On October 24, 2022, Peoples Bancorp, Inc., an Ohio corporation ("Peoples"), and Limestone Bancorp, Inc., a Kentucky
corporation ("Limestone"), entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which Limestone agreed to merge with and into Peoples (the "Merger"). The Merger Agreement provides that Limestone's wholly-owned banking
subsidiary, Limestone Bank, Inc., will be merged with and into Peoples' wholly-owned banking subsidiary, Peoples Bank, Inc. (the “Bank Merger”), following the Merger. The Boards of Directors of both Peoples and Limestone have approved the Merger,
the Bank Merger and the Merger Agreement.
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each record holder of Limestone common stock (other than "Dissenting Shares" (as defined in the Merger Agreement)) will
receive 0.90 shares of Peoples common stock in a tax-free exchange for each share of Limestone common stock. Cash will be paid in lieu of fractional shares. Consummation of the Merger is subject to approval by federal and state banking regulatory
authorities, approval by the shareholders of Limestone and Peoples and certain other conditions set forth in the Merger Agreement.
The Merger Agreement contains (a) customary representations and warranties of Peoples and Limestone, 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 Limestone to conduct its business
in the ordinary course until the Merger is completed, (c) covenants of Limestone to use reasonable efforts to preserve intact its business organization and assets and maintain its rights and franchises, and (d) covenants of Peoples and Limestone to
take, or not to take, certain actions during the term of the Merger Agreement. Limestone has also agreed not to (a) solicit proposals relating to alternative business combination transactions or (b) maintain discussions concerning any proposals for
alternative business combination transactions.
Each party's obligation to consummate the Merger is subject to various conditions, including (a) receipt of the
requisite approval of the holders of Limestone common stock of the Merger and the Merger Agreement, (b) the requisite approval of the holders of Peoples common stock of the Merger and the Merger Agreement, (d) receipt of regulatory approvals,
(d) effectiveness of the registration statement to be filed by Peoples with respect to the Peoples common stock to be issued in the Merger, (e) the accuracy of the representations and warranties of the other party in all material respects,
(f) compliance by the other party with its covenants in all material respects, and (g) the absence of a material adverse effect as to the other party.
The Merger Agreement contains certain termination rights for Peoples and Limestone, 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 July 31, 2023; (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; (vi) the failure of the Board of Directors of Limestone or the Board of Directors of Peoples to recommend
the Merger to its shareholders, or (iv) if the Limestone shareholders or the Peoples 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 $8.3 Million by Limestone to Peoples, as more fully described in the Merger Agreement.
In connection with the Merger Agreement, the members of the Board of Directors of Limestone and the holder of
Limestone’s non-voting common stock, all of whom collectively hold approximately 19.1% of the outstanding shares of Limestone voting common stock and 100% of the outstanding shares of Limestone non-voting common stock as of October 24, 2022, each
entered into a support agreement (collectively, the "Support Agreements") with Peoples. Subject to the terms and conditions of the Support Agreements, the directors of Limestone have agreed to vote their shares in favor of the transactions
contemplated by the Merger Agreement and against any alternative acquisition proposal. The Support Agreements automatically terminate upon any termination of 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 and is incorporated herein by reference. The form of
Support Agreement executed by directors of Limestone is included as an exhibit to the Merger Agreement and is incorporated herein by reference.
As described in Item 3.03 of this Report, which is incorporated by reference, in conjunction with the execution of the
Merger Agreement, on October 24, 2022, Limestone amended its Tax Benefit Preservation Plan, between Limestone and American Stock Transfer & Trust Company, LLC, as
rights agent, dated June 25, 2015, as amended, to accelerate its final expiration date to October 24, 2022.