinary course of business consistent with past practice.
(l)
Except as disclosed in the CUB Disclosure Schedule, the Mergers will not result in the payment, vesting or acceleration
of any benefit under any Plan sponsored or contributed to by CUB or Citizens Union. Except as disclosed in Section 2.13 of the CUB Disclosure
Schedule, no Plan provides for “parachute payments” within the meaning of Section 280G of the Code.
(m)
All Options have been granted, maintained and administered in such manner that they are exempt from the application of Section
409A of the Code. Neither CUB nor Citizens Union has any liability or obligation to provide any gross-up of the tax imposed by Section
409A(a)(1)(B) of the Code.
(n)
With respect to the 401(k) and ESOP, except as set forth on Section 2.13(n) of the CUB Disclosure Schedule: (i) the 401(k)
and ESOP constitutes a qualified plan within the meaning of Section 401(a) of the Code and the trust is exempt from federal income tax
under Section 501(a) of the Code; (ii) the 401(k) and ESOP has been maintained and operated in compliance in all material respects with
all applicable provisions of Sections 409 and 4975 of the Code and the regulations and rulings thereunder; (iii) all contributions required
by such plan have been made or will be made on a timely basis; and (iv) no termination, partial termination or discontinuance of contributions
has occurred without a determination by the IRS that such action does not affect the tax qualified status of such 401(k) and ESOP.
Section
2.14.
Title to Properties; Insurance. Each of CUB, the Subsidiaries and the Trusts own good, marketable and indefeasible
fee simple title to all real properties reflected on the CUB Financial Statements as being owned by such entities and used by CUB, the
Subsidiaries or the Trusts in their respective businesses (collectively, the “Fee Real Estate”), free and clear of all liens,
charges and encumbrances (except taxes which are a lien but not yet payable and liens, charges or encumbrances reflected in the CUB Financial
Statements and easements, rights-of-way, and other restrictions of record which would not materially interfere, prevent or frustrate
the current use of the Fee Real Estate). A list and description of the locations of all Fee Real Estate are set forth in Section 2.14(i)
of the CUB Disclosure Schedule. Except as otherwise disclosed to GABC, the Fee Real Estate is not subject to any lease, option to purchase,
right of first refusal, purchase agreement or grant to any Person of any right relating to the purchase, use, occupancy or enjoyment
of such property or any portion thereof. To the knowledge of CUB, no portion of the Fee Real Estate is operated as a nonconforming use
under applicable zoning codes. To the knowledge of CUB, no portion of the Fee Real Estate is 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 Entity. All material leasehold interests used by CUB and
Citizens Union in their respective operations (collectively, the “Leased Real Estate” and, together with the Fee Real Estate,
the “Real Estate”) are held pursuant to lease agreements (collectively, the “Leases”) which are valid and enforceable
in accordance with their terms. True, complete and correct copies of the Leases have been provided to GABC, and a list of the Leases
are set forth in Section 2.14(ii) of the CUB Disclosure Schedule. There is no breach or default in any material respect by any party
under any Lease that is currently outstanding, and no party to any Lease has given notice (whether written or oral) of, or made a claim
with respect to, any breach or default thereunder. None of the Leased Real Estate is subject to any sublease or grant to any Person of
any right to the use, occupancy or enjoyment of the property or any portion thereof. Except as set forth in Section 2.14(iii) of the
CUB Disclosure Schedule, no consent under any Lease is required in connection with the transactions contemplated by this Agreement. To
the knowledge of CUB, the Real Estate 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 the knowledge of CUB, threatened with respect to the Real Estate. All licenses and permits necessary for the occupancy
and use of the Real Estate for the current use of the Real Estate have been obtained and are in full force and effect. All buildings,
structures and improvements located on, fixtures contained in, and appurtenances attached to the Real Estate 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.
CUB, the Subsidiaries and the Trusts have valid title or other ownership or use rights under licenses to all material intangible personal
or intellectual property used by CUB, the Subsidiaries or the Trusts in their respective businesses free and clear of any claim, defense
or right of any other person or entity that is material to CUB’s, Citizens Union’s or the Trust’s ownership or use
rights to such property, subject only to rights of the licensor pursuant to applicable license agreements, which rights do not materially
adversely interfere with the use or enjoyment of such property. All insurable properties owned or held by CUB, the Subsidiaries or the
Trusts are insured in such amounts, and against fire and other risks insured against by extended coverage and public liability insurance,
as is customary with companies of the same size and in the same business.
Section
2.15. Environmental
Matters.
(a)
As used in this Agreement, “Environmental Laws” means all local, state and federal environmental laws and regulations
in all jurisdictions in which CUB, the Subsidiaries or the Trusts has done business or owned property, including, without limitation,
the Federal Resource Conservation and Recovery Act, the Federal Comprehensive Environmental Response, Compensation and Liability Act,
the Federal Clean Water Act, the Federal Clean Air Act and the Federal Toxic Substances Control Act.
(b) Except
as provided in Section 2.15(b) of the CUB Disclosure Schedule, to the knowledge of CUB and Citizens Union, neither (i) the conduct
by CUB, the Subsidiaries or the Trusts of operations at any property, whether currently or previously owned or leased, nor (ii) any
condition of any property currently or previously owned or leased by CUB, the Subsidiaries or the Trusts nor, (iii) the condition of
any property currently or previously held by CUB, the Subsidiaries or the Trusts, violates or violated Environmental Laws in any
material respect, and no condition or event has occurred with respect to any such property that, with notice or the passage of time,
or both, would constitute a material violation of Environmental Laws or obligate (or potentially obligate) CUB, the Subsidiaries or
the Trusts to remedy, stabilize, neutralize or otherwise alter the environmental condition of any such property. Except as provided
in Section 2.15(b) of the CUB Disclosure Schedule, CUB, the Subsidiaries and the Trusts have not received any written notice from
any person or entity that CUB, the Subsidiaries or the Trusts, or the operation of any facilities or any property currently or
previously owned or leased by any of them, or currently or previously held as a trust asset, are or were in violation of any
Environmental Laws or that any of them is responsible (or potentially responsible) for the cleanup of any pollutants, contaminants,
or hazardous or toxic wastes, substances or materials at, on or beneath any such property.
Section
2.16.
Compliance with Law. CUB, the Subsidiaries and the Trusts have not engaged in any activity nor taken or omitted to
take any action which has resulted or, to the knowledge of CUB’s Management, could reasonably be expected to result, in the violation
of any local, state, federal or foreign law, statute, rule, regulation or ordinance or of any order, injunction, judgment or decree of
any court or government agency or body, the violation of which could reasonably be expected to have a Material Adverse Effect on CUB.
CUB, the Subsidiaries and the Trusts each have all material licenses, franchises, permits and other governmental authorizations that
are legally required to enable them to conduct their respective businesses as presently conducted and are in compliance in all material
respects with all applicable laws and regulations. The offer and sale by CUB of shares of CUB Common that are issued and outstanding,
and the continuing offer of CUB Common pursuant to the Options that are presently outstanding and the sales of CUB Common pursuant to
such Options that have occurred and which may occur prior to the Closing Date, have been and will be either registered or qualified under
the Securities Act of 1933, as amended (the “1933 Act”), and the securities laws of all states or other jurisdictions that
may be applicable, or have been or will be exempt from such registration and qualification requirements. CUB, the Subsidiaries and the
Trusts are not subject to any agreement, commitment or understanding with, or order and directive of, any regulatory agency or government
authority with respect to the business or operations of CUB, the Subsidiaries or the Trusts. Citizens Union has not received any notice
of enforcement actions or criticisms since January 1, 2018 from any regulatory agency or government authority relating to its compliance
with the Bank Secrecy Act, the Truth-in-Lending Act, the Community Reinvestment Act, the Gramm-Leach-Bliley Act of 1999, the USA Patriot
Act, the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, the Sarbanes-Oxley Act of 2002, the Dodd-Frank
Wall Street Reform and Consumer Protection Act or any laws with respect to the protection of the environment or the rules and regulations
promulgated thereunder. CUB has not received any notice of enforcement actions or criticisms since January 1, 2018, from any regulatory
agency or government authority relating to its compliance with any securities laws applicable to CUB. Citizens Union received a rating
of “satisfactory” or better in its most recent examination or interim review with respect to the Community Reinvestment Act.
To the knowledge of CUB and Citizens Union, there is no fact or circumstance or set of facts or circumstances that would cause Citizens
Union to fail to comply with such provisions or cause the CRA rating of Citizens Union to fall below satisfactory.
Section
2.17.
Brokerage. Except for CUB’s and Citizens Union’s arrangement with ProBank Austin, there are no claims,
agreements, arrangements, or understandings (written or otherwise) for brokerage commissions, finders’ fees or similar compensation
in connection with the Holding Company Merger and the Bank Merger payable by CUB or Citizens Union.
Section
2.18. Material Contracts. Except as set
forth in Section 2.18 of the CUB Disclosure Schedule, each of CUB, the Subsidiaries or the Trusts is not a party to or bound by any oral
or written (i) material agreement, contract or indenture under which it has borrowed or will borrow money (not including federal funds
and money deposited, including without limitation, checking and savings accounts and certificates of deposit and borrowings from the
Federal Home Loan Bank Board (FHLBB) and the FRB); (ii) material guaranty of any obligation for the borrowing of money or otherwise,
excluding endorsements made for collection and guarantees made in the ordinary course of business and letters of credit issued in the
ordinary course of business; (iii) material contract, arrangement or understanding with any present or former officer, director or shareholder
(except for deposit or loan agreements entered into in the ordinary course of business); (iv) material license, whether as licensor or
licensee; (v) contract or commitment for the purchase of materials, supplies or other real or personal property in an amount in excess
of One Hundred Thousand Dollars ($100,000) annually, or for the performance of services over a period of more than thirty (30) days and
involving an amount in excess of One Hundred Thousand Dollars ($100,000) annually; (vi) joint venture or partnership agreement or arrangement;
(vii) contract, arrangement or understanding with any present or former agent, consultant, representative, broker, adviser, finder, or
business intermediary that, by its terms, is not terminable by CUB, the Subsidiaries or the Trusts, respectively, for any reason or for
no reason, (A) in the case of such a person who has (or at the time of the entry into such a binding commitment had) no material relationship
with any past or present officer, employee, shareholder, or director of CUB, the Subsidiaries or the Trusts, without the payment of any
amount greater than Twenty-Five Thousand Dollars ($25,000) (in any one instance) or Fifty Thousand Dollars ($50,000) (in the aggregate),
or (B) in the case of such a person who has or had such a material relationship, without the payment by reason of such termination of
any amount; or (viii) material contract, agreement or other commitment not made in the ordinary course of business.
Section
2.19.
Compliance with Americans with Disabilities Act. (a) To the best of CUB’s knowledge, CUB, the Subsidiaries and
the Trusts and their respective properties (including those held by any of them in a fiduciary capacity) are in compliance with all applicable
provisions of the Americans with Disabilities Act (the “ADA”), and (b) except as set forth in Section 2.19 of the CUB Disclosure
Schedule, no action under the ADA against CUB, the Subsidiaries or the Trusts, or any of their properties, has been initiated nor, to
the best of CUB’s knowledge, has been threatened or contemplated.
Section
2.20.
Absence of Undisclosed Liabilities. Except as set forth in Section 2.20 of the CUB Disclosure Schedule, CUB, the Subsidiaries
and the Trusts do not have any liabilities, whether accrued, absolute, contingent, or otherwise, existing or arising out of any transaction
or state of facts existing on or prior to the date hereof, except (a) as and to the extent disclosed, reflected or reserved against in
the CUB Financial Statements, (b) any agreement, contract, obligation, commitment, arrangement, liability, lease or license which individually
is less than Fifty Thousand Dollars ($50,000) per year and which may be terminated within one year from the date of this Agreement, (c)
liabilities incurred since December 31, 2020 in the ordinary course of business consistent with past practice that either alone or when
considered with all similar liabilities, have not had or would not reasonably be expected have a Material Adverse Effect on CUB, (d)
liabilities incurred for reasonable legal, accounting, financial advising fees and out-of-pocket expenses or fees in connection with
the transactions contemplated by this Agreement, and (e) unfunded loan commitments made in the ordinary course of the Citizens Union’s
business consistent with past practices.
Section
2.21.
Deposit Insurance. The deposits of Citizens Union are insured by the FDIC in accordance with the Federal Deposit Insurance
Act, and Citizens Union has paid all premiums and assessments with respect to such deposit insurance.
Section
2.22.
Absence of Defaults. CUB, the Subsidiaries and the Trusts are not in violation of its respective organizational documents
or to the knowledge of CUB in default under any material agreement, commitment, arrangement, loan, lease, insurance policy or other instrument,
whether entered into in the ordinary course of business or otherwise and whether written or oral, and there has not occurred any event
known to CUB’s Management that, with the lapse of time or giving of notice or both, would constitute such a default, except for
defaults which would not have a Material Adverse Effect.
Section
2.23.
Tax and Regulatory Matters. Each of CUB, the Subsidiaries and the Trusts has not taken or agreed to take any action
or has any knowledge of any fact or circumstance that would (a) prevent the transactions contemplated hereby from qualifying as a reorganization
within the meaning of Section 368 of the Code or (b) materially impede or delay receipt of any regulatory approval required for consummation
of the transactions contemplated by this Agreement.
Section
2.24.
Securities Law Compliance. Shares of CUB Common are not listed or traded on any established securities exchange or
quotation system. CUB has complied in all material respects with all applicable state, federal or foreign securities laws, statutes,
rules, regulations or orders, injunctions or decrees of any applicable government agency relating to the issuance and sale of CUB Common
and the securities of the Trusts.
Section
2.25.
Shareholder Rights Plan. Other than any provisions in its Articles of Incorporation and Bylaws which may be deemed
to have an anti-takeover effect, CUB does not have a shareholder rights plan or any other plan, program or agreement involving, restricting,
prohibiting or discouraging a change in control or merger of CUB or Citizens Union or which may be considered an anti-takeover mechanism.
Section
2.26.
Indemnification Agreements. Except as set forth in Section 2.26 of the CUB Disclosure Schedule, CUB, the Subsidiaries
or the Trusts is not a party to any indemnification, indemnity or reimbursement agreement, contract, commitment or understanding to indemnify
any present or former director, officer, employee, shareholder or agent against any liability or hold the same harmless from liability
other than as expressly provided in the organizational documents of CUB, the Subsidiaries or the Trusts.
Section
2.27.
Statements True and Correct. To the best of the knowledge of CUB, none of the information supplied or to be supplied
by CUB or Citizens Union for inclusion in any documents to be filed with the FRB, the KDFI, the Indiana Department of Financial Institutions
(“IDFI”), the FDIC, the SEC or any other regulatory authority in connection with the Mergers will, at the respective times
such documents are filed, be false or misleading with respect to any material fact or omit to state any material fact necessary in order
to make the statements therein not misleading.
Section
2.28.
CUB’s Knowledge. With respect to representations and warranties herein that are made or qualified as being made
“to the knowledge of CUB” or words of similar import, it is understood and agreed that matters within the knowledge of any
of the directors or executive officers of CUB, the Subsidiaries or the Trusts shall be considered to be within the knowledge of CUB.
Section
2.29.
Nonsurvival of Representations and Warranties. The representations and warranties contained in this Article II shall
expire on the Closing Date or the earlier termination of this Agreement, and, thereafter, CUB, the Subsidiaries and the Trusts and all
directors and officers of CUB, the Subsidiaries and the Trusts shall have no further liability with respect thereto.
Article
III
REPRESENTATIONS AND WARRANTIES OF
GABC AND GERMAN AMERICAN
GABC and German American hereby
jointly and severally make the following representations and warranties to CUB and Citizens Union:
Section
3.01.
Organization and Capital Stock.
(a)
GABC is a corporation duly incorporated and validly existing under the IBCL and has the corporate power to own all of its
property and assets, to incur all of its liabilities and to carry on its business as now being conducted.
(b)
German American is a corporation duly incorporated and validly existing under the IFIA and has the corporate power to own
all of its property and assets, to incur all of its liabilities and to carry on its business as now being conducted. All of the capital
stock of German American is owned by GABC.
(c)
GABC has authorized capital stock of (i) 45,000,000 shares of GABC Common, no par value, of which, as of August 2, 2021,
26,545,704 shares were issued and outstanding, and (ii) 750,000 shares of preferred stock, no par value per share, of which no shares
are issued and outstanding, and there has been no material change in such capitalization or issued or outstanding shares since May 5,
2021. All of the issued and outstanding shares of GABC Common are duly and validly issued and outstanding, fully paid and non-assessable.
(d)
The shares of GABC Common that are to be issued to the holders of CUB Common pursuant to the Holding Company Merger have
been duly authorized and, when issued in accordance with the terms of this Agreement, will be validly issued and outstanding, fully paid
and non-assessable.
Section
3.02.
Authorization. The Boards of Directors of GABC and German American and the sole shareholder of German American have,
by all appropriate action, approved this Agreement and the Mergers and authorized the execution hereof on GABC’s and German American’s
behalf, as applicable, by their respective duly authorized officers and the performance by each such entity of its obligations hereunder.
Nothing in the Articles of Incorporation or Bylaws of GABC or German American, as amended, or any other agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to in or contemplated by this Agreement) by or to which either of them
or any of their subsidiaries is bound or subject would prohibit GABC or German American from entering into and consummating this Agreement
and the Mergers on the terms and conditions herein contained. This Agreement has been duly and validly executed and delivered by GABC
and German American and constitutes a legal, valid and binding obligation enforceable against them in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, and similar laws of general applicability relating
to or affecting creditors’ rights or by general equitable principles. No other corporate acts or proceedings are required by law
to be taken by GABC or German American to authorize the execution, delivery and performance of this Agreement. Except for any requisite
approvals of the FRB, FDIC, the KDFI and the IDFI, and the SEC’s order declaring effective GABC’s registration statement
under the 1933 Act with respect to the Holding Company Merger, no notice to, filing with, authorization by, or consent or approval of,
any federal or state regulatory authority is necessary for the execution and delivery of this Agreement or the consummation of the Mergers
by GABC or German American. Neither GABC nor German American is, nor will be by reason of the consummation of the transactions contemplated
herein, in material default under or in material violation of any provision of, nor will the consummation of the transactions contemplated
herein afford any party a right to accelerate any indebtedness under, its articles of incorporation or bylaws, any material promissory
note, indenture or other evidence of indebtedness or security therefor, or any material lease, contract, or other commitment or agreement
to which it is a party or by which it or its property is bound.
Section
3.03. Subsidiaries.
Each of GABC’s subsidiaries is duly organized and validly existing under the laws of the jurisdiction of its incorporation
and has the corporate power to own its respective properties and assets, to incur its respective liabilities and to carry on its respective
business as now being conducted.
Section
3.04.
Financial Information.
(a)
The consolidated balance sheet of GABC and its subsidiaries as of December 31, 2020 and 2019 and related consolidated statements
of income, changes in shareholders’ equity and cash flows for the three years ended December 31, 2020, together with the notes thereto,
included in GABC’s Annual Report on Form 10-K for the annual period then ended (the “10-K”) and the consolidated balance
sheets of GABC as of June 30, 2021, and related consolidated statements of income and cash flows included in GABC’s Quarterly Report
on Form 10-Q for the quarterly period then ended (the “10-Q”) (together, the financial statements included in the 10-K and
the 10-Q are referred to herein as the “GABC Financial Statements”) have been prepared in accordance with GAAP (except as
disclosed therein) and fairly present the consolidated financial position and the consolidated results of operations, changes in shareholders’
equity and cash flows of GABC and its consolidated subsidiaries as of the dates and for the periods indicated.
(b)
Neither GABC nor German American has any material liability, fixed or contingent, except to the extent set forth in the
GABC Financial Statements or incurred in the ordinary course of business since December 31, 2020.
Section
3.05. Absence of
Changes. Except for events and conditions relating to the business and interest rate environment in general or as set forth in
the GABC Disclosure Schedules, since December 31, 2020, no events have occurred which could reasonably be expected to have a Material
Adverse Effect.
Section
3.06.
Reports.
(a) Since January 1, 2017, GABC and each of its subsidiaries have filed all reports, notices and other statements, together
with any amendments required to be made with respect thereto, that it was required to file with (i) the SEC, (ii) the FRB, (iii) the FDIC,
(iv) the IDFI, (v) any applicable state securities or banking authorities, and (vi) any other governmental authority with jurisdiction
over GABC or any of its subsidiaries. As of their respective dates, each of such reports and documents, as amended, including the financial
statements, exhibits and schedules thereto, complied in all material respects with the relevant statutes, rules and regulations enforced
or promulgated by the regulatory authority with which they were filed.
(b)
GABC has filed all reports and other documents required to be filed under the 1933 Act and the Securities and Exchange Act
of 1934 (the “1934 Act”) required to be filed by it (collectively, the “SEC Reports”). All such SEC Reports were
true, accurate and complete in all material respects as of the dates of the SEC Reports, and no such filings contained any untrue statement
of a material fact or omitted to state a material fact necessary in order to make the statements, at the time and in the light of the
circumstances under which they were made, not false or misleading. GABC has made available to CUB copies of all comment letters received
by GABC from the SEC since January 1, 2017 relating to the SEC Reports, together with all written responses of GABC thereto. As of the
date of this Agreement, there are no outstanding or unresolved comments in such comment letters received by GABC, and to the knowledge
of GABC, none of the SEC Reports is the subject of any ongoing review by the SEC.
Section
3.07.
Absence of Litigation. There is no material litigation, claim or other proceeding pending or, to the knowledge of GABC,
threatened, before any judicial, administrative or regulatory agency or tribunal against GABC or any of its subsidiaries, or to which
the property of GABC or any of its subsidiaries is subject, which is required to be disclosed in SEC reports under Item 103 of Regulation
S-K, and which has not been so disclosed.
Section
3.08.
Absence of Agreements with Banking Authorities. Except as set forth in Section 3.08 of the disclosure schedule that
has been prepared by GABC and delivered by GABC to CUB in connection with the execution and delivery of this Agreement (the “GABC
Disclosure Schedules”), neither GABC nor any of its subsidiaries is subject to any order (other than orders applicable to bank
holding companies or banks generally), or is a party to any agreement or memorandum of understanding with (or any resolution of its board
of directors suggested by) any federal or state agency charged with the supervision or regulation of banks or bank holding companies,
including, without limitation the FDIC, the IDFI, and the FRB, in each case that has been issued, executed or delivered on or after January
1, 2018.
Section
3.09.
Environmental Matters. Except as set forth on Section 3.09 of the GABC Disclosure Schedules, to the knowledge of GABC
and German American, neither (i) the conduct by GABC or German American or their subsidiaries of operations at any property, whether
currently or previously owned or leased, nor (ii) any condition of any property currently or previously owned or leased by GABC or German
American or their subsidiaries, nor (iii) the condition of any property currently or previously held by GABC or German American or their
subsidiaries as a trust asset, violates or violated Environmental Laws in any respect, and no condition or event has occurred with respect
to any such property that, with notice or the passage of time, or both, would constitute a material violation of Environmental Laws or
obligate (or potentially obligate) GABC or German American or their subsidiaries to remedy, stabilize, neutralize or otherwise alter
the environmental condition of any such property. GABC and German American have not received any notice from any person or entity that
GABC or German American or their subsidiaries or the operation of any facilities or any property currently or previously owned or leased
by any of them, or currently or previously held as a trust asset, are or were in violation of any Environmental Laws or that any of them
is responsible (or potentially responsible) for the cleanup of any pollutants, contaminants, or hazardous or toxic wastes, substances
or materials at, on or beneath any such property.
Section
3.10.
Compliance with Law. GABC and its subsidiaries have not engaged in any activity nor taken or omitted to take any action
which has resulted or, to the knowledge of GABC and German American, could reasonably be expected to result, in the violation of any
local, state, federal or foreign law, statute, rule, regulation or ordinance or of any order, injunction, judgment or decree of any court
or government agency or body, the violation of which could reasonably be expected to have a Material Adverse Effect on GABC. GABC and
its subsidiaries each have all material licenses, franchises, permits and other governmental authorizations that are legally required
to enable them to conduct their respective businesses as presently conducted and are in compliance in all material respects with all
applicable laws and regulations. GABC and its subsidiaries are not subject to any agreement, commitment or understanding with, or order
and directive of, any regulatory agency or government authority with respect to the business or operations of GABC and its subsidiaries.
Except as set forth on Section 3.10 of the GABC Disclosure Schedules, German American has not received any notice of enforcement actions
or criticisms since January 1, 2018 from any regulatory agency or government authority relating to its compliance with the Bank Secrecy
Act, the Truth-in-Lending Act, the Community Reinvestment Act, the Gramm-Leach-Bliley Act of 1999, the USA Patriot Act, the International
Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform
and Consumer Protection Act or any laws with respect to the protection of the environment or the rules and regulations promulgated thereunder.
GABC has not received any notice of enforcement actions or criticisms since January 1, 2018, from any regulatory agency or government
authority relating to its compliance with any securities laws applicable to GABC. German American received a rating of “satisfactory”
or better in its most recent examination or interim review with respect to the Community Reinvestment Act. To the knowledge of GABC and
German American, there is no fact or circumstance or set of facts or circumstances that would cause German American to fail to comply
with such provisions or cause the CRA rating of German American to fall below satisfactory.
Section
3.11.
Brokerage. Other than GABC’s engagement of Sandler O’Neill & Partners, L.P., there are no claims, agreements,
arrangements, or understandings (written or otherwise) for brokerage commissions, finders’ fees or similar compensation in connection
with the Holding Company Merger or the Bank Merger payable by GABC and its subsidiaries or German American.
Section
3.12. Sufficient Financial
Resources. GABC
will have at the Closing sufficient financial resources to pay the aggregate cash portion of the Merger Consideration and to pay any
other amounts payable by it pursuant to this Agreement. As of the date hereof, each of GABC and German American is “well-capitalized”
under applicable regulatory definitions.
Section
3.13.
Tax and Regulatory Matters. Each of GABC and German American has not taken or agreed
to take any action or has any knowledge of any fact or circumstance that would (a) prevent the transactions contemplated hereby from
qualifying as a reorganization within the meaning of Section 368 of the Code or (b) prevent GABC from consummating the transactions contemplated
by this Agreement or materially impede or delay receipt of any regulatory approval required for consummation of the transactions contemplated
by this Agreement.
Section
3.14.
Securities Law Compliance.
Shares of GABC Common are traded on the Nasdaq Global Market under the symbol of “GABC.”
GABC has complied in all material respects with all applicable state, federal or foreign securities laws, statutes, rules, regulations
or orders, injunctions or decrees of any applicable government agency relating thereto.
Section
3.15.
Statements True and Correct. To the best of the knowledge of GABC, none of the information supplied or to be supplied
by GABC and its subsidiaries for inclusion in any documents to be filed with the FRB, the KDFI, the IDFI, the FDIC, the SEC or any other
regulatory authority in connection with the Mergers will, at the respective times such documents are filed, be false or misleading with
respect to any material fact or omit to state any material fact necessary in order to make the statements therein not misleading.
Section
3.16.
GABC’s Knowledge. With respect to representations and warranties herein that are made or qualified as being made
“to the knowledge of GABC” or words of similar import, it is understood and agreed that matters within the knowledge of any
of the directors or executive officers of GABC or German American shall be considered to be within the knowledge of GABC.
Section
3.17.
Nonsurvival of Representations and Warranties. The representations and warranties contained in this Article III shall
expire on the Closing Date or the earlier termination of this Agreement, and thereafter GABC and German American and all directors and
officers of GABC and German American shall have no further liability with respect thereto.
Article
IV
COVENANTS OF CUB AND CITIZENS UNION
Section
4.01.
Conduct of Business.
(a) From
the date hereof until the earlier of the termination of this Agreement or the Effective Time, except as expressly contemplated by
this Agreement or as required under applicable law in CUB’s Management’s reasonable judgment (provided that CUB gives
GABC prompt notice that it has determined that such is required under applicable law), CUB, the Subsidiaries and the Trusts shall
continue to carry on their respective businesses, and shall discharge or incur obligations and liabilities only in the ordinary
course of business as heretofore conducted. By way of amplification and not limitation with respect to the foregoing obligation,
except as otherwise provided in this Agreement or as set forth on Section 4.01 of the CUB Disclosure Schedule, CUB, the Subsidiaries
and the Trusts will not, without the prior written consent of GABC (which will not be unreasonably withheld, conditioned, or delayed
with respect to the following subparagraphs (vi), (vii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xviii), (xix), (xx), and
(xxi)):
(i)
declare or pay any dividend or make any other distribution to shareholders, whether in cash, stock or other property; or
(ii)
issue (or agree to issue) any common, other capital stock or equity (except for the issuance of: (a) up to 51,336 shares
of CUB Common pursuant to the payment and other terms of, and upon exercise by the holders of, the Options held by employees or directors
of CUB and Citizens Union as of the date of this Agreement, and (b) shares of CUB Common issued to fund any required contributions under
the 401(k) and ESOP), or trust preferred securities or any options, warrants or other rights to subscribe for or purchase common or any
other capital stock or any securities convertible into or exchangeable for any such instruments, or accept any purported notice of exercise
of any Unscheduled Purchase Right (but CUB shall promptly notify GABC of any such purported notice); or
(iii)
directly or indirectly redeem, purchase or otherwise acquire (or agree to redeem, purchase or acquire) any of the common
or any other capital stock of CUB, the Subsidiaries or the Trusts; or
(iv)
effect a split, reverse split, reclassification, or other similar change in, or of, any common or other capital stock or
otherwise reorganize or recapitalize; or
(v)
change the organizational documents of CUB, the Subsidiaries or the Trusts; or
(vi)
except as contemplated by this Agreement, pay or agree to pay, conditionally or otherwise, any bonus (other than bonuses
not to exceed $200,000 in the aggregate paid and promised to employees of CUB and its Subsidiaries for the purpose of inducing such employees
to continue providing services to CUB and its Subsidiaries through the Effective Date), additional compensation (other than ordinary and
normal bonuses and salary increases consistent with past practices) or severance benefit or otherwise make any changes out of the ordinary
course of business with respect to the fees or compensation payable or to become payable to consultants, advisors, investment bankers,
brokers, attorneys, accountants, directors, officers or employees of CUB, the Subsidiaries or the Trusts or, except as required by law
or as contemplated by this Agreement, adopt, terminate, or make any change in any Plan or other arrangement or payment made to, for or
with any consultants, advisors, investment bankers, brokers, attorneys, accountants, directors, officers or employees; provided, however,
that CUB and Citizens Union may pay the fees, expenses and other compensation of consultants, advisors, investment bankers, brokers, attorneys
and accountants when, if, and as earned or payable in accordance with the terms of the contracts, arrangements or understandings of CUB,
the Subsidiaries or the Trusts entered into in the ordinary course of business; or
(vii)
borrow or agree to borrow any material amount of funds except in the ordinary course of business, or directly or indirectly
guarantee or agree to guarantee any material obligations of others except in the ordinary course of business or pursuant to outstanding
letters of credit; or
(viii)
make, renew or otherwise modify any loan, loan commitment, letter of credit or other extension of credit (individually,
a “Loan” and collectively, “Loans”) to any one borrower, or group of affiliated or associated borrowers, if the
Loan is an existing credit on the books of Citizens Union or any subsidiary of Citizens Union and classified or graded as “Other
Loans Especially Mentioned,” “Substandard,” “Doubtful” or “Loss” in an amount in excess of Four
Hundred Twenty-Five Thousand Dollars ($425,000) without the prior written consent of GABC, which consent shall be deemed received unless
GABC shall object thereto within three (3) business days after receipt of written notice from Citizens Union. Except with respect to loans
previously approved but not yet funded as of the date of this Agreement, Citizens Union also, in respect of any one borrower or group
of affiliated or associated borrowers, shall not, without the prior written consent of GABC, make, renew, modify, amend, or extend the
maturity of (1) any commercial Loan in excess of Seven Hundred Fifty Thousand Dollars ($750,000), (2) any 1- to-4-family, residential
mortgage Loan with a loan to value ratio in excess of eighty-five percent (85%) (unless private mortgage insurance is obtained) or any
other 1- to-4-family, residential mortgage Loan in excess of Four Hundred Twenty-Five Thousand Dollars ($425,000), (3) any consumer Loan
in excess of Seventy-Five Thousand Dollars ($75,000); (4) any home equity Loan or line of credit in excess of One Hundred Thousand Dollars
($100,000), (5) any credit card account in excess of Ten Thousand Dollars ($10,000); or (6) any Loan participation; provided, that Citizens
Union may take any such action in respect of any such Loan or Loans if the Chief Credit Officer of German American (or his or her designee)
shall be provided with notice of the proposed action in writing at least three (3) business days prior thereto (or one (1) business day
prior thereto in the case of a consumer Loan) and does not object; or
(ix)
other than U.S. Treasury obligations or asset-backed securities issued or guaranteed by United States governmental agencies
or financial institution certificates of deposit insured by the FDIC, in either case having an average remaining life of five (5) years
or less (except that maturities may extend to seven (7) years on variable-rate securities), purchase or otherwise acquire any investment
security for the accounts of CUB, the Subsidiaries or the Trusts or sell any investment security owned by either of them which is designated
as held-to-maturity, or engage in any activity that would require the establishment of a trading account for investment securities; or
(x)
increase or decrease the rate of interest paid on time deposits, or on certificates of deposit, except in a manner consistent
with market conditions and pursuant to policies consistent with past practices; or
(xi)
enter into or amend any material lease, agreement, contract or commitment out of the ordinary course of business or amend
any Lease; or
(xii) except
in the ordinary course of business, place on any of the assets or properties of CUB, the Subsidiaries or the Trusts, any mortgage, pledge,
lien, charge, or other encumbrance; or
(xiii)
except in the ordinary course of business, cancel, release, compromise or accelerate any material indebtedness owing to
CUB, the Subsidiaries or the Trusts, or any claims which either of them may possess, or voluntarily waive any material rights with respect
thereto; or
(xiv) sell
or otherwise dispose of any loan, loan participation, real property or any material amount of any personal property other than properties
acquired in foreclosure or otherwise in the ordinary course of collection of indebtedness to CUB, the Subsidiaries or the Trusts, or
encumber any real property by mortgage, lease, easement, or otherwise; or
(xv) foreclose
upon or otherwise take title to or possession or control of any real property without first obtaining a phase one environmental report
thereon, prepared by a reliable and qualified environmental professional reasonably acceptable to GABC, which does not indicate the presence
of material or reportable quantities of pollutants, contaminants or hazardous or toxic waste materials or any recognized environmental
conditions at the property; provided, however, that each of CUB, the Subsidiaries or the Trusts shall not be required to obtain such
a report with respect to single family, non-agricultural residential property of five (5) acres or less to be foreclosed upon unless
it has reason to believe that such property might contain such materials or otherwise might be contaminated or subject to a recognized
environmental condition; or
(xvi)
commit any act or fail to do any act which will cause a material breach of any material lease, agreement, contract or commitment;
or
(xvii) violate
any law, statute, rule, governmental regulation or order, which violation might have a Material Adverse Effect on its business, financial
condition, or earnings; or
(xviii)
purchase any real or personal property or make any other capital expenditure where the amount paid or committed therefor
is in excess of Fifty Thousand Dollars ($50,000) individually, or One Hundred Fifty Thousand Dollars ($150,000) in the aggregate for all
such purchases, other than purchases of property made in the ordinary course of business in connection with loan collection activities
or foreclosure sales in connection with any of Citizens Union’s loans; or
(xix)
issue certificate(s) for shares of CUB Common to any CUB shareholder in replacement of certificate(s) claimed to have been
lost or destroyed without first obtaining from such shareholder(s), at the expense of such holder(s), a surety bond from a recognized
insurance company in an amount that would indemnify CUB (and its successors) against lost certificate(s) (but in an amount not less than
one hundred fifty percent (150%) of the estimated per share value of the Merger Consideration under this Agreement), and obtaining a usual
and customary affidavit of loss and indemnity agreement from such shareholder(s); or
(xx) make
or change any election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter
into any closing agreement, settle any Tax claim or assessment relating to CUB, the Subsidiaries or the Trusts, surrender right to claim
a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any tax claim or assessment relating to
CUB, the Subsidiaries or the Trusts, or take any other similar action relating to the filing of any Tax Return or the payment of any
Tax, except as required by law; or
(xxi)
merge, combine, or consolidate with or, other than in the ordinary course of business consistent with past practice, sell
the assets or the securities of CUB, the Subsidiaries or the Trusts to any other person, corporation, or entity, effect a share exchange
or enter into any other transaction not in the ordinary course; or
(xxii) fail
to maintain Citizens Union’s reserves for loan losses, or any other reserve account, in the ordinary course of business and in
accordance with sound banking practices; or
(xxiii)
agree in writing to take any of the foregoing actions.
(b)
CUB shall promptly supplement, amend and update, upon the occurrence of any change prior to the Effective Time, and as of
the Effective Time, the CUB Disclosure Schedule with respect to any matters or events hereafter arising which, if in existence or having
occurred as of the date of this Agreement, would have been required to be set forth or described in the CUB Disclosure Schedule or this
Agreement and including, without limitation, any fact which, if existing or known as of the date hereof, would have made any of the representations
or warranties of CUB contained herein materially incorrect, untrue or misleading. No such supplement, amendment or update shall become
part of the CUB Disclosure Schedule unless GABC shall have first consented in writing with respect thereto.
(c)
CUB shall promptly notify GABC in writing of the occurrence of any matter or event known to CUB that is, or is likely to
have, a Material Adverse Effect on the business, operations, properties, assets or condition (financial or otherwise) of CUB, the Subsidiaries
or the Trusts.
(d) On
and after the date of this Agreement and until the Effective Time or until this Agreement is terminated as herein provided, and
except with the prior written approval of GABC, CUB shall neither permit nor authorize its directors, officers, employees, agents or
representatives (or those of the Subsidiaries or the Trusts) to, directly or indirectly, initiate, solicit or knowingly encourage,
or except to the extent required under such circumstances by applicable fiduciary duties of CUB’s Board of Directors as
determined by the members of CUB’s Board of Directors in good faith after advice to that effect given by counsel experienced
in mergers and acquisitions under Kentucky law (in which case GABC’s prior written approval shall not be required), provide
information to, any corporation, association, partnership, person or other entity or group concerning any merger, consolidation,
share exchange, combination, purchase or sale of substantial assets, sale of shares of common stock (or securities convertible or
exchangeable into or otherwise evidencing, or any agreement or instrument evidencing the right to acquire, capital stock) or similar
transaction relating to CUB (each, an “Acquisition Transaction”), the Subsidiaries or the Trusts, to which CUB, the
Subsidiaries or the Trusts or their respective shareholders or members may become a party.
(e)
CUB shall promptly communicate to GABC the terms of any inquiry, proposal, indication of interest, or offer which CUB, the
Subsidiaries or the Trusts may receive with respect to an Acquisition Transaction, including the fact that information has been shared
pursuant to the fiduciary duty exception set forth in subparagraph (d) above, and the identity of the person or entity making such inquiry
or proposal or receiving such information. CUB shall also keep GABC reasonably informed of the status and details (including amendments
or proposed amendments) of any such inquiry, proposal, indication of interest or offer. This subsection (e) shall not authorize CUB, the
Subsidiaries or the Trusts, or any of their directors, officers, employees, agents or representatives, to initiate any discussions or
negotiations with respect to an Acquisition Transaction with a third party or (except as permitted by subsection (d) hereof) to furnish
information to any third party or to cooperate in any way with the making of a proposal, indication of interest, or offer with respect
to an Acquisition Transaction.
(f)
CUB, the Subsidiaries and the Trusts shall maintain, or cause to be maintained, in full force and effect insurance on its
properties and operations and fidelity coverage on its directors, officers and employees in such amounts and with regard to such liabilities
and hazards as customarily are maintained by other companies operating similar businesses.
Section
4.02.
Subsequent Discovery of Events or Conditions. CUB shall, in the event CUB, the Subsidiaries or the Trusts obtains knowledge
of the occurrence of any event or condition which would have been materially inconsistent with any of its representations and warranties
made to GABC and German American under Article II had such event or condition occurred or existed (or, as to events or conditions that
occurred or came into existence in whole or in part prior to the date of this Agreement, been known to CUB, the Subsidiaries or the Trusts)
on or before the date of this Agreement, or which would be materially inconsistent with its past or expected future satisfaction of any
of its agreements or covenants included in Article IV of this Agreement, give prompt notice thereof to GABC.
Section
4.03.
Shareholder and Other Approvals; Cooperation.
(a) CUB
shall submit this Agreement to its shareholders for approval and adoption at a special meeting (or, if timely, its annual meeting)
(the “CUB Shareholder Meeting”) to be called and held in accordance with applicable law and the Articles of
Incorporation and Bylaws of CUB as promptly as practicable (but in no event later than forty-five (45) days following the time when
the Registration Statement becomes effective). Unless precluded by applicable fiduciary duties of CUB’s Board of Directors
under Kentucky law as determined by the members thereof in good faith after advice to that effect given by counsel experienced in
mergers and acquisitions under Kentucky law, the Board of Directors of CUB shall recommend to CUB’s shareholders that such
shareholders approve and adopt this Agreement and the Holding Company Plan of Merger and the Holding Company Merger contemplated
hereby and thereby. The foregoing covenant does not apply to directors in their capacity as trustees of the 401(k) and ESOP. CUB
shall use its best efforts to perform and fulfill all other conditions and obligations on its part to be performed or fulfilled
under this Agreement and to effect the Mergers in accordance with the terms and provisions hereof. CUB shall furnish (or cause the
Subsidiaries or the Trusts, as applicable, to furnish) to GABC in a timely manner all information, data and documents in the
possession of CUB, the Subsidiaries or the Trusts requested by GABC as may be required to obtain any necessary regulatory or other
approvals of the Mergers (all of which shall be true, accurate and complete, to the best of the knowledge of their respective
management) and shall otherwise cooperate fully with GABC to carry out the purpose and intent of this Agreement. CUB, the
Subsidiaries and the Trusts shall not (a) knowingly take any action that would, or is reasonably likely to, prevent or impede the
Mergers from qualifying as a reorganization within the meaning of Section 368 of the Code; or (b) knowingly take any action or
inaction that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (ii) any of the conditions
to the Mergers set forth in this Agreement not being satisfied, (iii) a material violation of any provision of this Agreement or
(iv) a delay in the consummation of the Mergers except, in each case, as may be required by applicable law or regulation.
(b)
Citizens Union shall submit the Bank Merger Agreement to CUB, as its sole shareholder, for approval by unanimous written
consent without a meeting in accordance with applicable law and the Articles of Incorporation and By-laws of Citizens Union at a date
reasonably in advance of the filing of applications for regulatory approval of the Bank Merger. The Board of Directors of Citizens Union
shall recommend approval of the Bank Merger Agreement and the Bank Merger to CUB, as the sole shareholder of Citizens Union, and CUB,
as sole shareholder of Citizens Union, shall approve the Bank Merger Agreement and the Bank Merger.
(c)
Promptly after the date of this Agreement, Citizens Union shall take steps to locate and engage (provided that commercially
reasonable terms for such engagement can be obtained) a qualified independent person or entity to serve as an independent fiduciary with
respect to the shares of CUB Common held in the 401(k) and ESOP. Within a reasonable time prior to the Effective Time, CUB and the independent
fiduciary will (i) agree upon a process, which the independent fiduciary will oversee, for the shares of CUB Common held by the 401(k)
and ESOP to be voted at the special meeting of CUB’s shareholders described in Section 4.03(a) of this Agreement by the independent
fiduciary in accordance with directions provided by each participant or beneficiary in the 401(k) and ESOP with respect to any shares
of CUB Common allocated to the account of such participant or beneficiary, and (ii) arrange for the independent fiduciary to engage an
independent financial advisor to opine that the Merger Consideration to be received by the 401(k) and ESOP is at least equal to “fair
market value” (as defined under ERISA) and the Holding Company Merger is fair to the 401(k) and ESOP participants and beneficiaries
from a financial point of view.
Section
4.04.
SEC Registration Matters.
CUB shall cooperate with GABC in the preparation and filing of the Registration Statement described
by Section 5.01, and CUB and Citizens Union shall use their reasonable best efforts in the taking of any other action required to be
taken under any applicable federal or state securities laws in connection with the Mergers and shall furnish all information concerning
it and its management and directors and the holders of its capital stock as may be reasonably requested in connection with any such action.
Section
4.05.
Environmental Reports. CUB shall cooperate with an environmental professional designated by GABC that is reasonably
acceptable to CUB (the “Designated Environmental Consultant”) to conduct a Phase I Environmental Site Assessment (ESA) and,
if necessary, based on the identification of recognized environmental conditions, controlled recognized environmental conditions and/or
historical recognized environmental conditions (collectively, “RECs”) and/or data gaps in such Phase I ESA, a Phase II environmental
investigation (Phase II) on all real property owned or leased (other than in connection with the operation of ATMs located on leased
real estate) by CUB, the Subsidiaries or the Trusts as of the date of this Agreement, and (except as otherwise provided in Section 4.01.(a)(xv))
any real property acquired or leased (other than in connection with the operation of ATMs located on leased real estate) by CUB, the
Subsidiaries or the Trusts after the date of this Agreement (collectively, the “CUB Property”). German American shall be
responsible for the costs of the Phase I’s and German American and Citizens Union shall each be responsible for fifty percent (50%)
of the costs of any Phase II’s.
The Designated Environmental
Consultant shall prepare a DRAFT Phase I ESA report(s) identifying RECs in connection with any CUB Property, in compliance with ASTM Standard
E 1527-13 (Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process). GABC shall furnish to
CUB the draft Phase I ESA report(s) that it receives with respect to any CUB Property promptly upon GABC’s receipt of such draft
report, but in no event later than five (5) business days after its receipt thereof. CUB shall provide to GABC any comments or concerns
in connection with the draft Phase I ESA report(s) within five (5) business days following its receipt of the draft report from GABC,
and GABC shall provide CUB’s comments to the Designated Environmental Consultant. GABC and the Designated Environmental Consultant
shall consult with CUB as reasonably necessary to resolve any questions or disagreements regarding the content of the draft Phase I ESA
report(s). GABC shall furnish the Final Phase I ESA report(s), which will reflect CUB’s input to the extent independently determined
reasonable to include by the Designated Environmental Consultant, promptly upon GABC’s receipt of such report, but in no event later
than five (5) business days after its receipt thereof.
The Designated Environmental
Consultant shall provide any proposed recommendations in connection with the Final Phase I ESA in a separate letter. Any conclusions in
the Final Phase I ESA shall be consistent with the requirements of ASTM Standard E1527-13 and any recommendations in such letter shall
be consistent with the findings, conclusions, opinions, and data gaps described in the Final Phase I ESA report(s). GABC shall furnish
a copy of the proposed recommendations promptly upon GABC’s receipt, but in no event later than five (5) business days after its
receipt thereof. CUB shall provide any comments or concerns in connection with the proposed recommendations within five (5) business days
after its receipt of such recommendations from GABC, and GABC shall provide CUB’s comments to the Designated Environmental Consultant.
If GABC reasonably determines after collaborating with and considering any comments from CUB that a Phase II environmental investigation
is required as to any CUB Property based on the Final Phase I ESA report(s) and recommendation letter(s) prepared by the Designated Environmental
Consultant, and should GABC order the Designated Environmental Consultant to perform such further investigatory procedures, CUB, the Subsidiaries
and the Trusts shall cooperate with such further investigatory procedures.
Should GABC, on the
basis of the results of any Phase II Report(s) prepared by the Designated Environmental Consultant, reasonably determine that (A)
the aggregate costs of taking all remedial and corrective actions and measures recommended by the Designated Environmental
Consultant based upon the findings of the Phase II Report(s), in the aggregate (including the aggregate costs of the taking of the
further investigative procedures and the obtaining of the Phase II Report(s) of the results thereof), would exceed the sum of One
Million Five Hundred Thousand Dollars ($1,500,000), or (B) that the sum of such costs identified in clause (A) cannot be reasonably
estimated with any degree of certainty but could reasonably exceed the sum of One Million Five Hundred Thousand Dollars ($1,500,000)
in the aggregate, then GABC shall have the right pursuant to Section 7.04 hereof to terminate this Agreement immediately by giving
CUB notice of termination, specifying the basis under this Section 4.05 for doing so, without further obligation. The Effective Time
Book Value (as calculated in accordance with Section 1.03(c)) shall be reduced by the costs of taking reasonable remedial and
corrective actions and measures identified through the assessments and reports discussed above in this Section 4.05 in excess of One
Hundred Thousand Dollars ($100,000). If such costs exceed the sum of One Million Five Hundred Thousand Dollars ($1,500,000) in the
aggregate, then CUB shall have the right pursuant to Section 7.04 hereof to terminate this Agreement by giving GABC notice of
termination, specifying the basis under this Section 4.05 for doing so; provided, however, CUB’s termination right under this
Section 4.05 shall cease to exist if GABC agrees, within three (3) days of receiving CUB’s notice of termination pursuant to
this Section 4.05, that such costs will not reduce the Effective Time Book Value by greater than One Million Four Hundred Thousand
Dollars ($1,400,000).
Section
4.06.
Access to Information.
(a)
CUB, the Subsidiaries and the Trusts shall permit GABC and its consultants reasonable access to their properties to perform
any investigations, tests, and surveys reasonably required by GABC and shall disclose and make available to GABC all books, documents,
papers and records relating to their assets, stock, ownership, properties, operations, obligations and liabilities, including, but not
limited to, all books of account (including general ledgers), tax records, minute books of directors’, managers’ and shareholders’
meetings, organizational documents, material contracts and agreements, loan files, trust files, investments files, filings with any regulatory
authority, accountants’ workpapers, litigation files, plans affecting employees, and any other business activities or prospects
in which GABC may have a direct or an indirect interest in light of the transactions contemplated by this Agreement; provided that such
access or investigation shall not interfere unnecessarily with the operations of CUB, the Subsidiaries and the Trusts. GABC may cause
to be hired, at its expense, a mutually-agreeable third party consultant to perform cybersecurity system testing and reasonable monitoring
(based on a mutually-agreeable project scope) on Citizens Union’s information technology systems in order to confirm that such systems
are free of security breaches as defined in the project scope and, if necessary, provide remediation and notices related thereto. CUB
and GABC will each receive the results of the testing and reasonably coordinate their efforts on any potential remediation and notices.
(b) During
the period from the date of this Agreement to the Effective Time or the date this Agreement is terminated pursuant to Article VII,
CUB will cause one or more of its or Citizens Union’s designated representatives to confer on a regular basis with the Chief
Executive Officer of GABC, or any other person designated in a written notice given to CUB by GABC pursuant to this Agreement, to
report the general status of the ongoing operations of CUB, the Subsidiaries and the Trusts. CUB will promptly notify GABC of any
material change in the normal course of the operation of its business or properties, of any regulatory complaints, investigations or
hearings (or communications indicating that the same may be contemplated), of any data or security breach, or the institution or the
threat of litigation involving CUB, the Subsidiaries or the Trusts and will keep GABC fully informed of such events. Notwithstanding
the foregoing, CUB and Citizens Union shall not be required to provide access to or to disclose information where such access or
disclosure would violate the rights of Citizens Union’s customers, jeopardize the attorney-client privilege of the entity in
possession or control of the information, or contravene any law, rule, regulation, order, judgment, decree or binding agreement
entered into prior to the date of this Agreement. The parties will make appropriate and reasonable substitute disclosure
arrangements under circumstances in which the restrictions of the preceding sentence apply.
Section
4.07.
Title to Real Estate. CUB shall provide copies of all existing title policies with respect to any parcel of Fee Real
Estate to GABC and any other title information reasonably requested by GABC. GABC shall have the right (at GABC’s expense) to obtain
updated title insurance commitments with respect to any parcel of Fee Real Estate from a national title company selected by GABC (the
“Title Company”), showing the condition of title to any parcel of the Fee Real Estate. GABC may also (at GABC’s expense)
obtain surveys of any parcel of the Fee Real Estate prepared in accordance with ALTA Minimum Standard Detail Requirements. If GABC becomes
aware of any material defect, whether disclosed by a title commitment, survey or otherwise, that GABC reasonably deems unacceptable other
than Standard Permitted Exceptions, GABC may notify CUB of such defect prior to the Closing Date. The term “Standard Permitted
Exceptions” shall include (i) liens for real estate taxes and assessments not yet delinquent; and (ii) utility, access and other
easements, rights of way, restrictions and exceptions existing on the Fee Real Estate as shown in the title commitments or surveys, none
of which impair such real property for the use and business being conducted thereon in any material respect. CUB shall have ten (10)
days after receipt of GABC’s notice to cure or remove any such unacceptable defects. If CUB does not cure or remove such defects
within said period, and the defects would require more than One Million Dollars ($1,000,000) to cure or remove, GABC may either (i) terminate
this Agreement pursuant to Section 7.04 hereof immediately by giving CUB notice of termination, specifying the basis under this Section
4.07 for doing so, without further obligation, or (ii) waive such defects and continue the transactions contemplated by this Agreement.
The Effective Time Book Value (as calculated in accordance with Section 1.03(c)) shall be reduced by the costs to cure or remove any
material defects, whether disclosed by a title commitment, survey or otherwise, that GABC reasonably deems unacceptable other than Standard
Permitted Exceptions. If such costs exceed the sum of One Million Dollars ($1,000,000) in the aggregate, then CUB shall have the right
pursuant to Section 7.04 hereof to terminate this Agreement by giving GABC notice of termination, specifying the basis under this Section
4.07 for doing so; provided, however, CUB’s termination right under this Section 4.07 shall cease to exist if GABC agrees, within
three (3) days of receiving CUB’s notice of termination pursuant to this Section 4.07, that such costs will not reduce the Effective
Time Book Value by greater than One Million Dollars ($1,000,000). At the Closing and as a condition thereto, GABC shall receive the following
evidence of title with respect to any parcels of the Fee Real Estate reasonably deemed necessary by GABC (collectively, the “Title
Policies”): (i) owner’s policies of title insurance (or signed marked-up proforma policies or commitments binding coverage)
issued by the Title Company, in amounts reasonably designated by GABC, showing a good and marketable title in the Fee Real Estate, subject
only to Standard Permitted Exceptions and other exceptions reasonably acceptable to GABC, including any endorsements reasonably required
by GABC and dated no earlier than the Closing Date, or (ii) such endorsements to existing title policies held by CUB, the Subsidiaries
or the Trusts reasonably required by GABC, including, without limitation, date-down endorsements and non-imputation endorsements.
Section
4.08.
Confidentiality. CUB
and Citizens Union shall continue to be bound by the NDA (as defined in Section 8.07) pursuant to the terms of the NDA. CUB, the Subsidiaries
and the Trusts shall ensure that their respective officers, employees, and authorized representatives are subject to confidentiality
duties and obligations to GABC and German American with respect to Confidential Information (as defined in the NDA) that are no less
restrictive than the terms and conditions applicable to CUB and Citizens Union under the NDA.
Section
4.09.
Fairness Opinion. Subject to the prior review and consent of ProBank Austin, the CUB Fairness Opinion shall be included
in the Proxy Statement/Prospectus included as part of the Registration Statement described by Section 5.01.
Section
4.10.
Additional Financial Information. CUB shall furnish to GABC prior to the Closing the consolidated balance sheets
of CUB as of the end of the month immediately preceding the month which immediately precedes the month in which the Effective Time occurs
(e.g., if the Effective Time occurs on January 1, 2022, the consolidated balance sheets of CUB shall be as of November 30, 2021)
and related consolidated statements of income and cash flows and changes of shareholders’ equity for the same period (without footnotes),
prepared in accordance with GAAP, that fairly present the consolidated financial position and the consolidated results of operations
of CUB in all material respects as of the dates and for the periods indicated. CUB shall provide GABC with an opportunity to discuss
such financial statements with CUB and Crowe Horwath LLP prior to the Closing.
Section
4.11.
Termination of 401(k) and ESOP. If directed by GABC no later than sixty (60) days before the Closing Date, CUB shall
(a) cause the Board of Directors of CUB to adopt resolutions and an amendment to the 401(k) and ESOP providing (i) that the term “Company
Stock” as used therein shall include shares of GABC Common received by the 401(k) and ESOP as part of the Merger Consideration,
(ii) that distributions of any shares of GABC Common held in a participant’s account under the 401(k) and ESOP may only be in the
form of an “in kind” distribution, and (iii) for the termination of the 401(k) and ESOP on a date that is no later than the
Closing Date, and (b) file an application with the Internal Revenue Service on a date that is no later than the Closing Date that requests
a favorable determination letter on the 401(k) and ESOP relating to its termination.
Article
V
COVENANTS OF GABC AND GERMAN AMERICAN
Section
5.01.
Regulatory Approvals and Registration Statement.
(a)
GABC shall as promptly as practicable (but in no event later than forty-five (45) days after the date of this Agreement)
file or cooperate with CUB and Citizens Union in filing all regulatory applications required in order to consummate the Mergers, including
all necessary applications or notices for the prior approvals of the FRB, the KDFI, the IDFI and the FDIC. GABC shall keep CUB reasonably
informed as to the status of such applications or notices and promptly send or deliver complete copies of such applications or notices,
and of any supplementally filed materials, to counsel for CUB.
(b)
GABC shall prepare, in consultation with CUB, mutually acceptable proxy material that shall constitute the Proxy Statement/Prospectus
relating to the matters to be submitted to the CUB shareholders at the CUB Shareholder Meeting and GABC shall file as promptly as practicable
(but in no event later than forty-five (45) days after the date of this Agreement) with the SEC the registration statement relating to
the shares of GABC Common to be issued to the shareholders of CUB pursuant to this Agreement (the “Registration Statement”),
and shall use its best efforts to cause it to become effective as soon as practicable and thereafter, until the date of the CUB Shareholder
Meeting, or termination of this Agreement, to keep the same effective. At the time the Registration Statement becomes effective, the form
of the Registration Statement shall comply in all material respects with the provisions of the 1933 Act and the published rules and regulations
thereunder, and shall (to the best of the knowledge of GABC) not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not false or misleading. GABC shall use commercially reasonable
efforts to obtain, prior to the effective date of the Registration Statement, all necessary state securities law or “blue sky”
permits and approvals required to carry out the transactions contemplated by this Agreement. GABC shall promptly notify CUB upon the receipt
of any comments from the SEC or its staff or any requirements from the SEC or its staff for amendments or supplements to the Registration
Statement or the Proxy Statement/Prospectus and shall promptly provide CUB with copies of all correspondence between GABC and its representatives,
on the one hand, and the SEC and its staff, on the other hand. Notwithstanding the foregoing, prior to filing the Registration Statement
(or any amendment or supplement thereto) or filing or mailing the Proxy Statement/Prospectus (or any amendment or supplement thereto)
or responding to any comments of the SEC with respect thereto, GABC (i) shall provide CUB with a reasonable opportunity to review and
comment on such document or response, (ii) shall include in such document or response all comments reasonably proposed by CUB, and (iii)
shall not file or mail such document or respond to the SEC prior to receiving CUB’s approval, which approval shall not be withheld,
conditioned or delayed unreasonably. GABC shall advise CUB, promptly after GABC receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the
qualification of GABC Common for offering or sale in any jurisdiction, of the initiation or threat of any proceeding for any such purpose,
or of any request by the SEC for the amendment or supplement of the Registration Statement or for additional information. At the time
of the mailing thereof to the shareholders and at the time of any shareholders meeting, the Proxy Statement/Prospectus included as part
of the Registration Statement, as amended or supplemented by any amendment or supplement, shall (to the best of the knowledge of GABC)
not contain any untrue statement of a material fact or omit to state any material fact regarding GABC, German American or the Holding
Company Merger necessary to make the statements therein not false or misleading. GABC shall promptly and properly prepare and file any
other filings required under the 1934 Act relating to the Mergers, or otherwise required of it under the 1934 Act prior to the Effective
Time.
Section
5.02.
Subsequent Discovery of Events or Conditions. GABC shall, in the event it or German American obtains knowledge of the
occurrence of any event or condition which would have been materially inconsistent with any of its representations and warranties made
to CUB under Article III had such event or condition occurred or existed (or, as to events or conditions that occurred or came into existence
in whole or in part prior to the date of this Agreement, been known to GABC or German American) on or before the date of this Agreement,
or which would be materially inconsistent with its past or expected future satisfaction of any of its agreements or covenants included
in Article V of this Agreement, give prompt notice thereof to CUB.
Section
5.03.
Consummation of Agreement. GABC shall use its best efforts to perform and fulfill all conditions and obligations to
be performed or fulfilled under this Agreement and to effect the Mergers in accordance with the terms and conditions of this Agreement.
GABC and any of its subsidiaries shall not (a) knowingly take any action that would, or is reasonably likely to, prevent or impede the
Mergers from qualifying as a reorganization within the meaning of Section 368 of the Code; or (b) knowingly take any action or inaction
that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or prior to the Effective Time, (ii) any of the conditions to the Mergers set
forth in this Agreement not being satisfied, (iii) a material violation of any provision of this Agreement or (iv) a delay in the consummation
of the Mergers except, in each case, as may be required by applicable law or regulation.
Section
5.04.
Preservation of Business. GABC shall: (a) conduct its business substantially in the manner as is presently being conducted
and in the ordinary course of business and not amend its articles of incorporation in any manner that requires the approval of shareholders
of GABC under the IBCL; (b) file, and cause its subsidiaries to file, all required reports with applicable regulatory authorities; (c)
comply with all laws, statutes, ordinances, rules or regulations applicable to it and to the conduct of its business, the noncompliance
with which results or could result in a Material Adverse Effect on the financial condition, results of operation, business, assets or
capitalization of GABC on a consolidated basis; and (d) comply in all material respects with each contract, agreement, commitment, obligation,
understanding, arrangement, lease or license to which it is a party by which it is or may be subject or bound, the breach of which could
result in a Material Adverse Effect on the financial condition, results of operations, business, assets or capitalization of GABC on
a consolidated basis. GABC shall promptly notify CUB in writing of the occurrence of any matter or event known to GABC that is, or is
likely to have a Material Adverse Effect on the businesses, operations, properties, assets or condition (financial or otherwise) of GABC
and its subsidiaries on a consolidated basis.
Section
5.05.
Employee Benefit Plans and Employee Payments.
(a)
GABC and GABC’s subsidiaries, as applicable, shall provide compensation and benefits to the officers and employees
of CUB, the Subsidiaries and the Trusts who continue as employees of GABC or any of GABC’s subsidiaries after the Effective Time
(“Continuing Employees”) that are generally comparable to those provided to similarly situated employees of GABC and GABC’s
subsidiaries.
(b) GABC
and GABC’s subsidiaries, as applicable, shall cause Continuing Employees to receive credit for prior service with CUB, the
Subsidiaries or the Trusts for purposes of eligibility and vesting under those GABC and German American employee benefit plans (in
effect as of the Effective Time) that are made available to such Continuing Employees; provided, however, that in no event will any
credit be given to the extent it would result in the duplication of benefits for the same period of service. Except as otherwise
provided herein and subject to the consent of applicable insurance carriers and service providers, GABC may determine to keep one or
more of CUB’s or Citizens Union’s separate benefit plans in effect for the Continuing Employees through the last
day of 2022, or thereafter, even if the Effective Time occurs prior to the last day of 2022, if permitted by applicable law and the
provisions of such plans; provided, however, that, to the extent that GABC determines, in its sole discretion, that one or more of
CUB or Citizens Union’s employee benefit plans should be terminated, either as of the Effective Time or such later time as
GABC may determine is appropriate, Continuing Employees shall become eligible to participate in one or more similar type(s) of
employee benefit plan(s) of GABC or German American, if any, (for example, 401(k) to 401(k) or life insurance to life insurance)
immediately upon such termination, subject to the terms and conditions of such plan(s), with no gap in coverage except as may be
required by the timing of pay dates with respect to 401(k) deferrals. To the extent that the initial period of coverage for
Continuing Employees under any GABC or German American health and dental plan is not a full twelve (12) month period of coverage,
such benefit plans shall provide credit for any deductibles and co-insurance payments made by such Continuing Employees under the
corresponding and comparable CUB or Citizens Union plan during the balance of such twelve (12) month period of coverage provided
that GABC can obtain, in a manner reasonably satisfactory to GABC, the necessary data.
(c)
After the Effective Time, CUB’s and Citizens Union’s paid time-off policies shall terminate and all Continuing
Employees shall be subject to GABC’s paid-time-off policy. Notwithstanding the foregoing, all accrued and unpaid paid time-off of
Continuing Employees at the Effective Time, up to but not beyond two hundred (200) hours per Continuing Employee, shall be carried over
to GABC’s paid-time-off policy.
(d)
Until the Effective Time, CUB, the Subsidiaries and the Trusts, whichever is applicable, shall be liable for all obligations
for continued health coverage pursuant to Section 4980B of the Code and Sections 601 through 609 of ERISA (“COBRA”) for eligible
employees who incur a qualifying event before the Effective Time. GABC or a GABC subsidiary, whichever is applicable, shall after the
Effective Time be liable for (i) all obligations for continued health coverage under COBRA with respect to each qualified beneficiary
of CUB, the Subsidiaries or the Trusts who incurs a termination on and after the Effective Time, and (ii) for continued health coverage
under COBRA from and after the Effective Time for each qualified beneficiary of CUB, the Subsidiaries or the Trusts who incurs a qualifying
event before the Effective Time.
(e) GABC
or German American intends to retain substantially all of the employees of CUB, the Subsidiaries or the Trusts after the Effective
Time. Except for those employees entitled to the benefits set forth in Section 5.05(e) of the CUB Disclosure Schedule, those
employees of CUB, the Subsidiaries or the Trusts, as of the Effective Time (i) who GABC or its subsidiaries elect not to employ
after the Effective Time or who become Continuing Employees but are terminated by German American (or a subsidiary of German
American) other than for cause within twelve (12) months after the Closing Date, and (ii) who sign and deliver a Termination and
Release Agreement in the form attached hereto as Exhibit 5.05(e), shall be entitled to a severance payment (payable, net of
deductions, in a lump-sum payment promptly upon termination of employment and provided that they have satisfied the applicable
conditions for such payment) equal to two (2) weeks of pay, at their base rate of pay in effect at the time of termination, for each
full year of continuous service with CUB, the Subsidiaries or the Trusts and their successors, with a minimum of twelve (12) weeks
and a maximum of twenty-six (26) weeks. In addition, any such terminated employees shall be entitled to their accrued paid-time-off
and to continuation coverage under German American’s group health plans as required by COBRA, subject to timely election and
payment of the applicable COBRA premium by such terminated employees.
(f)
Nothing in this Section shall be deemed to apply to employees other than those described in this Section, or to limit or
modify GABC’s or German American’s at-will employment policy or any employee’s at-will employment status. It is understood
and agreed between the parties that all provisions contained in this Agreement with respect to employment, employee benefit plans or employee
compensation are included for the sole benefit of the respective parties hereto and do not and shall not create any right in any other
Person, including, but not limited to, any Continuing Employee, any participant in any benefit or compensation plan or any beneficiary
thereof. Nothing in this Agreement shall be deemed to constitute an amendment of any employee benefit plan of GABC or German American,
nor shall it limit the right of CUB, Citizens Union, GABC or German American from amending or terminating their respective employee benefit
plans from time to time.
(g)
As to CUB’s and/or Citizens Union’s welfare benefit plans:
(i)
To the extent allowable under the plans and subject to the consent of applicable insurance carriers and service providers,
all fully insured welfare benefit plans (including, but not limited to, health, dental/vision, life/AD&D, LTD) currently sponsored
by CUB and/or Citizens Union, shall continue as separate plans after the Effective Time, until such time as GABC determines, in its sole
discretion, that it will terminate any or all of such plans.
(ii)
As of the Effective Time, CUB and/or Citizens Union shall take, or cause to be taken, all actions necessary to assign any
and all applicable group insurance policies to GABC and to provide GABC all necessary financial, enrollment, eligibility, contractual
and other information related to these welfare benefit plans to assist GABC in the administration of such plans.
(iii)
From the date of this Agreement through the Effective Time, CUB and/or Citizens Union shall continue to pay the applicable
insurance premiums necessary to continue the benefits under CUB’s and/or Citizens Union’s fully insured welfare benefit plans.
(h)
From and after the date of this Agreement, CUB shall not award any additional equity grants or awards of any kind under
the CUB Stock Option Plan. Prior to the Effective Time, CUB shall use its best efforts, including using its best efforts to obtain any
necessary consents from optionees, with respect to the CUB Stock Option Plan, to permit the conversion of each outstanding stock option
into cash as provided in Section 1.03(d). CUB shall take action prior to the Effective Time to cause the termination of the CUB Stock
Option Plan as of the Effective Time.
Section
5.06.
Indemnification and Insurance.
(a) GABC
shall indemnify and hold harmless (including the advancement of expenses as incurred) each present and former director, manager and
officer of CUB, the Subsidiaries and the Trusts (each, an “Indemnified Party”) following the Effective Time, against any
costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in
connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior
to, at or after the Effective Time, to the same extent (and subject to the making of the same findings as to eligibility for such
indemnification and/or advancement of expenses) that such Indemnified Party would have been indemnified (or entitled to advancement
of expenses) as a director, manager or officer of CUB, the Subsidiaries or the Trusts (including without limitation service as a
trustee or in any similar capacity with respect to any CUB Plan), under applicable Kentucky or Indiana law or any organizational
documents of CUB, the Subsidiaries or the Trusts, as in effect as of the date of this Agreement.
(b)
GABC shall cause the persons serving as officers, managers and directors of CUB, the Subsidiaries and the Trusts immediately
prior to the Effective Time to be covered for a period of six (6) years after the Effective Time by the directors’ and officers’
liability insurance policy currently maintained by CUB and Citizens Union (the “Existing Policy”) or by a comparable or better
policy (the “Replacement Policy”). Prior to the Effective Time, as instructed by GABC, Citizens Union shall cause the applicable
broker of record for its Existing Policy to be assigned to GABC’s designee. Such assignment in favor of GABC’s designee shall
be executed by Citizens Union with sufficient time to allow GABC and its designee to place the insurance required by this Section. The
Existing Policy or Replacement Policy, subject to policy terms and conditions, shall provide coverage with respect to covered acts or
omissions occurring prior to the Effective Time; provided, however, that GABC shall not be required to pay annual premiums for the Existing
Policy (or for any Replacement Policy) in excess of one hundred fifty percent (150%) of the annual premium for the current annual term
of the Existing Policy (the “Maximum Amount”); and, provided, further, however, that, if notwithstanding the use of reasonable
efforts to do so, GABC is unable to maintain or obtain the insurance called for by this Section 5.06(b), GABC shall obtain as much comparable
insurance as is available for the Maximum Amount. GABC’s obligations within this Section 5.06(b) apply solely and exclusively to
the Existing Policy at current limits of insurance, as well as its other terms, conditions, exclusions and annual premium as of the date
of this Agreement, and which must be continuously maintained in force by Citizens Union without interruption, cancellation or amendment
until the Effective Time or GABC’s obligations within this Section shall cease.
(c)
The provisions of this Section 5.06 shall survive the Effective Time and are intended to be for the benefit of, and shall
be enforceable by, each Indemnified Party and his or her heirs and representatives.
(d)
In the event that either GABC or any of its successors or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving entity of such consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of
GABC shall assume the obligations set forth in this Section 5.06.
Section
5.07.
Confidentiality. GABC
and German American shall continue to be bound by the NDA (as defined in Section 8.07) pursuant to the terms of the NDA. GABC and German
American shall ensure that each of their subsidiaries and their respective officers, employees, and authorized
representatives are subject to confidentiality duties and obligations to CUB and Citizens Union with respect to Confidential Information
(as defined in the NDA) that are no less restrictive than the terms and conditions applicable to GABC and German American under the NDA.
Section
5.08.
Updated GABC Disclosure Schedules. GABC shall promptly supplement, amend and update,
upon the occurrence of any change prior to the Effective Time, and as of the Effective Time, the GABC Disclosure Schedule with respect
to any matters or events hereafter arising which, if in existence or having occurred as of the date of this Agreement, would have been
required to be set forth or described in the GABC Disclosure Schedules or this Agreement and including, without limitation, any fact
which, if existing or known as of the date hereof, would have made any of the representations or warranties of GABC contained herein
materially incorrect, untrue or misleading. No such supplement, amendment or update shall become part of the GABC Disclosure Schedules
unless CUB shall have first consented in writing with respect thereto.
Section
5.09.
Trust Preferred Securities. Upon the Effective Time, GABC shall assume the due and punctual
performance and observance of the covenants and conditions to be performed by CUB under each of (i) the Indenture dated as of October
1, 2004 (the “Capital I Indenture”) between CUB and Wilmington Trust Company, as trustee, relating to the capital securities
issued thereunder (the “Capital I Securities”) and the due and punctual payments of the principal of and premium, if any,
and interest on the Capital I Securities, as required by Article III of the Indenture, and (ii) the Indenture dated as of August 19,
2005 (the “Capital II Indenture”) between CUB and Wells Fargo Bank, National Association, as trustee, relating to the capital
securities issued thereunder (the “Capital II Securities”) and the due and punctual payments of the principal of and premium,
if any, and interest on the Capital II Securities, as required by Article III of the Capital II Indenture. In connection therewith, GABC
shall execute and deliver any supplemental indentures, and the parties hereto shall provide any opinion of counsel to the trustee thereof,
required to make such assumptions effective.
Article
VI
CONDITIONS PRECEDENT TO THE MERGER
Section
6.01.
Conditions of GABC’s and German American’s Obligations. The obligations of GABC and German American to
effect the Mergers shall be subject to the satisfaction (or waiver by GABC and German American) prior to or on the Closing Date of the
following conditions:
(a) The
representations and warranties made by CUB and Citizens Union in this Agreement shall be true in all material respects on and as of
the Closing Date with the same effect as though such representations and warranties had been made or given on and as of the Closing
Date (except that representations and warranties that by their express terms speak as of the date of this Agreement or some other
date shall be true and correct only as of such date); provided that no representation or warranty of CUB, except for those included
in Sections 2.01, 2.02 and 2.06, inclusive, hereof, shall be deemed untrue, inaccurate or incorrect for purposes hereunder as a
consequence of the existence of any fact, event or circumstance inconsistent with such representation or warranty, unless such fact,
event or circumstance, individually or taken together with all other facts, events or circumstances inconsistent with any
representation or warranty of CUB or Citizens Union, has had or would result in a Material Adverse Effect on CUB, the Subsidiaries
or the Trusts.
(b)
CUB, the Subsidiaries and the Trusts shall have performed and complied in all material respects with all of its obligations
and agreements required to be performed on or prior to the Closing Date under this Agreement.
(c)
The shareholders of CUB shall have approved and adopted this Agreement and the Holding Company Plan of Merger as required
by applicable law and its Articles of Incorporation.
(d)
No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the Mergers shall be in effect, nor shall any proceeding by any
bank regulatory authority, governmental agency or other person seeking any of the foregoing be pending. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Mergers, which makes the consummation
of the Mergers illegal.
(e)
All necessary regulatory approvals, consents, authorizations and other approvals required by law or stock market requirements
for consummation of the Mergers shall have been obtained and shall remain in full force and effect, and all statutory or regulatory waiting
periods in respect thereof shall have expired, and no such approvals shall contain any burdensome conditions, stipulations, restrictions
or requirements which GABC reasonably determines in good faith would materially adversely affect the consolidated financial condition,
earnings, business, properties or operations of CUB, the Subsidiaries or the Trusts.
(f)
GABC shall have received the environmental reports required by Section 4.05 and 4.01(a)(xv) hereof and this Agreement shall
not have been terminated and canceled pursuant to Section 4.05 hereof.
(g)
GABC shall have received from CUB on or prior to the Closing the items and documents, in form and content reasonably satisfactory
to GABC, set forth in Section 1.09(a) hereof.
(h)
The Registration Statement shall be effective under the 1933 Act and no stop orders suspending the effectiveness of the
Registration Statement shall be in effect or proceedings for such purpose pending before or threatened by the SEC.
(i)
GABC shall have obtained an opinion of Dentons Bingham Greenebaum LLP, in form and substance reasonably acceptable to the
parties, dated on or about the date the Proxy Statement/Prospectus is delivered to the CUB shareholders to the effect that the Mergers
effected pursuant to this Agreement shall constitute a reorganization within the meaning of Section 368(a) of the Code. Such opinion
shall be based upon factual representations received by counsel from CUB and GABC, which representations may take the form of written
certifications.
(j)
The Title Company shall have agreed to issue the Title Policies at the Closing.
(k) Less
than ten percent (10%) of the outstanding shares of CUB Common have become and remain Dissenting Shares as described in Section 1.03 of
this Agreement.
(l) CUB’s
Board of Directors shall have adopted any resolutions or have amended the CUB Stock Option Plan as necessary to effect the process described
under Section 1.03(d) and Section 1.04 of this Agreement.
Section
6.02.
Conditions of CUB’s and Citizens Union’s Obligations. CUB’s and Citizens Union’s obligations
to effect the Mergers shall be subject to the satisfaction (or waiver by CUB and Citizens Union) prior to or on the Closing Date of the
following conditions:
(a)
The representations and warranties made by GABC and German American in this Agreement shall be true in all material respects
on and as of the Closing Date with the same effect as though such representations and warranties had been made or given on and as of the
Closing Date (except that representations and warranties that by their express terms speak as of the date of this Agreement or some other
date shall be true and correct only as of such date); provided that no representation or warranty of GABC shall be deemed untrue, inaccurate
or incorrect for purposes hereunder as a consequence of the existence of any fact, event or circumstance inconsistent with such representation
or warranty, unless such fact, event or circumstance, individually or taken together with all other facts, events or circumstances inconsistent
with any representation or warranty of GABC, has had or would result in a Material Adverse Effect on GABC.
(b)
GABC and German American shall each have performed and complied in all material respects with all of its obligations and
agreements required to be performed prior to the Closing Date under this Agreement.
(c)
The shareholders of CUB shall have approved and adopted this Agreement and the Holding Company Plan of Merger as required
by applicable law and its Articles of Incorporation.
(d)
No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the Mergers shall be in effect, nor shall any proceeding by any
bank regulatory authority, other governmental agency or other person seeking any of the foregoing be pending. There shall not be any action
taken, or any statute, rule, regulation or order enacted, enforced or deemed applicable to the Mergers, which makes the consummation of
the Mergers illegal.
(e)
All necessary regulatory approvals, consents, authorizations and other approvals required by law for consummation of the
Mergers shall have been obtained and all waiting periods required by law shall have expired.
(f)
CUB shall have received from GABC at the Closing the items and documents, in form and content reasonably satisfactory to
CUB, listed in Section 1.09(b) hereof.
(g)
The Registration Statement shall be effective under the 1933 Act and no stop orders suspending the effectiveness of the
Registration Statement shall be in effect or proceedings for such purpose pending before or threatened by the SEC.
(h)
CUB shall have obtained an opinion of Dentons Bingham Greenebaum LLP, in form and substance reasonably acceptable to the
parties, dated on or about the date the Proxy Statement/Prospectus is delivered to the CUB shareholders to the effect that the Mergers
effected pursuant to this Agreement shall constitute a reorganization within the meaning of Section 368(a) of the Code, and that
no gain or loss will be recognized by shareholders of CUB to the extent they receive shares of GABC Common in the Holding Company Merger
in exchange for their shares of CUB Common, except that gain or loss will be recognized with respect to any cash received. Such opinion
shall be based upon factual representations received by counsel from CUB and GABC, which representations may take the form of written
certifications.
(i)
The shares of GABC Common issued in the Holding Company Merger shall be eligible for trading on the NASDAQ Global Market.
Article
VII
TERMINATION OR ABANDONMENT
Section
7.01.
Mutual Agreement. This Agreement may be terminated by the mutual written agreement of CUB and GABC, approved by their
respective Boards of Directors, at any time prior to the Effective Time, regardless of whether shareholder approval of this Agreement
and the Mergers by the shareholders of CUB shall have been previously obtained.
Section
7.02.
By Unilateral Action. Either party may, in addition to any other remedies to which such party may be entitled, terminate
this Agreement at any time prior to the Effective Time and abandon the Mergers, if such party’s Board of Directors determines that:
(a)
either
(i) the
other party has breached any representation or warranty contained herein (other than those breaches that do not have and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect on the other party), which breach cannot be cured, or
has not been cured within thirty (30) days after the giving of written notice to such party of such breach; or
(ii)
the other party has breached in any material respect any of the covenants or agreements contained herein, which breach cannot
be cured, or has not been cured within thirty (30) days after the giving of written notice to the other party of such breach; or
(b)
any of the conditions to the obligations of such party are not satisfied or waived on or prior to the Closing Date and are
not capable of being satisfied by April 1, 2022, immediately upon delivery of written notice thereof to the other party on the Closing
Date.
Section
7.03.
Shareholder Approval Denial; Dissenting Shareholders.
(a) If
this Agreement and consummation of the Mergers are not approved by the required vote of the CUB Common shares outstanding on the
record date for the meeting (including any adjournments) of CUB Common shareholders at which the proposal for the approval of this
Agreement and consummation of the Mergers is submitted to them for a vote, then either party (subject to Section 7.09(b)) may
terminate this Agreement by giving written notice thereof to the other party.
(b) GABC
may terminate this Agreement by giving written notice to CUB if greater than twenty percent (20%) of the outstanding shares of CUB Common
have become and remain Dissenting Shares as described in Section 1.03 of this Agreement.
Section
7.04.
Adverse Environmental Reports; Title Defects. GABC and CUB each may terminate this Agreement under the circumstances,
and by providing to the other the written notices, specified in Section 4.05 or Section 4.07, subject to the limitations set forth in
Section 4.05 and Section 4.07, respectively.
Section
7.05.
Termination Upon Adverse Regulatory Determination. In connection with the filings that GABC, German American, CUB and/or
Citizens Union may be required to make in connection with the Mergers with banking and antitrust regulatory agencies (“Agencies”),
each party shall use its best efforts to obtain all necessary approvals of, or clearances from, the Agencies, and shall cause its respective
agents and advisors to cooperate and use their best efforts in connection therewith. GABC (or its subsidiaries) shall be responsible
for making the required filings for the Mergers (except to the limited extent that the applicable law, regulations, or forms specify
that CUB or Citizens Union is the appropriate filing party) with the Agencies, and for discussing such filings with the Agencies and
responding to comments thereon. If any required filing is disapproved by any of the Agencies, or any determination is made by any of
the Agencies that either of the Mergers cannot be consummated except on terms and conditions that are materially adverse to GABC (an
“Adverse Determination”), then GABC shall promptly advise CUB of such Adverse Determination and GABC’s intended course
of action with respect thereto. In the event that GABC in its sole reasonable discretion determines to seek a judicial or regulatory
appeal or review (formal or informal) of the Adverse Determination, CUB and Citizens Union (and their agents and advisors) shall continue
to cooperate with such appeal and review procedure and use its best efforts to assist in connection with obtaining reversal or modification
of such Adverse Determination. In the event that (i) GABC in its sole reasonable discretion elects not to seek an appeal or review of
the Adverse Determination or elects in its sole reasonable discretion at any time after seeking such an appeal or review to discontinue
that effort, or (ii) GABC seeks such an appeal or review but all avenues for such appeal or review are exhausted without the Adverse
Determination having been vacated or overruled or modified in such a manner that the Adverse Determination is no longer materially adverse,
then either GABC or CUB may terminate this Agreement without obligation to the other on account of the Adverse Determination.
Section
7.06.
Regulatory Enforcement Matters. In the event that CUB or Citizens Union, on the one hand, or GABC or German American,
on the other hand, should become a party or subject to any cease and desist order imposed by any federal or state agency charged with
the supervision or regulation of banks or their holding companies after the date of this Agreement, then the party that is not (and whose
affiliate is not) subject to such regulatory enforcement may terminate this Agreement by giving written notice thereof to the other party.
Section
7.07.
Lapse of Time. If the Closing Date does not occur on or prior to April 1, 2022, then this Agreement may be terminated
by the Board of Directors of either CUB or GABC by giving written notice thereof to the other party.
Section
7.08. Lack of Exclusivity.
In the event
(a) CUB breaches its notice obligations under Section 4.01(e) related to an Acquisition Transaction, or (b) CUB does not terminate all
discussions, negotiations and information exchanges related to such inquiry, proposal, indication of interest or offer related to an
Acquisition Transaction within forty-five (45) days after the first communication between CUB or Citizens Union and the third party and
provide GABC with written notice of such termination, or (c) the CUB Board fails to include its recommendation in favor of the Holding
Company Merger in the proxy statement delivered to shareholders of CUB with regard to the CUB Shareholder Meeting, or the withdrawal
by the CUB Board of such recommendation following the submission by any other person or entity not a party to this Agreement of an indication
of interest to CUB or Citizens Union contemplating a merger, consolidation, plan of stock exchange, sale of all or substantially all
assets, or other business combination with CUB or Citizens Union, GABC may terminate this Agreement by written notice to CUB.
Section
7.09.
Effect of Termination.
(a)
Upon termination, this Agreement shall be of no further force or effect, and there shall be no further obligations or restrictions
on future activities on the part of either party or their respective directors, officers, employees, agents and shareholders, except as
provided in compliance with: (i) the obligations of the parties to pay their expenses pursuant to Section 8.02, and (ii) the obligation
of CUB to pay certain termination fees under the circumstances described by subsection (b) of this Section 7.09; provided, however, that
termination shall not in any way release a breaching party from liability for any willful breach of this Agreement giving rise to such
termination.
(b)
Notwithstanding the foregoing, in the event that this Agreement is terminated by GABC pursuant to Section 7.08, then in
addition to whatever legal rights or remedies GABC may be entitled to assert against any third party, CUB shall, upon GABC’s demand
and not later than the second business day after the making of such demand, pay to GABC a termination fee of Six Million Five Hundred
Thousand Dollars ($6,500,000). If CUB should fail or refuse to pay any amount demanded by GABC pursuant to the preceding sentence and
GABC recovers such disputed amount pursuant to a legal proceeding, CUB shall, in addition thereto, pay to GABC all costs, charges, expenses
(including, without limitation the fees and expenses of counsel) and other amounts expended by GABC in connection with or arising out
of such legal proceeding. The termination fee payable by CUB constitutes liquidated damages and not a penalty for termination under Section
7.08 of this Agreement.
Article
VIII
MISCELLANEOUS
Section
8.01.
Liabilities. In the event that this Agreement is terminated or the Mergers abandoned pursuant to the provisions of
Article VII hereof, no party and no officer, director, manager, or employee of any party hereto shall have any liability to any other
party for costs, expenses, damages, termination fees, or otherwise except to the extent specifically set forth in Section 7.09.
Section
8.02. Expenses.
Except as otherwise
provided in Section 4.05 hereof, CUB shall pay all expenses of CUB, the Subsidiaries and the Trusts, and their respective shareholders,
officers, managers and directors incidental to the Mergers contemplated hereby, and GABC shall pay all expenses of GABC and its subsidiaries
and their respective shareholders, officers and directors incidental to the Mergers contemplated hereby.
Section
8.03.
Notices. Any notice or other communication hereunder shall be in writing and shall be deemed to have been given or
made (a) on the date of delivery, in the case of hand delivery, (b) the next business day if timely deposited the prior business day
for shipping with a recognized overnight courier delivery service, with all shipping fees for next business day delivery prepaid or billed
to shipper, and (c) three (3) business days after deposit in the United States Registered or Certified Mail, with mailing receipt postmarked
by the Postal Service to show date of mailing, postage prepaid; addressed (in any case) as follows:
German American Bancorp, Inc.
711 Main Street
Box 810
Jasper, Indiana 47546
Attn: Mark A. Schroeder, Chairman
and Chief Executive Officer
with a copy to:
Dentons Bingham Greenebaum LLP
2700 Market Tower
10 W. Market Street
Indianapolis, Indiana 46204
Attn: Jeremy E. Hill, Esq.
Citizens Union Bancorp of Shelbyville,
Inc.
1854 Midland Trail
Shelbyville, Kentucky 40065
Attn: David M. Bowling, Chief
Executive Officer
with a copy to:
Frost Brown Todd LLC
400 West Market Street
Suite 3200
Louisville, Kentucky 40202
Attn: Nathan L. Berger, Esq.
or to such other address as any party may from
time to time designate by notice to the others.
Section
8.04.
Non-survival of Representations, Warranties and Agreements. None of the representations, warranties, covenants and
agreements of the parties in this Agreement or in any instrument delivered by the parties pursuant to this Agreement, including any rights
arising out of any breach of such representations, warranties, covenants, and agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein (including, without limitation those included in Section 5.06) that by their
terms apply or are to be performed in whole or in part after the Effective Time.
Section
8.05.
Representations Not Affected by Review. The reliability and binding effect of any representation or warranty made by
any party in this Agreement shall not be diminished or limited in any way by any review, or by the opportunity to conduct any review,
by or on behalf of the intended beneficiary of the subject matter of the representation or warranty, whether before or after the date
of this Agreement, unless and to the extent that the reviewing party and the other party expressly agree otherwise in writing.
Section
8.06.
Press Releases. GABC and CUB shall use reasonable efforts (i) to develop a joint communications plan with respect to
this Agreement and the transactions contemplated hereby, (ii) to ensure that all press releases and other public statements with respect
to this Agreement and the transactions contemplated hereby shall be consistent with such joint communications plan, and (iii) except
in respect of any announcement required by applicable law or by obligations pursuant to any listing agreement with or rules of NASDAQ,
to consult with each other before issuing any press release or, to the extent practical, otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby.
Section
8.07.
Entire Agreement. Except for that certain Mutual Confidentiality and Non-Disclosure Agreement dated as of June 25,
2021 (the “NDA”), this Agreement and the exhibits, schedules, appendices, and agreements contemplated hereunder constitutes
the entire agreement between the parties and supersedes and cancels any and all prior discussions, negotiations, undertakings and agreements
between the parties relating to the subject matter hereof.
Section
8.08.
Headings and Captions. The captions of Articles and Sections hereof are for convenience only and shall not control
or affect the meaning or construction of any of the provisions of this Agreement.
Section
8.09.
Waiver, Amendment or Modification. The conditions of this Agreement that may be waived may only be waived by written
notice specifically waiving such condition addressed to the party claiming the benefit of the waiver. The failure of any party at any
time or times to require performance of any provision hereof shall in no manner affect the right of such party at a later time to enforce
the same. This Agreement may not be amended or modified except by a written document duly executed by the parties hereto.
Section
8.10.
Rules of Construction. Unless the context otherwise requires (a) a term used herein has the meaning assigned to it,
and (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP.
Section
8.11.
Counterparts/Facsimiles. This Agreement may be executed and delivered (including by facsimile transmission) in two
(2) or more counterparts, each of which shall be deemed an original and all of which shall be deemed one and the same instrument. A telecopy,
facsimile, or email transmission of a signed counterpart of this Agreement will be sufficient to bind the party or parties whose signature(s)
appear thereon.
Section
8.12. Successors.
This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their respective successors, estates, heirs, personal representatives,
and executors. Except for the persons intended to be benefited by (and to the extent provided by) Section 5.07, there shall be no third
party beneficiaries hereof.
Section
8.13.
Governing Law; Assignment; Specific Performance. This Agreement shall be governed by the laws of the State of Indiana.
This Agreement may not be assigned by any of the parties hereto. The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement was not performed in accordance with its specific terms on a timely basis or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or other equitable relief to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any court with jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
Section
8.14.
Securityholder Litigation. Each party shall notify the other parties hereto in writing of any litigation related to
this Agreement, the Mergers or the other transactions contemplated by this Agreement that is brought, or, to the knowledge of such party,
threatened in writing, against it and/or the members of its Board of Directors (any such litigation and/or the executive officers or
members of the Board of Directors of a party (a “Transaction Litigation”)), and shall keep the other parties reasonably informed
with respect to the status thereof. Each party shall give the other parties the opportunity to participate in the defense or settlement
of any Transaction Litigation, and, except to the extent required by applicable law, no party shall settle, agree to any undertakings
or approve or otherwise agree to any waiver that may be sought in connection with such Transaction Litigation, without the prior written
consent of the other parties (which shall not be unreasonably withheld, conditioned or delayed).
[Signature Page Immediately Follows]
IN WITNESS WHEREOF,
the parties hereto have duly executed this Agreement as of the day and year first above written.
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GERMAN AMERICAN
BANCORP, INC.
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By:
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/s/
Mark A. Schroeder
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Mark A. Schroeder
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Chairman and Chief Executive
Officer
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GERMAN AMERICAN
BANK
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By:
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/s/
Mark A. Schroeder
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Mark A. Schroeder
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Chairman and Chief Executive
Officer
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CITIZENS UNION
BANCORP OF SHELBYVILLE, INC.
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By:
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/s/
David M. Bowling
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David M. Bowling
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Chief Executive Officer
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CITIZENS UNION
BANK OF SHELBYVILLE, INC.
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By:
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/s/
David M. Bowling
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David M. Bowling
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Chief Executive Officer
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EXHIBIT 1.01
PLAN OF MERGER
The following constitutes
a Plan of Merger within the meaning of the Indiana Business Corporation Law (Indiana Code 23-1-40-1) (“IBCL”) and the Kentucky
Business Corporation Act (Kentucky Revised Statutes 271B.11-010) (“KBCA”):
1. The
names of each corporation planning to merge (the “Merger”) are:
German American Bancorp, Inc.,
an Indiana corporation (the “Surviving Corporation”)
Citizens Union Bancorp of
Shelbyville, Inc., a Kentucky corporation (the “Merging Corporation”)
2. The
corporation surviving the Merger is German American Bancorp, Inc., the name of which is not changed pursuant to this Plan of Merger.
3. At
the time of filing with the Indiana Secretary of State and the Kentucky Secretary of State of appropriate Articles of Merger with respect
to the Merger or at such later time as shall be specified by such Articles of Merger (the “Effective Time”), each of the shares
of common stock, without par value, of the Merging Corporation (“Merging Corporation Stock”) that shall then be issued and
outstanding (other than shares with respect to which holders have properly exercised, and not withdrawn or waived, appraisal rights in
accordance with the KBCA) shall be converted into the right to receive, without interest, a cash payment of Thirteen and 44/100 Dollars
($13.44) per share and 0.7739 (the “Exchange Ratio”) of a newly-issued share of common stock of the Surviving Corporation,
all subject to and in accordance with the terms and provisions of Article I of the Agreement and Plan of Reorganization among the Surviving
Corporation, the Merging Corporation and certain of their subsidiaries dated September 20, 2021 (the “Agreement”).
4. The
shares of Surviving Corporation stock issued and outstanding immediately prior to the Effective Time shall continue to be issued and outstanding
shares of Surviving Corporation stock.
5. The
Articles of Incorporation and the Bylaws of the Surviving Corporation (each as amended immediately prior to the effective time of the
merger) shall not change as a result of the Merger.
6. No
fractional shares of the Surviving Corporation Stock shall be issued in the Merger and, in lieu thereof, holders of shares of Merging
Corporation Stock who would otherwise be entitled to a fractional share interest (after taking into account all shares of Merging Corporation
Stock held by such holder) in stock of the Surviving Corporation shall be paid an amount in cash equal to the product of multiplying such
fractional share by $_________.
7.
From time to time on and after the Effective Time, the last acting officers of the Merging Corporation or the corresponding officers
of the Surviving Corporation may, in the name of the Surviving Corporation, execute and deliver all such proper deeds, assignments
and other instruments and take or cause to be taken all such further or other actions as the Surviving Corporation, or its
successors or assigns, may deem necessary or desirable in order to vest in, perfect or confirm to the Surviving Corporation and its
successors and assigns, title to and possession of all of the property, rights, privileges, powers and franchises of the Merger
Corporation and otherwise to carry out the intent and purposes of this Plan of Merger.
EXHIBIT 1.05
AGREEMENT AND PLAN OF BANK MERGER
Between
GERMAN AMERICAN BANK
And
CITIZENS UNION BANK OF SHELBYVILLE, INC.
THIS AGREEMENT AND PLAN OF
BANK MERGER (this “Agreement”), made between GERMAN AMERICAN BANK (hereinafter referred to as “German American”),
a bank organized under the laws of the State of Indiana, being located at 711 Main Street, Jasper, County of Dubois, in the State of Indiana,
and CITIZENS UNION BANK OF SHELBYVILLE, INC. (hereinafter referred to as “Citizens Union”), a bank organized under the laws
of the Commonwealth of Kentucky, being located at 1854 Midland Trail, Shelbyville, County of Shelby, in the Commonwealth of Kentucky,
each acting pursuant to a resolution of its board of directors adopted by the vote of at least a majority of its directors, witnesses
as follows:
SECTION 1.
Citizens Union shall be merged
with and into German American under the charter of the latter (the “Merger”), subject to and effective in accordance with
the terms and conditions of this Agreement. The Articles of Incorporation and Bylaws of German American, as in effect immediately prior
to the effective time of the Merger, shall continue, unchanged, as the Articles of Incorporation and Bylaws of the surviving bank from
and after the effective time of the Merger.
SECTION 2.
The name of the surviving
bank shall be “German American Bank.”
SECTION 3.
The business of the surviving
bank shall be that business that is authorized to be conducted by a bank organized under the laws of the State of Indiana. The business
of banking of the surviving bank shall be conducted by the surviving bank at its main office, which shall be located at 711 Main Street,
Jasper, Indiana, and at its legally established branches.
SECTION 4.
The Merger shall have
all of the effects provided by the Indiana Financial Institutions Act, as amended, and the Kentucky Financial Services Code, as
amended. All assets of Citizens Union as they exist at the effective time of the Merger shall pass to and vest in the surviving bank
without any conveyance or other transfer. The surviving bank shall be responsible for all of the liabilities of every kind and
description of Citizens Union existing as of the effective time of the Merger.
SECTION 5.
At the effective time of the
Merger, the shares of capital stock of German American that were issued and outstanding immediately prior to the Merger shall continue
to be issued and outstanding, and the shares of capital stock of Citizens Union that were issued and outstanding immediately prior to
the Merger shall be canceled.
SECTION 6.
The members of the board of
directors of German American immediately prior to the effective time of the Merger shall continue to serve as members of the Board of
Directors of the surviving bank at and after the effective time of the Merger until the next annual meeting or until such time as their
successors have been elected and have qualified. The officers of German American immediately prior to the effective time of the Merger
shall continue to serve as officers of the surviving bank at and after the effective time of the Merger until they are removed or resign
their offices.
SECTION 7.
This Agreement may be terminated
by the mutual consent of the boards of directors of German American and Citizens Union at any time prior to the effective time of the
Merger. Notwithstanding the foregoing, in the event that that certain Agreement and Plan of Reorganization dated September 20, 2021,
by and among German American Bancorp, Inc., Citizens Union Bancorp of Shelbyville, Inc., German American Bank and Citizens Union Bank
of Shelbyville, Inc. (“Master Agreement”) is terminated without the transactions contemplated thereby being consummated as
provided therein, then this Agreement shall also be terminated and shall be of no further force and effect.
SECTION 8.
This Agreement shall be approved
by the sole shareholder of each of the merging banks as required by law. Subject to Section 9 of this Agreement, the Merger shall become
effective at the time specified in the Articles of Merger filed with the Department of Financial Institutions of the State of Indiana,
the Department of Financial Institutions of the Commonwealth of Kentucky, the Secretary of State of the State of Indiana and the Secretary
of State of the Commonwealth of Kentucky (the “Effective Time”).
SECTION 9.
Anything herein to the contrary
notwithstanding, the obligations of the merging banks under this Agreement are subject to and expressly conditioned upon the consummation
of the merger of German American Bancorp, Inc., and Citizens Union Bancorp of Shelbyville, Inc. as described in the Master Agreement.
SECTION 10.
From time to time on and after
the Effective Time, the last acting officers of Citizens Union or the corresponding officers, shareholder, or agents of German American
may, in the name of the surviving bank, execute and deliver all such proper deeds, assignments and other instruments and take or cause
to be taken all such further or other actions as the surviving bank, or its successors or assigns, may deem necessary or desirable in
order to vest in, perfect or confirm to the surviving bank and its successors and assigns, title to and possession of all of the property,
rights, privileges, powers and franchises of Citizens Union and otherwise to carry out the intent and purposes of this Agreement.
WITNESS, the signatures of
said merging banks this _____ day of __________, 2021, each set by its Chairman, Chief Executive Officer or President and attested to
by its Cashier or Secretary, pursuant to a resolution of its board of directors, acting by a majority of its members.
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GERMAN AMERICAN BANK
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Attest:
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By:
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Secretary
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Mark A. Schroeder
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Chairman and Chief Executive Officer
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CITIZENS UNION BANK OF SHELBYVILLE,
INC.
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Attest:
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By:
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Secretary
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David M. Bowling
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Chief Executive Officer
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EXHIBIT 5.05(e)
TERMINATION AND RELEASE AGREEMENT
Attached hereto.
TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT (“Agreement”)
is voluntarily entered into as of the date(s) set forth below by and between ________________ (“Employee”) and German American
Bank (“German American”).
WHEREAS, German American has either elected not
to employ Employee or has terminated Employee’s employment within twelve (12) months of the effective date of the merger of Citizens
Union Bank of Shelbyville, Inc. (“CUB”) into German American Bank; with such election or termination being effective as of
__________________, 201___ (the “Separation Date”);
NOW THEREFORE, German American and Employee desire
to fully and completely settle and dispose of any and all claims of any kind or nature which Employee may now or hereafter have against
German American. German American and Employee also desire that Employee keeps this Agreement confidential. In consideration of the foregoing,
and the mutual promises and covenants to be performed as herein set forth, the parties hereto agree as follows:
1. Definition.
The term “German American,” as used in this Agreement, shall be deemed to include, in addition to German American Bank, its
affiliates and German American Bancorp, Inc. German American and any such affiliate(s) shall be entitled to enforce this Agreement as
if a party to this Agreement. The term “CUB,” as used in this Agreement, shall be deemed to include, in addition to Citizens
Union Bank of Shelbyville, Inc., Citizens Union Bancorp of Shelbyville, Inc. immediately prior to the effective time of the merger of
Citizens Union Bancorp of Shelbyville, Inc. with and into German American Bancorp, Inc.
2. Separation
of Employment. Effective as of the Separation Date, Employee’s employment with German American shall be terminated. Employee
acknowledges that German American does not have any obligation, contractual or otherwise, to rehire, reemploy, recall, or hire Employee
in the future.
3. Severance
Payment. In exchange for the promises and covenants contained herein, German American shall pay Employee a “Severance Payment”
equal to $__________, consisting of two (2) weeks of pay, at Employee’s base rate of pay in effect as of the Separation Date, for
each full year of Employee’s continuous service with CUB, or any of its subsidiaries or affiliates, and/or German American (as applicable),
with a minimum of twelve (12) weeks and a maximum of twenty-six (26) weeks. The Severance Payment shall be paid in lump sum (less all
applicable taxes, including Federal, State and local taxes, and FICA) within ten (10) days following Employee’s execution of this
Agreement, and reported on a form W-2; provided, however, that if the Review Period and Revocation Period described in Section 6, along
with the ten (10) day period within which payment is to be made span two calendar years, the Severance Payment will be made in the second
calendar year. In addition, Employee shall be entitled to his or her accrued paid-time-off and to continuation coverage under any applicable
CUB or German American group health plans as required by COBRA, subject to timely election and payment of the applicable COBRA premium
by Employee. Apart from the Severance Payment, German American has paid Employee any and all other compensation owed to Employee by German
American.
4. Employee’s
Release. In exchange for the promises and covenants herein, including the payment of the Severance Payment, Employee, Employee’s
heirs, next of kin, personal representatives, assigns and successors in interest, hereby irrevocably, unconditionally and generally releases,
acquits and forever discharges to the fullest extent permitted by law German American, its owners, predecessors, successors, assigns,
agents, directors, officers, employees, representatives, attorneys, insurance carriers, benefit plans and all other persons acting by,
through, under or in concert with any of them (“Released Parties”), from any and all grievances, charges, complaints, liabilities,
damages, lawsuits, actions, causes of action, rights, demands, costs, losses, debts, reinstatement, instatement, engagement, employment,
bonuses, commissions, fees, back pay, front pay, lost wages, liquidated, compensatory and/or punitive damages, benefits, obligations,
promises, agreements, controversies, attorney’s fees, costs, and rights of any kind or nature whatsoever, in law or in equity,
whether known or unknown, which arise out of Employee’s employment and/or the separation of Employee’s employment.
By way of specification and not by way of limitation,
Employee specifically waives, releases, and agrees to forego any rights or claims that Employee may now have, may have heretofore had,
or may at any time hereafter have against the Released Parties on matters arising prior to and up to the date of this Agreement under
tort, contract, statute, or other law of the United States or any of its individual states, including, but not limited to, claims arising
out of allegations of wrongful, retaliatory or constructive discharge, breach of contract, breach of implied covenant of good faith and
fair dealing, tortious interference with contract, misrepresentation, fraud, promissory estoppel, slander, libel, defamation, emotional
pain and suffering and intentional infliction of emotional distress or any claim under Title VII, the Civil Rights Act of 1991, the ADA,
the ADEA, the FMLA, or under any other laws, ordinances, executive orders, rules, regulations or administrative or judicial case law arising
under the statutory or common laws of the United States or any of its individual states, or any political subdivision thereof.
5. Exclusions
from Release. Employee understands that he does not waive future claims. Also, Employee further understands that nothing in this
Agreement shall in any way adversely affect whatever vested rights Employee may have to benefits under any retirement or other employee
benefit plan. In addition, Employee acknowledges that this Agreement is not intended to (a) prevent Employee from filing a charge or complaint
including a challenge to the validity of this Agreement, with the Equal Employment Opportunity Commission ("EEOC"); (b) prevent
Employee from participating in any investigation or proceeding conducted by the EEOC; or (c) establish a condition precedent or other
barrier to exercising these rights. While Employee has the right to participate in an investigation, Employee understands that he is waiving
his right to any monetary recovery arising from any investigation or pursuit of claim. Employee acknowledges that he has the right to
file a charge alleging a violation of the ADEA with any administrative agency and/or to challenge the validity of the waiver and release
of any claim Employee might have under the ADEA without either: (a) repaying to German American the amounts paid by it to him or on my
behalf under this Agreement; or (b) paying to German American any other monetary amounts (such as attorney's fees and/or damages).
6. Waiver
of Rights and Claims under the Age Discrimination in Employment Act. In the event Employee is at least forty (40) years of age,
Employee is covered by the provisions of the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act. In conformance
with these acts, Employee acknowledges that on ______________, 201___, German American delivered this Agreement to Employee and advised
Employee of Employee’s right to consult with an attorney prior to executing this Agreement. Employee is also advised that as of
the date this Agreement was delivered to Employee, Employee has a period of forty-five (45) days in which to review and execute this Agreement
(“Review Period”). Employee is also advised that, after executing this Agreement, Employee has an additional seven (7) days
in which to revoke this Agreement (“Revocation Period”). Employee’s signature shall constitute and be considered a waiver
of any prospective days remaining in the Review Period. The terms of this Agreement will become effective upon the expiration of the Revocation
Period. Employee understands that if Employee revokes this Agreement, all consideration agreed to by German American, including but not
limited to the Severance Payment, will be forfeited and this Agreement will become null and void and unenforceable by any party.
7. Confidentiality.
Employee acknowledges and agrees that he will keep the terms and amounts paid pursuant to this Agreement completely confidential, except
as to his attorney, tax advisor, and/or spouse and as required by law or in order to effectuate the terms of this Agreement.
8. Miscellaneous
Representations and Warranties. In consideration of German American’s willingness to enter into this Agreement, Employee
hereby makes the following representations and warranties to German American: Employee is aware, by signing this Agreement, that Employee
is giving up the right to initiate a lawsuit or pursue other legal proceedings; Employee agrees to abide by the agreements and covenants
contained herein; there are no other promises or representations which have been made to Employee related to the matters covered herein,
except those contained in this Agreement; and this Agreement should be construed in accordance with and governed by the laws of the State
of Indiana, regardless of the place of execution or performance.
9. Section
409A. This Agreement is intended to comply with Code Section 409A or an exemption thereunder and shall be construed and administered
in accordance with Code Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may
only be made upon an event and in a manner that complies with Code Section 409A or an applicable exemption. Any payments under this Agreement
that may be excluded from Code Section 409A either as separation pay due to an involuntary separation from service or as a short-term
deferral shall be excluded from Code Section 409A to the maximum extent possible. Any payments to be made under this Agreement upon a
termination of employment shall only be made upon a “separation from service” under Code Section 409A.
Employee acknowledges that Employee has carefully
read and reviewed the foregoing Agreement, acknowledges its contents, and agrees to be bound by its terms. Employee further acknowledges
that Employee has had the opportunity to consult with an attorney and has been provided reasonable time to consider this Agreement.
SIGNATURE PAGE TO FOLLOW
IN WITNESS WHEREOF, the parties
hereto have executed this Agreement, by their duly authorized representatives.
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By:
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Mark
A. Schroeder, Chairman and CEO
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Exhibit 10.1
VOTING AGREEMENT
THIS
VOTING AGREEMENT (“Agreement”) is made and entered into as of September 20, 2021, by and among GERMAN AMERICAN BANCORP,
INC., an Indiana corporation (“German American”), and the undersigned securityholders (each, the “Securityholder,”
which term is used to describe all undersigned securityholders together if more than one) of Citizens Union Bancorp of Shelbyville, Inc.,
a Kentucky corporation (the “Company”). All capitalized terms herein not otherwise defined shall have the meaning ascribed
to them in the “Merger Agreement” (as defined below).
Recitals
WHEREAS,
pursuant to that certain Agreement and Plan of Reorganization of even date herewith (the “Merger Agreement”), by and
among German American, the Company, and their respective banking subsidiaries, the Company will merge (the “Merger”)
into German American, with German American continuing as the surviving corporation and all of the outstanding common stock, without par
value, of the Company (“Company Stock”) being exchanged for common stock, without par value, of German American and
a cash payment;
WHEREAS,
the Securityholder is the beneficial owner of, or exercises control and direction over, the number of issued and outstanding shares of
Company Stock, as set forth on Exhibit A attached hereto;
WHEREAS,
the Securityholder has had a fair opportunity to review the Merger Agreement and to consult with legal, tax, financial and other advisers
of the Securityholder’s choosing to the extent such Securityholder has desired to have such consultation; and
WHEREAS,
as a material inducement for German American to enter into the Merger Agreement with the Company and thereby provide the benefits of the
Merger to the Securityholder, the Securityholder is willing (among other terms and conditions set forth in this Agreement) to (i) in accordance
with the terms hereof, not transfer or otherwise dispose of any of such Securityholder’s shares of Company Stock, or any and all
other shares or securities of the Company issued, issuable, exchanged or exchangeable, in respect of any Company Stock (the “Securities”)
until the Securityholder’s shares are voted with respect to the Merger and (ii) vote or use best efforts to cause to be voted Company
Stock as set forth herein.
Agreement
NOW,
THEREFORE, in contemplation of the foregoing and in consideration of the mutual agreements, covenants, representations and warranties
contained herein and intending to be legally bound hereby, each Securityholder agrees with German American as follows:
1. Transfer
and Encumbrance. The Securityholder agrees that the Securityholder will not take or permit any action to, directly or
indirectly, (i) transfer, sell, assign, give, pledge (excluding any pledges already in effect to commercial lenders that secure the
repayment of money borrowed), exchange, or otherwise dispose of or encumber the Securities (except as may be specifically required
by court order, in which case the Securityholder shall give German American prior written notice and any such transferee shall agree
to be bound by the terms and conditions of this Agreement) prior to the “Expiration Date” (as defined below), or to make
any offer or agreement relating thereto, at any time prior to the Expiration Date; (ii) deposit any of the Securities into a voting
trust or enter into a voting agreement or arrangement with respect to such Securities or grant any proxy or power of attorney with
respect thereto, in each case, in a manner that conflicts or may conflict with the Securityholder’s obligations hereunder; or
(iii) enter into any contract, option or other arrangement or undertaking with respect to the direct or indirect sale,
assignment, transfer, exchange or other disposition of or transfer of any interest in or the voting of any of the Securities, in
each case, in a manner that conflicts or may conflict with the Securityholder’s obligations hereunder. As used herein, the
term “Expiration Date” shall mean the earlier to occur of (i) April 1, 2022, (ii) the date which is the day
following the shareholder meeting at which the Merger is approved by the Company’s shareholders, (iii) the date the Board
decides not to recommend or withdraws its recommendation of the Merger without a breach of Sections 4.01(d), 4.01(e) or 4.03(a), or
Section 7.08 of the Merger Agreement, (iv) the termination of the Merger Agreement by either German American or Company in
accordance with their respective rights under Article VII of the Merger Agreement prior to the meeting of the Company’s
shareholders to approve the Merger, or (v) the termination of the Merger Agreement by either German American or the Company pursuant
to Section 7.03(a) of the Merger Agreement.
2.
Agreement to Vote. Prior to the Expiration Date, at every meeting of the shareholders of the Company called with respect
to any of the following, and at every adjournment thereof, and on every action or approval by written consent of the shareholders of the
Company with respect to any of the following, the Securityholder agrees to vote (or cause to be voted) the shares of Company Stock owned
of record and beneficially by such Securityholder other than as a trustee of a benefit plan, which shares shall include, without limitation,
all shares owned by such Securityholder individually, all shares owned jointly by such Securityholder and such Securityholder’s
spouse, all shares owned by such Securityholder by any minor children (or any trust for their benefit), all shares owned by any business
of which such Securityholder is the principal shareholder (but in each such case only to the extent such Securityholder has the right
to vote or direct the voting of such shares), and specifically including all shares shown as owned directly or beneficially by such Securityholder
on Exhibit A attached hereto or acquired subsequently hereto: (i) in favor of approval of the Merger, the Merger Agreement
and the transactions contemplated thereby and any matter that could reasonably be expected to facilitate the Merger; (ii) in favor of
any alternative structure as may be agreed upon by German American and the Company to effect the Merger; provided that such alternative
structure is on terms in the aggregate no less favorable to the Securityholder from a financial point of view than the terms of the Merger
set forth in the Merger Agreement (including, without limitation, with respect to the consideration to be received by the Securityholder);
and (iii) against the consummation of any proposal looking toward the acquisition of control of the Company by any party not affiliated
with German American, or any action, proposal, agreement or transaction (other than the Merger, the Merger Agreement or the transactions
contemplated thereby) that in any such case would result in a breach of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement. This Agreement is intended to bind the Securityholder as a shareholder of the
Company only with respect to the specific matters set forth herein. Notwithstanding the foregoing, nothing in this Agreement shall limit
or restrict the Securityholder from voting in his, her or its sole discretion on any matter other than those matters referred to in this
Agreement.
3.
No Opposition. Prior to the Expiration Date, the Securityholder agrees not to take, or cause to be taken, any action in
the Securityholder’s capacity as a holder of Securities of the Company that would, or would be reasonably likely to, have the purpose
or effect of preventing the consummation of the Merger and the transactions contemplated by the Merger Agreement. Prior to the Expiration
Date, the Securityholder agrees to take, or cause to be taken in its capacity as a holder of Securities of the Company, all actions necessary
to effect the Merger and the transactions contemplated by the Merger Agreement.
4.
New Securities. The Securityholder hereby agrees that any shares of the capital stock or other securities of the Company
that the Securityholder purchases or with respect to which the Securityholder otherwise acquires a right to acquire or other beneficial
ownership (as such concept of beneficial ownership is interpreted for purposes of the beneficial ownership disclosure provisions of Section
13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission adopted
thereunder) after the date of this Agreement and prior to the Expiration Date (the “New Securities”), and any and all
other shares or securities of the Company issued, issuable, exchanged or exchangeable in respect of any New Securities, shall become subject
to the terms and conditions of this Agreement to the same extent as if they constituted Securities.
5.
Representations, Warranties and Covenants of Securityholder. The Securityholder (and if more than one signatory exists for
the Securityholder, all such signatories, jointly and severally) hereby represents and warrants to, and covenants with, German American
that:
5.1.
Ownership. Except as may be noted on Exhibit A hereto, the person(s) or entity(ies) who or that has (have) signed
this Agreement as the Securityholder have good and marketable title to, and is (are) the sole legal and beneficial owners of Securities
in the numbers that are specified on Exhibit A. As of the date hereof, such person(s) or entity(ies) does (do) not beneficially
own any shares of the capital stock of the Company or other securities issued by the Company other than the Securityholder’s Securities
that are so identified. No person acting on behalf of any such person(s) or entity(ies) has provided German American with any information
concerning the nature of ownership of the numbers of Securities identified on Exhibit A that is false or misleading in any respect
material to German American.
5.2.
Authorization; Binding Agreement. The Securityholder has all requisite power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby and thereby and has sole voting power and sole power of disposition, with respect
to all of the shares of Company Stock included within the Securityholder’s Securities with no restrictions on its voting rights
or rights of disposition pertaining thereto, except as specified on Exhibit A. The Securityholder has duly executed and delivered
this Agreement and, assuming its due authorization, execution and delivery by German American, this Agreement is a legal, valid and binding
agreement of the Securityholder, enforceable against the Securityholder in accordance with its terms.
6. Further
Assurances. The Securityholder hereby covenants and agrees to execute and deliver, or cause to be executed or delivered, such
proxies, consents, waivers and other instruments, and undertake any and all further action, necessary or desirable, in the
reasonable opinion of German American, to carry out the purpose and intent of this Agreement and to consummate the Merger, the
Merger Agreement and the transactions contemplated thereby.
7.
Termination. This Agreement shall terminate and shall have no further force or effect as of the Expiration Date. In the
event of termination of this Agreement upon the Expiration Date, this Agreement shall become void and of no effect with no liability on
the part of any party hereto; provided, however, that nothing herein shall relieve any party from liability hereof for any willful breach
of this Agreement prior to the Expiration Date.
8.
Miscellaneous.
8.1.
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
(or deemed formally or informally by a governmental agency) to be invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
In the event that a governmental agency (including but not limited to the Board of Governors of the Federal Reserve System (the “FRB”))
expresses to German American any concern that this Agreement may be violative of law applicable to German American or the Securityholder,
then German American shall so notify the Securityholder of such concern, and German American and the Securityholder shall cooperate with
each other toward amending this Agreement in order to resolve such governmental agency’s concern(s).
8.2.
Binding Effect and Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the parties hereto may be assigned by either of the parties without
the prior written consent of the other; provided, however, that German American may freely assign its rights to a direct or indirect wholly-owned
subsidiary of German American without such prior written approval but no such assignment shall relieve German American of any of its obligations
hereunder. Any purported assignment without such consent shall be void. No provision of this Agreement shall be for the benefit of any
third party, except that the Company is an intended third-party beneficiary of the Securityholder’s agreements pursuant to this
Agreement.
8.3.
Amendment and Modification. This Agreement may not be modified, amended, altered or supplemented except by the execution
and delivery of a written agreement executed by the parties hereto.
8.4.
Specific Performance; Injunctive Relief. The parties hereto acknowledge that German American will be irreparably harmed
and that there will be no adequate remedy at law for a violation of any of the covenants or agreements of the Securityholder set forth
herein. Therefore, it is agreed that, in addition to any other remedies that may be available to German American upon such violation,
German American shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other
means available to German American at law or in equity.
8.5.
Notices. All notices that are required or may be given pursuant to the terms of this Agreement shall be in writing and
shall be sufficient in all respects if given in writing and delivered by hand or national or international overnight courier service,
or mailed by registered or certified mail, postage prepaid (effective (a) when delivered by hand, (b) one (1) business day after
dispatch by overnight courier, and (c) three (3) business days after dispatch by mail), as follows:
If to German
American, to:
Mr. Mark A.
Schroeder
Chairman and
Chief Executive Officer
German American
Bancorp, Inc.
711 Main Street
Jasper, Indiana 47546
with a copy
to:
Jeremy E. Hill,
Esq.
Dentons Bingham
Greenebaum LLP
10 W. Market
Street
2700 Market
Tower
Indianapolis,
Indiana 46204
If
to any person who has signed this Agreement as Securityholder, to the address that appears in the shareholder records of the Company,
which have been provided to German American.
And in the event
of notice to either German American or any person who has signed this Agreement as Securityholder, with a copy to:
David M. Bowling
Chief Executive Officer
Citizens Union Bancorp of Shelbyville,
Inc.
1854 Midland Trail
Shelbyville, Kentucky 40065
with a copy to:
Nathan L. Berger, Esq.
Frost Brown Todd LLC
400 West Market Street, Suite
3200
Louisville, Kentucky 40202
8.6 Governing
Law. This Agreement shall be governed by, construed and enforced in accordance with the internal laws of the State of Indiana
without giving effect to any choice or conflict of law provision, rule or principle (whether of the State of Indiana or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Indiana.
8.7
Entire Agreement. This Agreement contains the entire understanding of German American and Securityholder in respect of the
subject matter hereof, and, except for any confidentiality agreements between German American and the Company binding upon the Securityholders,
supersedes all prior negotiations and understandings between the parties with respect to such subject matters.
8.8
Counterparts. This Agreement may be executed (and delivered, in original form or by electronic mail or by facsimile transmission)
in several counterparts, each of which shall be an original, but all of which together shall (when executed and delivered between or among
two or more signatories) constitute one and the same agreement.
8.9
Effect of Headings. The section headings herein are for convenience only and shall not affect the construction or interpretation
of this Agreement.
8.10
No Limitation on Actions of the Securityholder as Director or Officer. Notwithstanding anything to the contrary in this
Agreement, in the event the Securityholder, or a representative of the Securityholder, is an officer or director of the Company, nothing
in this Agreement is intended or shall be construed to require the Securityholder, or its representative, as the case may be, in such
individual’s capacity as an officer or director of the Company, to act or fail to act in accordance with such individual’s
fiduciary duties in such capacity.
8.11
Remedies Not Exclusive. All rights, powers and remedies provided under this Agreement or otherwise available in respect
hereof at law or in equity will be cumulative and not alternative, and the exercise of any thereof by either party will not preclude the
simultaneous or later exercise of any other such right, power or remedy by such party.
8.12
Disclosure. The Securityholder hereby authorizes German American and the Company to disclose the identity of the Securityholder
and the nature and amounts of its commitments, arrangements and understandings under this Agreement (and to file publicly a copy of this
Agreement in that connection) in any reports or other filings or communications that either German American or the Company may be required
to file under any applicable law (without seeking confidential treatment of such disclosure), including without limitation the laws popularly
known as Bank Holding Company Act of 1956, the Bank Merger Act, the Securities Exchange Act of 1934, and the Securities Act of 1933 (each
as amended), and including, without limitation, any report filed with the Securities and Exchange Commission on Form 8-K or any Schedule
13D or Schedule 13G, any Registration Statement filed by German American under the Securities Act of 1933, and any applications or notices
seeking or concerning regulatory review and/or approval of the Merger and/or this Agreement that may be filed with the Board of Governors
of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Indiana Department of Financial Institutions and the Kentucky
Department of Financial Institutions.
8.13
Attorney Fees. Except as otherwise provided herein, each party shall pay hereto shall pay its own costs, expenses and attorney’s
fees in connection with the review and execution of this Agreement, any future negotiation or consultation in connection with this Agreement,
and/or in the event of any judicial proceeding arising out of or related to this Agreement or which requires the interpretation or construction
of this Agreement.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the
parties have caused this Agreement to be duly executed on the day and year first above written.
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GERMAN AMERICAN BANCORP, INC.
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By:
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/s/ Mark A. Schroeder
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Mark A. Schroeder,
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Chairman and Chief Executive Officer
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[GERMAN AMERICAN SIGNATURE PAGE TO VOTING AGREEMENT]
Lea M. Anderson,
on behalf of herself and as Trustee of the Lea M. Anderson Revocable Trust
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/s/ Lea M.
Anderson
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Lea M. Anderson
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Susan A. McMullan Eden,
as Trustee of the Susan A. McMullan Eden Trust, the Kadlam Family Trust, the Hugh River Trust
and the Seaton Oaks Trust
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/s/ Susan A. McMullan Eden
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Susan A. McMullan Eden
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|
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Brian M. McMullan, as
Trustee of the Brian M. and Amy C. McMullan Trust, the Lea M. McMullan Irrev UTD 8-11-93 and the Kadlam Family Trust
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|
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/s/ Brian M. McMullan
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Brian M. McMullan
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Amy C. McMullan, as
Trustee of the Brian M. and Amy C. McMullan Trust, the James River Irrevocable Trust, the Ashton Oaks Irrevocable Trust and the Hartfield
Irrevocable Trust
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/s/ Amy C. McMullan
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Amy C. McMullan
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Kenneth D. Anderson
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/s/ Kenneth D. Anderson
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Kenneth D. Anderson
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[SECURITYHOLDER SIGNATURE PAGE TO VOTING AGREEMENT]
Steven E.
Barker, on behalf of himself and as Trustee of the Thomas Barker Trust, the Thomas & Agnes Barker
Trust, the Betty P. Barker Trust and the Agnes Barker Trust
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/s/ Steven E. Barker
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Steven E. Barker
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Edward B. Hayes
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/s/ Edward B. Hayes
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Edward B. Hayes
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Katherine Hayes Trentham,
on behalf of herself and as Trustee of the Edward B. Hayes Irrevocable Trust 5 and the Edward B.
Hayes Irrevocable Trust 6
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/s/ Katherine Hayes Trentham
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Katherine Hayes Trentham
|
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PNC DTC, as
Trustee of the Ann Hayes Ronald Delaware Trust
|
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/s/ Jon-Michael Childers
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Jon-Michael Childers
|
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William H. Borders
|
|
|
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/s/ William H. Borders
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William H. Borders
|
|
|
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F. Patrick Hargadon
|
|
|
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/s/ F. Patrick Hargadon
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F. Patrick Hargadon
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[SECURITYHOLDER SIGNATURE PAGE TO VOTING AGREEMENT]
Steve E. Higdon
|
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/s/ Steve E. Higdon
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Steve E. Higdon
|
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D. Ray Leathers
|
|
|
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/s/ D. Ray Leathers
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D. Ray Leathers
|
|
|
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Robert F. McDowell
|
|
|
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/s/ Robert F. McDowell
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Robert F. McDowell
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|
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Stephen H. Solomon
|
|
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/s/ Stephen H. Solomon
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Stephen H. Solomon
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Gary L. Stewart
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|
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s/ Gary L. Stewart
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Gary L. Stewart
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David M. Bowling
|
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/s/ David M. Bowling
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David M. Bowling
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Darryl T. Traylor
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/s/ Darryl T. Traylor
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Darryl T. Traylor
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[SECURITYHOLDER SIGNATURE PAGE TO VOTING AGREEMENT]
EXHIBIT A
SECURITYHOLDERS’ OWNERSHIP
OF COMPANY STOCK
Securityholder
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Shares of
Common
Stock
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Lea M. Anderson Revocable Trust
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179,006
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Susan A. McMullan Eden Trust
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367,180
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Brian M. and Amy C. McMullan Trust
|
339,356
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James River Irrevocable Trust
|
55,643
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Ashton Oaks Irrevocable Trust
|
55,643
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Hartfield Irrevocable Trust
|
55,643
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Lea M. McMullan Irrev UTD 8-11-93
|
30,300
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Kadlam Family Trust
|
25,200
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Hugh River Trust
|
10,369
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Seaton Oaks Trust
|
10,369
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Kenneth D. Anderson
|
6,796
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Thomas Barker Trust
|
173,388
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Thomas & Agnes Barker Trust
|
133,126
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Betty P. Barker Trust
|
13,898
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Agnes Barker Trust
|
4,000
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Sarah H. Wilson
|
187,154
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Katherine Hayes Trentham
|
186,426
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Ann Hayes Ronald Delaware Trust
|
186,426
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Edward B. Hayes
|
170,636
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Edward B. Hayes Irrevocable Trust 5
|
7,581
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Edward B. Hayes Irrevocable Trust 6
|
7,581
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William H. Borders
|
12,980
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F. Patrick Hargadon
|
14,796
|
Steve E. Higdon
|
2,511
|
D. Ray Leathers
|
5,000
|
Robert F. McDowell
|
4,200
|
Stephen H. Solomon
|
45,520
|
Gary L. Stewart
|
5,000
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David M. Bowling
|
54,718
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Darryl T. Traylor
|
45,002
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Exhibit
99.1
NEWS RELEASE
For additional information, contact:
Mark A. Schroeder, Chairman and Chief
Executive Officer
D. Neil Dauby, President and Chief
Operating Officer
Bradley M. Rust, Senior Executive
Vice President and Chief Financial Officer
(812) 482-1314
1 of 5
SEPTEMBER 20, 2021
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GERMAN AMERICAN BANCORP, INC. AND CITIZENS UNION BANCORP
OF SHELBYVILLE, INC. ANNOUNCE DEFINITIVE MERGER AGREEMENT
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Jasper, Indiana: September 20, 2021 – German
American Bancorp, Inc. (Nasdaq: GABC) (“German American”) and Citizens Union Bancorp of Shelbyville, Inc. (“CUB”)
announced today that they have entered into a definitive agreement to merge CUB into German American. Upon completion of the transaction,
CUB’s subsidiary bank, Citizens Union Bank of Shelbyville, Inc., will be merged into German American’s subsidiary bank, German
American Bank.
Under terms of the definitive agreement, CUB common
shareholders will receive a fixed exchange ratio of 0.7739 shares of German American common stock for each share of CUB in a tax-free
exchange, and a cash payment of $13.44 per CUB share. Based on the number of CUB common shares expected to be outstanding at closing,
German American would issue approximately 2.9 million shares of its common stock, and pay approximately $49.8 million cash, for all of
the issued and outstanding common shares of CUB. German American has also agreed, upon completion of the merger, to make a cash payment
in cancellation of CUB’s unexercised stock options, which payment is currently estimated to total approximately $0.9 million, if
none of the outstanding options were to be exercised before closing.
Based upon the $35.99 per share volume-weighted
average price of German American’s common shares over the 10-day trading period ended September 17, 2021, the transaction has an
aggregate indicated value of approximately $154.0 million, with the total merger consideration being split between stock and cash
on an approximate 67:33 basis. Upon consummation of the transaction, German American and CUB will have combined assets of approximately
$6.4 billion, based upon June 30, 2021 financials. Giving effect to the merger today, the combined company would have 83 banking offices
in 19 counties in Indiana and 15 counties in Kentucky.
Mark A. Schroeder, Chairman and CEO of
German American, stated, “This merger with Citizens Union represents another important, strategic opportunity for German
American, and enhances our presence in the vibrant Louisville, Kentucky metropolitan market area. Our combined operations in the
broader Louisville market area places us in a top 10 market share position in the largest metropolitan market area in the
Commonwealth of Kentucky. CUB has built a solid community banking franchise in each of the Kentucky markets they serve giving German
American an opportunity to provide our extensive offerings of banking, insurance and investment products and services to CUB’s
current and prospective clients. We are excited to welcome the Citizens Union customers, employees, communities and shareholders to
the German American family.”
NEWS RELEASE
September 20, 2021
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2 of 5
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Schroeder continued, “We expect that this
strategic transaction will be materially accretive to German American’s earnings per share during the twelve months following completion
of the transaction, and will have a relatively quick tangible book value earn back period of less than three years. German American’s
pro forma capital ratios will continue to significantly exceed regulatory well-capitalized levels, enabling us to continue to take advantage
of future growth opportunities throughout our markets in Kentucky, as well as within and adjacent to our existing Southern Indiana market
area.”
David M. Bowling, Chief Executive Officer of CUB,
stated, “This strategic partnership with German American, one of the best performing community banking organizations in the nation,
will enable us to deepen and broaden the financial services offerings we provide in all our markets. Strategically and culturally, we
are exceptionally well aligned with German American’s commitment to their community banking business model centered on delivering
exceptional customer service and on a willingness to invest in the local communities they serve. German American’s reputation, financial
strength and operational capabilities will provide tremendous value to our customers, employees, communities and shareholders.”
The transaction is expected to close in the first
quarter of 2022. Completion of the transaction is subject to approval by regulatory authorities and by holders of a majority of the issued
and outstanding common shares of CUB, as well as certain other closing conditions. In connection with the definitive agreement, German
American entered into a voting agreement with each of the members of the CUB board of directors and with certain other CUB shareholders,
who collectively hold approximately 60% of the outstanding shares of CUB common stock. Subject to the terms and conditions of the voting
agreement, the shareholders who are parties to the agreement have agreed to vote their shares in favor of the transactions contemplated
by the definitive agreement.
Piper Sandler & Co. served as financial advisor
on the transaction to German American and Dentons Bingham Greenebaum LLP served as legal counsel.
ProBank Austin served as financial advisor on
the transaction to CUB and Frost Brown Todd LLC served as legal advisor.
NEWS RELEASE
September 20, 2021
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3 of 5
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Additional Information
Communications in this press release do not constitute
an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy vote or approval. The proposed merger
will be submitted to the CUB shareholders for their consideration. In connection with the proposed merger, German American will file a
Registration Statement on Form S-4 with the Securities and Exchange Commission (“SEC”) that will include a proxy statement
for CUB and a prospectus for German American and other relevant documents concerning the proposed merger. INVESTORS ARE URGED TO READ
THE REGISTRATION STATEMENT AND THE CORRESPONDING PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER WHEN IT BECOMES AVAILABLE, AS
WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS TO THOSE DOCUMENTS, AS THEY WILL
CONTAIN IMPORTANT INFORMATION. You will be able to obtain a copy of the proxy statement/prospectus once filed, as well as other filings
containing information about German American, without charge, at the SEC’s website (http://www.sec.gov) or by accessing German American’s
website (http://www.germanamerican.com) under the tab “Investor Relations” and then under the heading “Financial Information”.
Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus
can also be obtained, without charge, by directing a request to Terri A. Eckerle, Shareholder Relations, German American Bancorp, Inc.,
711 Main Street, Box 810, Jasper, Indiana 47546, telephone 812-482-1314 or to David M. Bowling, Chief Executive Office, Citizens Union
Bancorp of Shelbyville, Inc., 1854 Midland Trail, Shelbyville, Kentucky 40065, telephone 866-633-4450.
German American and CUB and certain of their directors
and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of CUB in connection with
the proposed merger. Information about the directors and executive officers of German American is set forth in the proxy statement for
German American’s 2021 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 30, 2021, which information
has been updated by German American from time to time in subsequent filings with the SEC. Information about the directors and executive
officers of CUB will be set forth in the proxy statement/prospectus relating to the proposed merger. Additional information about the
interests of those participants and other persons who may be deemed participants in the transaction may also be obtained by reading the
proxy statement/prospectus relating to the proposed merger when it becomes available. Free copies of this document may be obtained as
described above.
NEWS RELEASE
September 20, 2021
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4 of 5
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Forward-Looking Statements
This press release contains forward-looking statements
made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can
often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”,
“project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional
verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”,
or similar expressions. These forward-looking statements include, but are not limited to, statements relating to the expected timing and
benefits of the proposed merger (the “Merger”) between German American and CUB, including future financial and operating results,
cost savings, enhanced revenues, and accretion/dilution to reported earnings that may be realized from the Merger, as well as other statements
of expectations regarding the Merger, and other statements of German American’s goals, intentions and expectations; statements regarding
German American’s business plan and growth strategies; statements regarding the asset quality of German American’s loan and
investment portfolios; and estimates of German American’s risks and future costs and benefits, whether with respect to the Merger
or otherwise.
These forward-looking statements are subject
to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in
forward-looking statements, including, among other things: the risk that the businesses of German American and CUB will not be
integrated successfully or such integration may be more difficult, time-consuming or costly than expected; expected revenue
synergies and cost savings from the Merger may not be fully realized or realized within the expected time frame; revenues following
the Merger may be lower than expected; customer and employee relationships and business operations may be disrupted by the Merger;
the ability to obtain required regulatory approvals or the approval of CUB’s shareholders, and the ability to complete the
Merger on the expected timeframe; the costs and effects of litigation and the possible unexpected or adverse outcomes of such
litigation; the ability of German American to complete integration and attract new customers; possible changes in economic and
business conditions; the severity and duration of the COVID-19 pandemic and its impact on general economic and financial market
conditions and our business, results of operations and financial condition; the existence or exacerbation of general geopolitical
instability and uncertainty; possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing
restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases;
possible changes in the creditworthiness of customers and the possible impairment of collectability of loans; fluctuations in market
rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of
federal and state agencies applicable to bank holding companies and banks like German American’s affiliate bank; continued
availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market,
economic, operational, liquidity, credit and interest rate risks associated with German American’s business; and other risks
and factors identified in German American’s filings with the Securities and Exchange Commission. Neither German American nor
CUB undertakes any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in
this press release. In addition, German American’s and CUB’s past results of operations do not necessarily indicate
either of their anticipated future results, whether the Merger is effectuated or not.
NEWS RELEASE
September 20, 2021
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5 of 5
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About German American
German American Bancorp, Inc. is a Nasdaq-traded
(symbol: GABC) financial holding company based in Jasper, Indiana. German American, through its banking subsidiary German American Bank,
operates 68 banking offices in 19 contiguous southern Indiana counties and eight counties in Kentucky. The Company also owns an investment
brokerage subsidiary (German American Investment Services, Inc.) and a full line property and casualty insurance agency (German American
Insurance, Inc.). At June 30, 2021, German American reported total assets of approximately $5.3 billion, total loans (net of allowance)
of approximately $3.0 billion, and total deposits of approximately $4.4 billion.
About CUB
Citizens Union Bancorp of Shelbyville, Inc. is
a bank holding company headquartered in Shelbyville, Kentucky. CUB has branch offices located in Shelby, Jefferson, Spencer, Bullitt,
Oldham, Owen, Gallatin and Hardin counties in Kentucky. At June 30, 2021, CUB reported total assets of approximately $1.1 billion, total
loans (net of allowance) of approximately $707.5 million, and total deposits of approximately $889.2 million.
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Symbol: GABC
September 2021
Merger with
Citizens Union Bancorp of Shelbyville, Inc.
Shelbyville, Kentucky
1
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CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This presentation contains forward‐looking statements made pursuant to the safe‐harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward‐looking statements can often, but not always, be identified by the use of words like “believe”,
“continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as
“will”, “would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These forward‐looking statements include, but are not
limited to, statements relating to the expected timing and benefits of the proposed merger (the “Merger”) between German American
Bancorp, Inc.(“German American”) and Citizens Union Bancorp of Shelbyville, Inc.(“Citizens Union”), including future financial and
operating results, cost savings, enhanced revenues, and accretion/dilution to reported earnings that may be realized from the Merger, as
well as other statements of expectations regarding the Merger, and other statements of German American’s goals, intentions and
expectations; statements regarding German American’s business plan and growth strategies; statements regarding the asset quality of
German American’s loan and investment portfolios; and estimates of German American’s risks and future costs and benefits, whether
with respect to the Merger or otherwise.
These forward‐looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ
materially from those set forth in forward‐looking statements, including, among other things: the risk that the businesses of German
American and Citizens Union Bancorp will not be integrated successfully or such integration may be more difficult, time‐consuming or
costly than expected; expected revenue synergies and cost savings from the Merger may not be fully realized or realized within the
expected time frame; revenues following the Merger may be lower than expected; customer and employee relationships and business
operations may be disrupted by the Merger; the ability to obtain required regulatory approvals or the approval of Citizens Union
Bancorp’s shareholders, and the ability to complete the Merger on the expected timeframe; the costs and effects of litigation and the
possible unexpected or adverse outcomes of such litigation; possible changes in economic and business conditions; the severity and
duration of the COVID-19 pandemic and its impact on general economic and financial market conditions and our business, results of
operations and financial condition; the existence or exacerbation of general geopolitical instability and uncertainty; the ability of German
American to complete integration and attract new customers; possible changes in monetary and fiscal policies, and laws and regulations;
the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative
cases; possible changes in the creditworthiness of customers and the possible impairment of collectability of loans; fluctuations in market
rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and
state agencies applicable to bank holding companies and banks like German American’s affiliate bank; continued availability of earnings
and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity,
credit and interest rate risks associated with German American’s business; and other risks and factors identified in German American’s
filings with the Securities and Exchange Commission. German American does not undertake any obligation to update any
forward‐looking statement, whether written or oral, relating to the matters discussed in this presentation. In addition, German American’s
and Citizens Union Bancorp’s past results of operations do not necessarily indicate either of their anticipated future results, whether the
Merger is effectuated or not.
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ADDITIONAL INFORMATION FOR INVESTORS
Communications in this presentation do not constitute an offer to sell or the solicitation of an offer to buy any securities
or a solicitation of any proxy vote or approval. The Merger will be submitted to the Citizens Union Bancorp’s
shareholders for their consideration. In connection therewith, German American will file a Registration Statement on
Form S-4 with the Securities and Exchange Commission (“SEC”) that will include a proxy statement for Citizens Union
Bancorp and a prospectus for German American, as well as other relevant documents concerning the Merger.
INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE CORRESPONDING PROXY
STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE, AS WELL AS ANY
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, TOGETHER WITH ALL AMENDMENTS AND
SUPPLEMENTS TO THOSE DOCUMENTS, AS THEY WILL CONTAIN IMPORTANT INFORMATION. You will be able
to obtain a copy of the proxy statement/prospectus (once filed), as well as other filings containing information about
German American, without charge, at the SEC's website (http://www.sec.gov). You may also obtain these documents,
without charge, by accessing German American’s Web site (http://www.germanamerican.com) under the tab “Investor
Relations” and then under the heading “Financial Information.” Copies of the proxy statement/prospectus and the filings
with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained, without
charge, by directing a request to Terri A. Eckerle, Shareholder Relations, German American Bancorp, Inc., 711 Main
Street, Box 810, Jasper, Indiana 47546, telephone 812-482-1314 or to Mr. David Bowling, CEO, Citizens Union
Bancorp, 1854 Midland Trail Shelbyville, KY 40065. German American and Citizens Union Bancorp and certain of their
directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of
Citizens Union Bancorp in connection with the Merger. Information regarding the interests of those persons who may be
deemed participants in the transaction may be obtained by reading the proxy statement/prospectus when it becomes
available. Free copies of this document may be obtained as described in the preceding paragraph.
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Transaction Highlights
4
• Attractive addition to German American franchise:
– Expands GABC’s market share position in the attractive Louisville, KY market (1)
• Tripling market share to 2.47%, a top-10 overall market share position in a major metro market
• Increases German American’s deposit market share rank to #4 of banks with less than $20 billion assets
• Logical expansion within the Louisville market, enhancing the Company’s existing Indiana footprint and
Louisville Commercial LPO
• Further expands German American’s Kentucky footprint following upon the Citizens First Corp. merger in
2019 and First Security, Inc. merger in 2018
– Complimentary community banking model & culture with opportunity to expand relationships with Citizens
Union customers
– Retention of key Citizens Union personnel - David Bowling (current CEO) and Darryl Traylor (current
President) will assume regional roles in a senior advisory capacity as Regional Chairman and Vice
Chairman, respectively
• Financially Compelling:
– ~14% accretive to first full year EPS(2)
– ~2.50 earn back period and 3.2% dilutive to TBV at closing(3)
– ~200+ bps improvement in 2023E ROATCE (first full year of combined operations with 100% cost saves)
– Price / LTM Net Income + Cost Savings of 8.2x(4)
– Pro forma tangible common equity / tangible assets > 9.5% at close leaves GABC well positioned for
continued growth
1) Defined as MSA of Louisville, KY
2) Excludes one-time costs. Assumes 100% phase-in of projected cost savings
3) Tangible book value per share earn back period defined as the number of years for pro forma tangible book value per share to exceed
projected standalone tangible book value per share (“crossover”)
4) Based on GABC’s 10 Day VWAP $35.99 as of September 17, 2021
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Transaction Overview
5
• GABC to acquire 100% of Citizens Union Bancorp of Shelbyville. Citizens Union Bank of
Shelbyville will be merged with and into GABC’s banking subsidiary, German American Bank
• Approximately 67% stock / 33% cash mix – Citizens Union pro forma ownership of
approximately 10%(1)
• Each common shareholder will receive 0.7789 shares of GABC common stock and $13.44
in cash
• Unexercised stock options will be cashed out
Structure /
Consideration
Purchase
Price (1)(2)
Board / Management
Other Terms
Approvals / Timing
• $41.29 per share or $154.0 million in aggregate consideration(1)(2)
• Price / tangible book value of 155%
• Price / LTM net income of 14.0x
• Price / LTM net income + cost savings of 8.2x(3)
• Core deposit premium of 6.5%(4)
• David Bowling, CEO of Citizens Union, and Daryl Traylor, President of Citizens Union, will
assume regional roles in a senior advisory capacity as Regional Chairman and Vice
Chairman, respectively
• Citizens Union shall have a minimum net worth at closing with any shortfall deducted from
the cash consideration
• Termination fee of $6.5 million
• Customary regulatory approvals and shareholder approval by a majority of Citizens Union
shareholders(5)
• Estimated close and conversion in Q1 2022
1) Based on GABC’s 10 Day VWAP $35.99 as of September 17, 2021
2) Based on 3,706,299 shares of common stock outstanding; 51,336 unexercised stock option shares with weighted average strike price of $23.40
3) Assumes fully phased-in cost savings
4) Excludes CDs greater than $100k
5) All of the members of the Board of Directors and certain other shareholders of Citizens Union Bancorp have entered into a Voting Agreement with
GABC (representing approximately 60% of the shares outstanding), pursuant to which they agreed to vote their shares in favor of the merger
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Citizens Union’s major Kentucky markets enhance
GABC’s overall demographics
Attractive Addition to Kentucky Franchise
GABC
CUB
Louisville,
KY MSA
Pro Forma Branch Map
Source: S&P Global Market Intelligence, Company documents
1) Based on 3,706,299 shares of CUB common stock outstanding
2) GABC YTD Diluted Earnings Per Share
3) Demographic & deposit data as of June 30, 2021
6
Balance Sheet & Select Metrics as of 6/30/21
Balance Sheet ($M) GABC CUB
Total Assets $5,348 $1,074
Total Loans (Excl. HFS) $3,071 $716
Total Deposits $4,450 $889
Tangible Common Equity $520 $99
TCE/TA 10.0% 9.3%
Per Share Data (1)
Tanigble Book Value Per Share $19.58 $26.81
YTD Earnings Per Share (2) $1.64 $1.58
Other
Banking Offices 68 15
2010-2021 Projected 2021-2026
Location
# of
Brchs
Deposits In
Market
($M)
Population
Change
(%)
Population
Change
(%)
HH Income
Change
(%)
MSA
Louisville/Jefferson County, KY-IN 11 703.2 5.76 2.02 9.78
Cincinnati, OH-KY-IN 1 33.2 4.53 1.71 9.70
Elizabethtown-Fort Knox, KY 1 27.5 4.57 2.12 7.31
County Not In Any MSA
Owen County, Kentucky 2 128.5 1.01 1.21 7.05
Citizens Union Demographic Information (3)
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Due Diligence Summary
7
• Comprehensive due diligence process
• In-depth review of credit files, underwriting
methodology and policy
• Approximately 71% of the total loan portfolio,
approximately 81% of commercial loans (excluding
PPP loans), and 100% of non-performing loans
were reviewed
• Detailed review of expenses on a line item basis
Modeling Assumptions
• Estimated credit mark of $14.9 million ($5.7 million
net of reserves), consisting of:
– PCD credit mark of $9.1 million (recorded as ACL)
– Non-PCD credit mark of $5.8 million, accreted through
earnings over 4 years SYD
• Day 2 CECL reserve for Non-PCD loans of $5.8
million
• Assumes 35% cost savings
– 75% phased-in in 2022 and 100% thereafter
• $1.0 million pre-tax time deposit write-up, amortized
over life of the deposits
• $1.7 million pre-tax FHLBs write-up, amortized over
life of the borrowings
• $2.8 million pre-tax TruPS write-down, accreted over
13.5 years
• Core deposit intangible of $3.3 million or 0.50%
amortized sum-of-years-digits over 10 years
• Pre-tax, one-time buyer and seller combined costs
are estimated at $19.3 million; assumed to be 34%
realized prior to transaction closing
Due Diligence Highlights
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Summary Highlights
• Enhances market position, following upon prior mergers with Citizens First
Corp. and First Security Inc., in key, attractive Kentucky markets
• Similar cultural fit for transitioning post-close
• Pro forma total assets approaching $6.5 billion at close
• Financially compelling:
– ~14% accretive to EPS in the first full year(1)
– Modest TBV dilution with ~2.50 year earn back (crossover method)(2)
– ~200+ bps improvement in 2023E ROATCE (first full year of combined operations with
100% cost saves)
• Strong pro forma capital levels with flexibility to continue future growth
8
1) Excludes one-time costs. Assumes 100% phase-in of projected cost savings
2) Tangible book value per share earn back period defined as the number of years for pro forma tangible book value per share to exceed
projected standalone tangible book value per share (“crossover”)
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9
Disciplined, Proven Acquiror
2013
United Commerce
Bancorp
• $128mm assets
2016
River Valley
Bancorp
• $519mm assets
2018
5 branches from
MainSource Financial
Group, Inc.
• $175mm deposits
First Security
• $572mm assets
2019
Citizens First
Corporation
• $476mm assets
2011
American Community
Bancorp
• $326mm assets
2021
(pending)
Citizens Union
Bancorp of
Shelbyville
• $1.1bn assets
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