Registration No. _______________
______________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________________________________________________________
FIRST CAPITAL BANCSHARES, INC.
(Exact name of issuer as specified in its Charter)
Ohio 31-1576795
(State of Incorporation) (I.R.S. Employer Identification No.)
33 West Main Street, Chillicothe, Ohio, 45601, (614) 775-6777
(Address, including zip code, and telephone number, including area
code, of registrant's Principal Executive Offices)
______________________________________________________________
Mr. Thomas W. Beard
President
First Capital Bancshares, Inc.
33 West Main Street
Chillicothe, Ohio 45601
(614) 775-6777
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_____________________________________________________________
Copy To:
Susan B. Zaunbrecher, Esq.
Dinsmore & Shohl
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
(513) 977-8200
Approximate date of proposed commencement of sales hereunder:
As soon as practicable after the effective date of this Registration
Statement
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box:
__x__
<PAGE>
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
Securities Amount Maximum Maximum
To Be To Be Offering Price Offering Amount of
Registered Registered Per Share Price Registration Fee
Common Stock 690,000 $ 15.07(1) $10,398,300.00 $3,067.50
without par
value
(1) The transaction to be registered on this Registration Statement
on Form S-4 is the issuance of shares of the Common Stock without
par value of First Capital Bancshares, Inc. (the "Holding Company")
to the existing shareholders of The Citizens National Bank of
Chillicothe (the "Bank") pursuant to the merger of the Bank into a
wholly-owned subsidiary of the Holding Company. As a result of the
merger, each shareholder of the Bank will receive ten (10) shares of
the Holding Company's Common Stock in exchange for each share of the
Bank's Common Stock. Although there are transactions in the Common
Stock of the Bank from time to time, trading has been extremely
limited. As of September 30, 1997 the estimated book value of the
Bank's Common Stock was approximately $150.74 per share. Since ten
(10) shares of Holding Company Common Stock are to be issued for
each of the 69,000 presently outstanding shares of Bank Common
Stock, 10% of the estimated per share book value of Bank Common
Stock, or $15.07 per share of Holding Company Common Stock, is the
amount on which the above registration fee is based.
<PAGE>
PROXY STATEMENT/PROSPECTUS
FIRST CAPITAL BANCSHARES, INC.
690,000 SHARES OF COMMON STOCK WITHOUT PAR VALUE
OF FIRST CAPITAL BANCSHARES, INC.
TO BE ISSUED IN CONNECTION WITH THE MERGER OF
THE CITIZENS NATIONAL BANK OF CHILLICOTHE INTO
THE CNB NATIONAL BANK (IN ORGANIZATION),
A WHOLLY-OWNED SUBSIDIARY OF FIRST CAPITAL BANCSHARES, INC.
___________________
THIS PROXY STATEMENT/PROSPECTUS CONSTITUTES THE PROXY STATEMENT OF
THE CITIZENS NATIONAL BANK OF CHILLICOTHE WITH RESPECT TO AN ANNUAL
MEETING OF ITS SHAREHOLDERS TO BE HELD ON TUESDAY, THE 24TH OF
FEBRUARY, 1998.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
THE OCC'S APPROVAL REFLECTS ONLY ITS VIEW THAT THE TRANSACTION DOES
NOT CONTRAVENE APPLICABLE COMPETITIVE STANDARDS IMPOSED BY LAW, AND
THAT THE TRANSACTION IS CONSISTENT WITH REGULATORY POLICIES RELATING
TO SAFETY AND SOUNDNESS. THE OCC'S APPROVAL IS NOT AN OPINION BY
THE OCC THAT THE PROPOSED TRANSACTION IS FAVORABLE TO THE
STOCKHOLDERS FROM A FINANCIAL POINT OF VIEW OR THAT THE OCC HAS
CONSIDERED THE ADEQUACY OF THE TERMS OF THE TRANSACTION.
THE OCC'S APPROVAL IS NOT AN ENDORSEMENT
OR RECOMMENDATION OF THE MERGER.
The date of this Proxy Statement/Prospectus is January 23, 1998<PAGE>
THE CITIZENS NATIONAL BANK OF CHILLICOTHE
33 West Main Street
Chillicothe, Ohio 45601
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that an Annual Meeting of Shareholders of The
Citizens National Bank of Chillicothe (the "Bank") will be held on
February 24, 1998 at 1:30 p.m., local time, at the main office of
the Bank, located at 33 West Main Street, Chillicothe, Ohio, for the
following purposes:
1. To elect seven nominees for Director to serve on the Board of
Directors of the Bank until the next annual meeting of shareholders.
2. To consider and act upon a proposal for the reorganization of
the Bank into a one-bank holding company structure by the adoption
of the form of Plan and Agreement of Merger and the Agreement to
Merge providing for the merger of the Bank with and into CNB
National Bank (In Organization), a wholly-owned national banking
subsidiary of First Capital Bancshares, Inc., Chillicothe, Ohio, the
Articles of Incorporation of which contain certain antitakeover
provisions, all as described in the accompanying Proxy
Statement/Prospectus.
To ratify the engagement of Robb, Dixon, Francis, Davis, Oneson &
Company as the independent auditors of the Bank for 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE BANK HAS UNANIMOUSLY APPROVED THE
FOREGOING MERGER PROPOSAL AND RECOMMENDS ITS APPROVAL BY THE
SHAREHOLDERS.
The Board of Directors has fixed the close of business on January
23, 1998, as the record date for the purpose of determining the
shareholders entitled to notice of and to vote at the Annual Meeting
and any adjournment thereof. Transferees after said date will not
be entitled to vote at the Annual Meeting.
You are cordially invited to attend the Annual Meeting in person.
Whether or not you plan to attend, you are urged to complete, date,
sign and return the enclosed Proxy in the envelope provided as soon
as possible.
By order of the Board of Directors
Dated: January 23, 1998 Thomas W. Beard, President
The Holding Company intends to furnish to its shareholders, along
with this Proxy Statement/Prospectus, an annual report for the year
ended December 31, 1997 containing financial statements. In
addition, the Holding Company may, in its sole discretion, issue
unaudited quarterly or other interim reports to its shareholders as
it deems appropriate.
___________________________
No person is authorized to give any information or to make any
representations other than those contained in this Proxy
Statement/Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized by
First Capital Bancshares, Inc. or The Citizens National Bank of
Chillicothe. This Proxy Statement/Prospectus does not constitute an
offering within any jurisdiction to any person to whom it is
unlawful to make such offer within such jurisdiction. Neither the
delivery of this Proxy Statement/Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that
there has been no change in the affairs of First Capital Bancshares,
Inc. or The Citizens National Bank of Chillicothe since the date
hereof.
TABLE OF CONTENTS
Page
INTRODUCTION 5
General 5
Election of Directors 5
Revocation of Proxies 5
The Citizens National Bank of Chillicothe 6
First Capital Bancshares, Inc. 6
Summary of the Transaction 6
Regulatory Approval 7
ELECTION OF DIRECTORS 7
ELECTION OF AUDITORS 8
DESCRIPTION OF THE TRANSACTION -
FORMATION OF A ONE-BANK HOLDING COMPANY 8
General 8
Purpose of Transaction 9
Summary of Agreements 9
Expenses of Conversion 10
Shareholder Vote Required 11
Regulatory Approvals 11
Rights of Dissenting Shareholders 11
Conditions of the Merger 12
Amendment or Abandonment of the Plan and Agreement of Merger 13
Conversion of Shares and Exchange of Certificates 13
Federal Income Tax Aspects 14
State Dividend Income Taxes 15
FINANCIAL STATEMENTS AND CAPITALIZATION 15
DESCRIPTION OF COMMON STOCK OF THE BANK AND THE HOLDING COMPANY 16
General 16
Dividends 16
Preemptive Rights 17
Cumulative Voting 17
Par Value 18
Certain Stabilizing Features of Corporate Governance 18
Repurchase of Shares 20
INFORMATION CONCERNING THE HOLDING COMPANY 21
General 21
Supervision and Regulation 21
INFORMATION REGARDING THE BANK 22
General 22
Selected Financial Data 23
Management's Discussion and Analysis of Condition and Results of
Operations 24
Supervision and Regulation 26
MANAGEMENT OF THE BANK AND THE HOLDING COMPANY 26
Directors and Executive Officers 26
Executive Compensation 28
CERTAIN BENEFICIAL OWNERS 29
COMMON STOCK MARKET INFORMATION 29
LEGAL MATTERS 30
OTHER BUSINESS 31
Appendices
Plan and Agreement of Merger Appendix A
Agreement of Merger Appendix A-1
Articles of Incorporation of
First Capital Bancshares, Inc. Appendix A-2
Code of Regulations of First Capital Bancshares, Inc. Appendix A-3
12 U.S.C. Section 215a and Banking Circular 259 Appendix B
INTRODUCTION
General
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Board of Directors of The Citizens
National Bank of Chillicothe (the "Bank") for use at the Annual
Meeting of the Bank's shareholders to be held on February 24, 1998
for the purpose of electing a Board of Directors and considering and
voting upon a proposal to merge the Bank into CNB National Bank (In
Organization) (the "New Bank"). The New Bank will be a wholly-owned
subsidiary of First Capital Bancshares, Inc., an Ohio corporation
(the "Holding Company"), and the purpose of the merger is to effect
a corporate reorganization so that the business of the Bank will be
conducted as a wholly-owned subsidiary of the Holding Company. At
the effective date of the merger, each one share of Common Stock of
the Bank will be converted by virtue of the merger into ten shares
of the Common Stock of the Holding Company. All shareholders of the
Bank will become shareholders of the Holding Company and will retain
the same percentage of ownership of Holding Company shares as each
shareholder held of the Bank's shares. The resulting bank in the
merger will thereafter be the wholly-owned subsidiary of the Holding
Company. Following the merger the Bank's business will continue
unchanged under the name The Citizens National Bank of Chillicothe
with the same management and employees. For a more detailed
description of the transaction, see the section herein entitled
"DESCRIPTION OF THE TRANSACTION."
Each of the 69,000 shares of Common Stock, $15.00 par value, of the
Bank outstanding on January 23, 1998, the record date for the
meeting, is entitled to one vote on all matters coming before the
meeting. Only shareholders of record on the books of the Bank at
the close of business on January 23, 1998 will be entitled to vote
at the meeting, either in person or by proxy.
The shares represented by all properly executed proxies that are
sent to the Bank will be voted as designated and each proxy not
designated will be voted "For" the proposed merger. Proxies will be
solicited principally by mail, but may also be solicited by
directors, officers and other regular employees of the Bank who will
receive no compensation therefor in addition to their regular
salaries. Brokers and others who hold stock in trust will be asked
to send proxy material to the beneficial owners of the stock and the
Bank may reimburse them for their expenses. The cost of preparing,
assembling and mailing this Proxy Statement/Prospectus, the notice
of meeting, and proxy, and any other costs of soliciting proxies,
will be borne by the Bank.
Election of Directors
The Articles of Association of the Bank provide that the number of
Directors shall not be less than six (6) or more than nine (9)
shareholders. The number of Directors is currently fixed at seven
(7) and the following slate of nominees is proposed by Management
for the seven (7) Directorships, each to hold office at least until
the next annual meeting of shareholders of the Bank: Thomas W.
Beard, James M. Cutright, John H. Kochensparger, III, Rosemary
Kochensparger, Joe Lane, Edward N. Steel, Jerry Whited.
Revocation of Proxies
Each person granting a proxy may revoke it by giving notice to the
Bank in writing or in open meeting at any time before it is voted,
or by submitting a subsequently dated proxy.
The Citizens National Bank of Chillicothe
The Bank is a national banking association which was organized in
1900 and has been in continuous operation since that date. It is
engaged in the general commercial banking business through its main
office and two branch offices located in Ross County, Ohio. The
address of the Bank's principal office is 33 West Main Street,
Chillicothe, Ohio 45601; (614) 775-6777.
First Capital Bancshares, Inc.
The Holding Company is a proposed bank holding company which was
organized on November 21, 1997 to facilitate the corporate
reorganization of the Bank by establishing it as a subsidiary of a
bank holding company. The Holding Company will be the sole
shareholder of the New Bank. Neither the Holding Company nor the
New Bank has conducted any business, and, until the merger becomes
effective, neither will conduct any business. After the merger
becomes effective, the Holding Company's principal business will be
ownership of 100% of the outstanding capital stock of the New Bank,
which as the resulting bank in the merger will change its name to
"The Citizens National Bank of Chillicothe" upon the effectiveness
of the merger and will succeed to all the assets and liabilities of
the Bank. Also on the effective date of the merger, the
shareholders of the Bank, by reason of the merger, will receive ten
shares of Holding Company Common Stock for each share of Bank Common
Stock.
If the conversion is duly approved by the Bank's shareholders, and
assuming the timely receipt of the appropriate regulatory approvals,
it is expected that the conversion will be legally consummated in
the second quarter of 1998. The affirmative vote of the holders of
at least two-thirds of the Bank's Common Stock, or 46,000 shares, is
necessary to approve the conversion and adopt the Plan and Agreement
of Merger and the Agreement of Merger described below.
Summary of the Transaction
The Bank's Board of Directors has determined that, due to the
greater business flexibility of a one-bank holding company system,
it is desirable for the Bank to become a wholly-owned subsidiary of
a bank holding company. Accordingly, the Board directed the
formation of the Holding Company and the organization of the New
Bank as a wholly-owned subsidiary of the Holding Company. The Board
also approved the terms of the Plan and Agreement of Merger and the
Agreement of Merger and directed that they be presented to the
shareholders for their approval.
Pursuant to the Agreement of Merger, on the effective date of the
merger, the Bank will be merged with and into the New Bank, and the
name of the New Bank will automatically be changed to "The Citizens
National Bank of Chillicothe". Each share of the Bank's outstanding
Common Stock will, by operation of law, be converted into ten shares
of the Holding Company's Common Stock, and the shareholders of the
Holding Company and their percentage ownership thereof immediately
after the merger becomes effective will be identical to the
shareholders of the Bank and their percentage ownership thereof
immediately before the merger becomes effective. Following the
merger, the Bank's business will continue unchanged with the present
management. For a more detailed description of the transaction, see
the section herein entitled, "DESCRIPTION OF THE TRANSACTION".
Shareholders of the Bank who vote against the merger or give written
notice to the Bank at or prior to the Annual Meeting of Shareholders
that they dissent from the merger and who make written demand for
payment within 30 days after consummation of the merger and
surrender their certificates representing Bank Common Stock, have
the right to receive cash in lieu of Holding Company Common Stock.
See "DESCRIPTION OF THE TRANSACTION - Rights of Dissenting
Shareholders."
Regulatory Approval
The Holding Company must be approved for formation as a bank holding
company by the Board of Governors of the Federal Reserve System,
which regulates bank holding companies. In addition, the merger
must be approved by the Comptroller of the Currency, the agency of
the federal government which regulates national banks. It is
anticipated that the Annual Meeting may be recessed from time to
time until the merger has been approved by the Comptroller, so that
the Bank's shareholders can act on technical changes, if any, to the
Plan and Agreement of Merger or Agreement of Merger recommended by
the Comptroller.
ELECTION OF DIRECTORS
The Articles of Association of the Bank provide that the Board of
Directors shall consist of not less than six (6) or more than nine
(9) persons. The number of Directors currently is fixed at seven
(7). The following slate of nominees proposed by Management
consists of seven (7) persons, all of whom currently serve as
Directors.
Proxies received in response to this solicitation will be voted,
unless authority is withheld, in favor of the election of the seven
(7) nominees named below. In the event any director nominee should
become unavailable to serve as a director, it is the intention of
the Proxy Committee to vote for such other person or persons for the
office of Director as the Board of Directors may recommend.
Management has no reason to believe that any of the nominees is not
available or will not serve if elected. In no event will the
proxies solicited hereby be voted for more than seven (7) nominees.
The proposed nominees for election as Directors are:
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Residence Director Since
Occupation
<S> <C> <C>
1. Thomas W. Beard 2151 Egypt Pike
Bank President, Chillicothe, Ohio 45601 1996
The Citizens National
Bank of Chillicothe
2. James M. Cutright 1 Belmont Court
Attorney Chillicothe, Ohio 45601 1987
3. John H. Kochensparger, III 2655 Bryden Road
Salesman Columbus, Ohio 43209 1990
4. Rosemary Kochensparger 85 Bishop Square
Homemaker Columbus, Ohio 43209 1953
5. Joseph Lane 120 North Second Street
Retired Business Owner Frankfort, Ohio 45628 1987
6. Edward N. Steel 11333 U.S. Route 50
Retired Farmer Bourneville, Ohio 45617 1953
7. Jerry Whited P.O. Box 1734
Accountant Chillicothe, Ohio 45601 1987
</TABLE>
<PAGE>
For further information concerning the nominees, see the section
herein entitled "MANAGEMENT".
ELECTION OF AUDITORS
The accounting firm of Robb, Dixon, Francis, Davis, Oneson & Company
("Robb Dixon") is presently serving as the Bank's independent
accounting firm. Robb Dixon also served as the Bank's independent
auditors with respect to the Bank's financial statements for the
year ended December 31, 1997. Representatives of Robb Dixon will be
present at the Annual Meeting and will be available to respond to
appropriate questions. The affirmative vote of a majority of the
Bank's common stock present in person or by proxy at the Annual
Meeting and entitled to vote is required to adopt the resolution.
Action by the shareholders is not required by law in the appointment
of independent auditors, but their appointment is submitted by the
Board of Directors in order to give the shareholders a voice in the
selection of auditors. If the resolution is rejected by the
shareholders, the Board of Directors will reconsider its choice of
Robb Dixon as the Bank's independent auditors. Proxies in the form
solicited hereby which are returned to the Bank will be voted in
favor of the resolution unless otherwise instructed by the
shareholders. Abstentions have the same effect as votes cast
against the resolution, provided such shares are properly present at
the meeting in person or by proxy. The Board of Directors
recommends the adoption of the resolution.
The resolution states:
"RESOLVED, that the shareholders of the Bank hereby ratify the
action of the Board of Directors in retaining Robb, Dixon, Francis,
Davis, Oneson & Company as the independent auditors of the Bank for
1998."
DESCRIPTION OF THE TRANSACTION - FORMATION OF
A ONE-BANK HOLDING COMPANY
General
At the Annual Meeting to be held on February 24, 1998, the following
proposed resolution will be submitted for adoption by the Bank's
shareholders. The affirmative vote of the holders of at least
two-thirds of the Bank's Common Stock issued and outstanding on
January 23, 1998, the record date for the Annual Meeting, is
required to approve and adopt the Plan and Agreement of Merger and
the Agreement of Merger which will effect the conversion of the Bank
into the Holding Company through the statutory merger of the Bank
with and into the New Bank. The New Bank will thereafter be a
wholly-owned subsidiary of the Holding Company.
The Board of Directors has declared the advisability of the adoption
of the following resolution and recommends a vote FOR the
resolution. Proxies will be voted in favor of this resolution
unless otherwise instructed by the shareholders.
The resolution states:
"RESOLVED, That the form of Plan and Agreement of Merger dated as of
January 16, 1997 between The Citizens National Bank of Chillicothe
and First Capital Bancshares, Inc., together with the Agreement of
Merger appended hereto as Exhibit A, providing for the merger of The
Citizens National Bank of Chillicothe with and into New Bank and the
conversion of the Bank into a holding company structure, are hereby
approved, ratified, adopted and confirmed."
Purpose of Transaction
In recent years, an increasing number of banks have converted their
corporate structures to that of a one-bank holding company under the
Bank Holding Company Act of 1956 due to the various advantages of
such a corporate structure, and the Board of Directors of the Bank
has determined that such a conversion is in the best interests of
the Bank. A holding company corporate structure will enhance the
Bank's ability to compete under the laws and conditions prevailing
in the banking field today. The resulting holding company structure
will afford greater flexibility in carrying on the Bank's business
activities and in responding effectively to future needs and
opportunities to expand the financial services currently offered and
the market currently served. It will provide an opportunity for
diversification, either through newly-formed subsidiaries or by
acquisition of established companies.
In addition, the reorganization will also provide flexibility in
meeting future financing needs. The Holding Company can increase
its number of authorized shares of Common Stock and issue such stock
without the approval of the Comptroller of the Currency. While
there are no present plans for the issuance of additional shares,
having this capability affords greater flexibility in raising
additional capital, in effectuating proposed acquisitions and for
other corporate purposes. The Holding Company will also have
authority to redeem its shares, subject to regulatory limits,
without the prior approval of any supervisory authorities and to
hold them, if desired, as treasury shares available for future
issuance.
Summary of Agreements
Copies of the Plan and Agreement of Merger, including the Agreement
of Merger, are attached as Appendices A and A-1 to this Proxy
Statement/Prospectus. The following paragraphs describe the
conversion, merger and related transactions. However, for more
complete information reference is made to the Agreements attached
hereto as Appendices A and A-1 as well as to Appendices A-2 and A-3
containing the Articles of Incorporation and Code of Regulations of
the Holding Company, respectively. The proposed Articles of
Association of the resulting bank in the merger are contained in the
Agreement of Merger (Appendix A-1).
The Bank and the Holding Company have entered into, and the New Bank
upon its formation will join in and become a party to, the Plan and
Agreement of Merger which sets forth the terms of the Bank's
conversion to a holding company structure. Under this Agreement,
the Bank will be merged with and into the New Bank, which will
simultaneously change its name to "The Citizens National Bank of
Chillicothe". Upon consummation of the merger, each outstanding
share of the Bank's Common Stock, $15.00 par value, will by
operation of law be converted into ten shares of the Holding
Company's Common Stock without par value. Consequently, the
shareholders of the Bank and their respective share holdings, as a
percentage of ownership, immediately prior to the consummation of
the merger will be identical to those of the Holding Company
immediately after consummation of the merger. A maximum of 690,000
shares of Holding Company Common Stock will be issued pursuant to
the merger. See "DESCRIPTION OF COMMON STOCK OF THE BANK AND THE
HOLDING COMPANY" for a discussion of the rights of shareholders of
the Bank as compared to shareholders of the Holding Company.
As of the effective date of the merger, the Bank will cease to exist
as a legal entity. The corporate identities and business of both
the Bank and the New Bank will be combined, and the business of the
Bank will continue to be conducted under the name "The Citizens
National Bank of Chillicothe" after the merger without any change.
The business of the resulting bank after the merger will be
identical to that of the Bank prior to the merger and will be
conducted with the same offices, properties and personnel as that of
the Bank. The resulting bank initially will have the same directors
and officers as the Bank. The resulting bank will continue to be
subject to regulation by the Comptroller of the Currency, and
deposits in the resulting bank will continue to be insured by the
Federal Deposit Insurance Corporation. In short, the resulting bank
will succeed to all of the rights and assets of the Bank and will be
subject to all of the Bank's obligations and liabilities.
Expenses of Conversion
The expenses of the conversion of the Bank into a holding company
structure, estimated to total approximately $55,000, will be borne
by the Bank. It is anticipated that legal expenses of the
conversion will approximate $30,000; accounting and financial
advisory services will approximate $10,000; application and related
fees for approvals by regulatory authorities are expected to total
$7,600; loan fees charged by an unaffiliated bank will approximate
$1,500; and postage, photocopying, long distance, supplies and
related miscellaneous expenses are not expected to exceed $1,100.
No commissions of any kind and no remuneration to directors, other
than customary fees for attending meetings, will be paid as a result
of the conversion.
The Holding Company will borrow approximately $115,000 from an
unaffiliated bank to finance its subscription for all the shares of
the New Bank's common stock. The loan will be evidenced by the
promissory note of the Holding Company. Upon the consummation of
the merger, the total equity capital of the resulting bank in the
merger will be essentially equal to that of the Bank plus that of
the New Bank. The total equity capital of the Bank at September 10,
1997 was $10,401,060. The contemplated total equity capital of the
resulting bank in the merger on a pro forma basis based upon the
Statement of Condition of the Bank at September 30, 1997 and
immediately after the merger will be approximately $10,461,060. The
increase of $60,000 represents the full subscription paid in for the
shares of the New Bank by the Holding Company. The resulting bank
in the merger will thereupon declare and pay a dividend of
approximately $60,000 to the Holding Company, which will be used to
repay in full the loan plus accrued interest thereon. Interest on
the loan, which will be an additional expense of the conversion, is
estimated to be less than $1,500. Thus, the total equity capital of
the resulting bank by merger will essentially be the same as the
total equity capital of the Bank immediately prior to the merger.
See "FINANCIAL STATEMENTS AND CAPITALIZATION."
Shareholder Vote Required
The merger of the Bank with and into the New Bank and the consequent
reorganization of the Bank's structure into that of a one bank
holding company system may only be effected if approved by the
affirmative vote of the holders of at least two-thirds of the Bank's
outstanding Common Stock, or 46,000 shares.
Approval by the Holding Company as the sole shareholder of the New
Bank is also required; the Holding Company will vote all outstanding
shares of the New Bank in favor of the transaction.
Regulatory Approvals
The formation of the Holding Company as a bank holding company is
subject to the approval of the Board of Governors of the Federal
Reserve System, the agency which regulates bank holding companies.
The merger of the Bank with and into the New Bank is subject to the
approval of the Comptroller of the Currency, which regulates
national banks. Applications requesting such approvals will be
submitted to such agencies after shareholder approval of the
conversion. Assuming receipt of all requisite approvals, it is
anticipated that the merger will become effective not later than the
end of the second quarter of 1998.
Rights of Dissenting Shareholders
Pursuant to the provisions of Section 215a of Title 12 of the United
States Code, a copy of which is attached hereto as Appendix B, any
shareholder of the Bank has the right to be paid in cash the value
of his or her shares (as of the time the merger becomes effective),
if and when the merger is consummated, only upon compliance with the
following conditions: (1) the shareholder must vote against approval
of the merger at the Annual Meeting of Bank shareholders or give
written notice to the Bank at or prior to the Annual Meeting that
the shareholder dissents from the proposed merger, which notice
shall be addressed to Thomas W. Beard, The Citizens National Bank of
Chillicothe, 33 West Main Street, Chillicothe, Ohio 45601; (2) the
shareholder must at any time before 30 days after consummation of
the merger make a written request for payment of the cash value of
such shares to the Bank; and (3) the written request described in
(2) immediately preceding shall be accompanied by surrender of the
certificate(s) representing such shares. Failure to comply with any
of the foregoing conditions may result in the loss of the rights
described herein. Shareholders who vote against approval of the
merger will be notified of the effective date of the merger so that
they may exercise their dissenters' rights.
The value of the shares of any dissenting shareholder will be
ascertained, as of the effective date of the merger, by an appraisal
made by a committee of three persons, composed of one selected by
the vote of the holders of a majority of the stock, the owners of
which are entitled to payment in cash; one selected by the directors
of the receiving association, i.e., the New Bank; and one selected
by the two so selected. The valuation agreed upon by any two of the
three appraisers shall govern. If the value so fixed shall not be
satisfactory to any dissenting shareholder who has requested
payment, that shareholder may, within five days after being notified
of the appraised value of his or her shares, appeal to the
Comptroller of the Currency ("Comptroller"), who shall cause a
reappraisal to be made which shall be final and binding as to the
value of the shares of such shareholder.
If, within ninety days from the date of consummation of the merger,
for any reason one or more of the appraisers is not selected as
herein provided, or the appraisers fail to determine the value of
such shares, the Comptroller, upon written request of any interested
party, is required to cause an appraisal to be made which shall be
final and binding on all parties. The expenses of the Comptroller
in making the reappraisal or the appraisal, as the case may be, must
be paid by the resulting bank. The value of the shares ascertained
must be promptly paid to the dissenting shareholders.
The foregoing constitutes a brief description of the rights of
dissenting shareholders and does not purport to be a complete
statement of such rights or the procedures to be followed by
shareholders desiring to receive the value of their shares. Each
shareholder who may desire to receive the value of his or her shares
should consult Section 215a of Title 12 of the United States Code
and strictly adhere to all of the provisions thereof. A copy of
Section 215a of Title 12 of the United States Code is appended
hereto as Appendix B, and the discussion herein concerning the
rights of dissenting shareholders is qualified in its entirety by
reference to Section 215a of Title 12 of the United States Code.
A copy of Banking Circular 259 is also included as part of Appendix
B. Banking Circular 259 summarizes the various methods used by the
Office of the Comptroller of the Currency in arriving at a fair
estimate of the value of the shares of a national bank.
Shareholders are advised to review Appendix B in its entirety before
the exercise of dissenter's rights.
Conditions of the Merger
Under the Plan and Agreement of Merger, the consummation of the
merger is conditioned, among other things, upon the following:
(a) The Plan and Agreement of Merger, including the Agreement of
Merger, shall have been duly adopted and approved by the affirmative
vote of the holders of at least two-thirds of the outstanding shares
of the Common Stock of the Bank entitled to vote on the proposal.
(b) The shares of Common Stock of the Holding Company into which the
shares of Common Stock of the Bank will be converted upon the
consummation of the merger shall be validly issued and outstanding,
fully paid and non-assessable.
(c) The Plan and Agreement of Merger and the Agreement of Merger as
well as the respective terms thereof shall be duly approved by all
the bank regulatory agencies to which the same are submitted for
approval as provided by law.
(d) Holders in the aggregate of more than five percent (5%) of the
outstanding shares of the Bank's Common Stock shall not have voted
against the merger at the Annual Meeting of shareholders or given
written notice of dissent to the merger prior to or at the Annual
Meeting. This condition may be waived by the Holding Company.
(e) The conversion will be a tax-free reorganization and no gain or
loss will be recognized by the shareholders of the Bank upon the
exchange of shares of the Bank for the shares of the Holding Company
pursuant to the merger.
Consummation of the merger is also subject to the accuracy in all
material respects of various representations and warranties of the
Bank, the Holding Company and the New Bank with respect to their
financial conditions and other matters, and the performance by the
parties of various other requirements.
Amendment or Abandonment of the Plan and Agreement of Merger
The Plan and Agreement of Merger may be amended only by written
agreement of all the parties thereto. The Plan and Agreement of
Merger provides that the Bank and the Holding Company may amend the
Plan and Agreement of Merger, by action of their respective Boards
of Directors, either before or after the shareholders of the Bank
have adopted the Plan and Agreement of Merger, in order to
facilitate the performance thereof or to comply with any applicable
law or order of any court, public agency or authority. However, no
such amendment may change, to the detriment of the Bank's
shareholders, the ratio set forth in the Plan and Agreement of
Merger for converting the Common Stock of the Bank into the Common
Stock of the Holding Company.
The Plan and Agreement of Merger will terminate and become void and
of no effect, notwithstanding prior approval by the shareholders of
the Bank, if the respective Boards of Directors of the Bank, the
Holding Company and the New Bank adopt resolutions prior to the
consummation of the merger to the effect that it is not advisable
under then existing circumstances to effectuate the merger.
Conversion of Shares and Exchange of Certificates
Upon consummation of the merger, each outstanding share of Bank
Common Stock will automatically be converted, by operation of law,
into ten (10) shares of Holding Company Common Stock. After the
merger is effected, shareholders are requested to return their
certificates for Bank Common Stock to the Holding Company in order
to receive certificates representing Holding Company Stock in
exchange therefor. In the event a shareholder is unable to produce
a certificate(s) representing his or her shares of Bank Common
Stock, such shareholder may deliver in lieu thereof (i) evidence
reasonably satisfactory to the Holding Company that such
certificate(s) has been lost, mislaid, wrongfully taken or
destroyed, (ii) such security or indemnity as reasonably may be
requested by the Holding Company to save it harmless, and (iii)
evidence reasonably satisfactory to the Holding Company that such
person is the owner of the shares theretofore represented by the
certificate or certificates claimed to be lost, mislaid, wrongfully
taken or destroyed and that he or she is the person who had been
entitled to present each such certificate and to receive Holding
Company Common Stock in exchange therefor pursuant to the Agreement
to Merge. If any certificate representing Holding Company Common
Stock is to be issued in a name other than that in which the
certificate(s) for shares of the Common Stock of the Bank
surrendered for exchange is registered, the certificate(s) so
surrendered must be properly endorsed or otherwise be in proper form
for transfer, and the person requesting such transfer must pay to
the Holding Company or its transfer agent any applicable transfer or
other taxes required by reason of the issuance of the certificate.
In the event of failure by a shareholder to surrender his or her
certificate(s) evidencing ownership of Bank Common Stock or to
satisfy the above-listed conditions with respect to a lost, mislaid,
wrongfully taken or destroyed certificate, such shareholder will,
upon consummation of the merger, cease to have any rights with
respect to such shares and each Bank Common Stock certificate will
be deemed for all purposes to evidence ownership of the number of
Holding Company shares into which such shares have been converted.
Dividends and other distributions, if any, that become payable on
Holding Company Common Stock will be retained by the Holding Company
until surrender of the certificates evidencing shares of Bank Common
Stock or satisfaction of such conditions, at which time such
dividends and distributions will be paid in full, without interest.
Federal Income Tax Aspects
The conversion transaction, including the merger of the Bank into
the New Bank and the conversion of the Bank's Common Stock into the
Holding Company's Common Stock, has been structured for federal tax
purposes to result in the following tax effects:
1. The proposed statutory merger will qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) and
Section 368(a)(2)(D) of the Internal Revenue Code of 1986. The
Bank, the New Bank and the Holding Company will each be a party to
the reorganization within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized by the Bank upon the transfer
of substantially all of its assets to the New Bank in exchange for
the Holding Company's Common Stock, and the assumption of all of the
Bank's liabilities by the New Bank.
3. No gain or loss will be recognized by either the Holding Company
or the New Bank upon the acquisition by the New Bank of
substantially all of the assets of the Bank in exchange for the
Holding Company's Common Stock.
4. The basis of the assets of the Bank acquired by the New Bank will
be the same in the hands of the New Bank as the basis of such assets
in the hands of the Bank immediately prior to the merger. The
holding periods of the assets of the Bank received by the New Bank
will include the periods for which such assets were held by the
Bank.
5. No gain or loss will be recognized by the shareholders of the
Bank upon the exchange of Bank Common Stock into Holding Company
Common Stock.
6. The federal income tax basis of the shares of the Holding Company
Common Stock received by the shareholders of the Bank will be the
same as the basis of the Bank Common Stock surrendered therefor.
7. The holding period of the Holding Company Common Stock received
by the shareholders of the Bank will include the period during which
the Bank Common Stock surrendered therefor was held, provided that
the Bank Common Stock was a capital asset in the hands of the
shareholders of the Bank on the date of the consummation of the
transaction.
8. The New Bank shall take into account as of the date of the
proposed merger (as defined in Section 1.381(b)-1(b) of the
Regulations promulgated under Code Section 381), the items described
in Section 381(c) of the Code subject to the conditions and
limitations of Sections 381, 382, 383 and 384 of the Internal
Revenue Code of 1986 and the regulations thereunder.
In addition, the tax free nature of the conversion will depend upon
the acquisition by the resulting bank, in this case the New Bank, of
at least 90% of the fair market value of the net assets and at least
70% of the fair market value of the gross assets of the Bank
immediately prior to the consummation of the merger. This means
that the sum of (a) all amounts payable to dissenting shareholders
of the Bank, if any, and (b) the Bank's expenses of the conversion
may not exceed 10% of the fair market value of the net assets or 30%
of the fair market value of the gross assets of the Bank.
The Plan and Agreement of Merger provides that any of the parties
may terminate such Agreement prior to the consummation of the merger
in the event that the tax-free nature of the conversion will not
occur or is threatened.
State Dividend Income Taxes
Dividends on shares of Bank Common Stock held by Ohio residents are
subject to the Ohio income tax, and dividends on shares of Holding
Company Common Stock will also be subject to such tax.
FINANCIAL STATEMENTS AND CAPITALIZATION
An Annual Report containing financial statements for the Bank's
latest fiscal year, ended December 31, 1997, and the call report as
of September 30, 1997, are being furnished together with this Proxy
Statement/Prospectus to shareholders of the Bank in connection with
the Bank's Annual Meeting of Shareholders to be held on February 24,
1998. This is being done in accordance with the requirements of the
Securities and Exchange Commission's Staff Accounting Bulletin 50,
and the financial statements included therein have been prepared in
accordance with generally accepted accounting principles.
The following table sets forth the expected capitalization of the
New Bank upon its formation and prior to the merger, the
capitalization of the Bank as at September 30, 1997, based upon its
Statement of Condition for such date, the anticipated adjustments
attributable to the merger, and the pro forma capitalization of both
the resulting bank in the merger and the Holding Company as if the
New Bank had been in existence and the merger had been consummated
on September 30, 1997:
<PAGE>
<TABLE>
<CAPTION>
(In Thousands)
New Bank Bank Adjustments Pro Forma Pro Forma
Resulting Bank Holding Company
<S> <C> <C> <C> <C> <C>
EQUITY CAPITAL:
Common Stock $50 $ 1,035 $(50) $ 1,035 $ 7
Surplus $10 $ 1,035 $(10) $ 1,035 $ 0
Undivided Profits $ 0 $ 8,331 $ 0 $ 8,331(1) $ 0
___________________________________________________
Total Equity Capital $60 $10,401 $(60) $10,401 $ 7
===================================================
DEBT:
Long Term 0 0 0 0 0
Short Term 0 0 0 0 115
____________________________________________________
Total Debt(2) 0 0 0 0 115(2)
====================================================
<FN>
(1) Immediately after the merger is consummated, approximately $115,000 will be paid by the
resulting bank to the Holding Company from the Undivided Profits of the resulting bank so that the
Holding Company will have funds available to repay the funds borrowed by it, as described in Note
2 below. Consequently, immediately after the declaration and payment of such dividend, the total
Equity Capital of the resulting bank will be the same as that of the Bank immediately prior to the
merger.
(2) These funds will be borrowed in order to capitalize the New Bank on an interim basis and will
be repaid as soon as possible, following the consummation of the merger and the receipt of the
dividend referred to in Note 1 above. The borrowing for the same period of time, but occurring at
the beginning of the fiscal period, would have had an immaterial effect on net income.
</FN>
</TABLE>
<PAGE>
DESCRIPTION OF COMMON STOCK OF THE BANK AND THE HOLDING COMPANY
General
The Bank's authorized capital stock consists of 69,000 shares of
Common Stock, $15.00 par value ("Bank Common Stock"), of which all
shares are presently outstanding. The Holding Company's authorized
capital stock consists of 850 shares of Common Stock without par
value ("Holding Company Common Stock") of which 70 shares are
presently outstanding. Immediately prior to the consummation of the
merger, the articles will be amended to increase the number of
shares authorized to 1,500,000. The 70 outstanding shares of
Holding Company Common Stock will be repurchased for their original
sales price by the Holding Company, and up to 690,000 shares will be
issued in exchange for the outstanding shares of Bank Common Stock.
The capitalization of the Bank immediately before the merger and of
the Holding Company immediately after the merger will therefore be
substantially identical.
Because the Bank is a national bank organized under federal law
while the Holding Company is a general business corporation formed
under the corporate law of the State of Ohio, there will be certain
minor differences in the respective rights of the shareholders,
which are described below. In addition, management has elected to
take advantage of the greater flexibility of Ohio corporate law in
comparison to that of the corporate law contained in the national
bank law to provide certain additional features of corporate
governance in the organizational documents of the Holding Company,
which are also discussed below.
Dividends
Under Ohio law, dividends may be declared by the Holding Company and
paid from the surplus of the corporation, provided that no dividend
may be paid at any time the corporation is insolvent or there is
reasonable ground to believe that by such payment it would be
rendered insolvent. Dividends which may be declared by the Bank are
governed by federal law which limits the amounts available for
payment of dividends to net profits and, under certain
circumstances, requires that a certain percentage of net profits
must be transferred to surplus which is unavailable for the purpose
of paying cash dividends. The ability of the resulting bank to pay
dividends to the Holding Company following the merger will be
governed by the same considerations which currently control the
declaration of dividends by the Bank.
Subject to the foregoing discussion and to the discretion of the
Board of Directors, it is expected that cash dividends of the
Holding Company after consummation of the merger will be paid on
approximately the same basis as the Bank presently pays cash
dividends. Funds for the payment of dividends by the Holding
Company will initially be obtained solely from dividends paid to the
Holding Company by the resulting bank.
Following consummation of the merger, no shareholder whose shares of
Bank Common Stock have been converted into shares of Holding Company
Common Stock by reason of the merger will be entitled to receive any
dividends or other distributions with respect to such Holding
Company shares until his or her Bank stock certificates are
exchanged for Holding Company stock certificates. However, when the
exchange of certificates is made, the dividends or other
distributions withheld will be paid without interest. Within a
reasonable period of time after consummation of the merger,
materials will be furnished to assist shareholders in effecting the
exchange.
Preemptive Rights
Holders of Bank Common Stock presently have the right under the
Bank's Amended Articles of Association, in the event additional
shares of Bank Common Stock are to be sold, to subscribe for such
additional shares in proportion to the number of shares of Bank
Common Stock then owned by them. Under Ohio law, holders of Holding
Company Common Stock will have substantially identical preemptive
rights.
Cumulative Voting
Holders of Holding Company Common Stock will have substantially the
same right to cumulatively vote their shares in the election of
directors as they possessed as holders of Bank Common Stock. Under
Ohio law, there shall be cumulative voting in the election of
directors if written notice is given by any shareholder to the
President, Vice President, or the Secretary of the Holding Company,
not less than 48 hours before the time fixed for holding the
meeting, that such shareholder desires that voting for the election
of directors shall be cumulative, and if announcement of the giving
of such notice is made upon the convening of the meeting by the
chairman or secretary or by or on behalf of the shareholder giving
such notice. In such event, each shareholder shall be entitled to
cumulate such voting power as he or she possesses and to give one
nominee as many votes as the number of directors to be elected
multiplied by the number of his or her shares, or to distribute such
votes on the same principle among two or more candidates, as the
shareholder sees fit. Cumulative voting rights applicable to the
Holding Company under Ohio law contain certain requirements that are
not applicable to national banks under the National Bank Act and
regulations promulgated by the Office of the Comptroller of the
Currency thereunder. Shareholders of the Bank may exercise
cumulative voting rights without the need for any corporate action
or notification requirements prior to the applicable shareholder
meeting, whereas these requirements would have to be met under
applicable provisions of Ohio law before a shareholder of the
Holding Company could exercise cumulative voting rights. Therefore,
cumulative voting rights under Ohio law are essentially the same as
those currently applicable to the Bank, but are slightly more
restrictive because of the addition of certain corporate and
notification requirements on the part of shareholders prior to their
exercise.
Par Value
The Common Stock of the Bank is par value stock and the Common Stock
of the Holding Company is no par value stock. The par value of
stock serves to fix a minimum subscription or original issue price
for each share of par value stock. The attributes of par value
stock issued by a national bank are determined by reference to the
law of the state in which the national bank is located. In the case
of the Bank, Ohio law provides that any consideration paid for
non-treasury, original issue par value shares shall not be less than
the par value of the shares, provided that such shares may be sold
and paid for at such a discount from the par thereof as would amount
to or not exceed a reasonable discount from the par value thereof as
would amount to or not exceed reasonable compensation for the sale,
underwriting or purchase of such shares. Par value is also used to
set the stated capital of a corporation. The stated capital of a
corporation with par value stock shall not be less than the par
value of each class of its outstanding shares times the total number
of shares of each class outstanding. In the Bank's case, its stated
capital cannot be less than $1,035,000 ($15.00 par value stock
multiplied by 69,000 shares outstanding). On the other hand, no par
value stock may be issued by a corporation at any price, with no
stated minimum subscription or issuance price. A share of no par
value stock does not purport to represent any stated proportionate
interest in the capital of a corporation and the issuance of such
shares does not in itself increase stated capital.
Certain Stabilizing Features of Corporate Governance
The Holding Company's Articles of Incorporation contain certain
corporate governance provisions which may have the effect of
discouraging attempts to change control of the Holding Company
without the prior approval of its Board of Directors. The Bank's
Articles of Association do not contain any such provisions. The
following is a brief summary of such provisions and of their
respective advantages and disadvantages.
Classified Board of Directors. Under the Bank's Articles of
Association and By-Laws, all members of the Board of Directors are
elected at each Annual Meeting of Shareholders to serve for a one
year term which ends at the following Annual Meeting of
Shareholders.
The Holding Company's Articles of Incorporation provide for a
classified Board of Directors consisting of two classes of directors
each with overlapping two year terms of office. Each such class is
to have an equal, or as close to equal as mathematically possible,
number of members. The Holding Company, upon its incorporation,
will have two classes of directors: Class I to serve an initial one-year term,
Class II to serve a full two-year term. Thereafter, at
the first Annual Meeting of Shareholders of the Holding Company
after consummation of the Merger, one class of directors will be
elected for a two year term, and at each annual meeting thereafter
one class will be elected to a two year term.
Management believes that structuring the Holding Company's Board of
Directors into two classes will insure a continuity of experienced
Board members, although there have been no problems with respect to
such continuity in the past. Also, under the classified Board
system, a shareholder or group of shareholders possessing a majority
of the voting power of the Holding Company will not in any one year
be able to replace a majority of the directors since only one-half
of the directors will stand for election each year. Rather, at
least two annual meeting elections will be required to change a
majority of the directors by the requisite vote of the shareholders.
By contrast, control of the Bank's Board of Directors could be
obtained by such a shareholder or a group of shareholders in a
single year since the Bank's entire Board is subject to election
each year. The classified Board of the Holding Company may
therefore have the effect of discouraging or making more difficult
an unfriendly attempt to take over the Holding Company. It will
also make it more difficult for shareholders to change the majority
of directors even if the only reason for such a change is the
performance of incumbent directors.
Vote Required for Certain Extraordinary Corporate Actions. Under
applicable law, the affirmative vote of the holders of at least
two-thirds of the issued and outstanding capital stock of the Bank
is required with respect to a merger or consolidation of the Bank
with another bank or the sale of all or substantially all of the
Bank's assets.
The Articles of Incorporation of the Holding Company provide for a
special "super-majority" voting requirement, subject to certain
exceptions, with respect to (i) any merger or consolidation of the
Holding Company with or into any other corporation; (ii) any sale,
lease, exchange or other disposition of all or any substantial part
of the assets of the Holding Company to or with any other
corporation, person or other entity; (iii) the issuance or transfer
of any securities of the Holding Company to any other corporation,
person or other entity in exchange for assets or securities or a
combination thereof (except assets or securities or a combination
thereof so acquired in a single transaction or a series of related
transactions having an aggregate fair market value of less than
$250,000); or (iv) the issuance or transfer of any securities of the
Holding Company to any other corporation, person or other entity for
cash.
Any such transaction must be approved by the affirmative vote of the
holders of at least eighty (80%) of the outstanding shares of the
Holding Company's capital stock which are not beneficially owned by
the other corporation, person or entity with which the Holding
Company proposes to enter into such transaction ("other party"), if
the other party is then the beneficial owner, directly or
indirectly, of 10% or more of the outstanding shares of the Holding
Company's Common Stock. However, there are certain exceptions to
the applicability of this "super-majority" vote requirement.
Specifically, it does not apply if the other party is a corporation
and a majority of the outstanding shares of all classes of such
corporation's voting capital stock are owned by the Holding Company,
if the Holding Company's Board of Directors has approved a
memorandum of understanding with the other party substantially
consistent with the proposed transaction before the other party
became the beneficial owner of 10% or more of the Holding Company's
Common Stock, or if the transaction is approved by at least a
majority of the members of the Holding Company's Board of Directors.
The Holding Company's Board of Directors is expressly authorized to
determine, for the purpose of applying the super-majority voting
requirement, on the basis of information then known to it, whether
(i) any other corporation, person or other entity beneficially owns,
directly or indirectly, 10% or more of the outstanding shares of
stock of the Holding Company entitled to vote generally in the
election of directors, or is an "affiliate" or an "associate" of
another, (ii) any proposed sale, lease, exchange or other
disposition of part of the assets of the Holding Company involves a
substantial part of the assets of the Holding Company, (iii) assets
or securities, or a combination thereof, to be acquired in exchange
for securities of the Holding Company, have an aggregate fair market
value of less than $250,000 and whether the same are proposed to be
acquired in a single transaction or a series of related
transactions, and (iv) the memorandum of understanding referred to
above is substantially consistent with the transaction to which it
relates. Any such determination by the Board shall be conclusive
and binding for all purposes.
Further, when evaluating any offer of another party to (i) purchase
or exchange any securities or property for any outstanding equity
securities of the Holding Company, (ii) merge or consolidate the
Holding Company with another corporation, or (iii) purchase or
otherwise acquire all or substantially all of the properties and
assets of the Holding Company, the Board of Directors is required,
in connection with the exercise of its judgment in determining what
is in the best interests of the Holding Company and its
shareholders, to give due consideration not only to the price or
other consideration being offered but also to all other relevant
factors, including without limitation the financial and managerial
resources and future prospects of the other party; the possible
effects on the business of the Holding Company and its subsidiaries
and on the depositors, employees, and other constituents of the
Holding Company and its subsidiaries; and the possible effects on
the communities and the public interest which the Holding Company
and its subsidiaries serve. In evaluating any such offer, the Board
of Directors shall be deemed to be performing its duly authorized
duties and acting in good faith and in the best interests of the
Holding Company within the meaning of applicable Ohio law.
The provision described above will have the general effect of
discouraging, or rendering more difficult, unfriendly takeover or
acquisition attempts. Consequently, such a provision would be
beneficial to current management in an unfriendly takeover attempt
but would have an adverse effect on shareholders who might wish to
participate in such a transaction. However, management believes
that such a provision is advantageous to shareholders in that it
will require a higher level of shareholder participation and consent
than currently would be required for the Bank and therefore would
increase the discussion and understanding of any such proposal.
Repurchase of Shares
Under applicable law, a national bank may not repurchase shares of
its capital stock except under certain limited circumstances where
such a purchase is necessary to prevent a loss upon a debt
previously contracted in good faith.
As permitted under Ohio law, and subject to federal regulatory
limitations, the Holding Company may redeem, purchase, or contract
to purchase, at any time and from time to time, shares of any class
issued by the Holding Company for such prices and upon and subject
to such terms and conditions as the Board of Directors may
determine, when authorized by the affirmative vote of a majority of
the Board of Directors, without the action or approval of the
shareholders of the Holding Company, subject only to the requirement
that an Ohio corporation may not repurchase its shares if
immediately thereafter its assets would be less than its liabilities
plus stated capital, if the corporation is insolvent, or if there is
reasonable ground to believe that by such purchase it would be
rendered insolvent and to the Federal Reserve requirement that a
bank holding company may not expend more than 10% of its net worth
in any 12 month period for the purpose of repurchasing its stock.
The market for the Bank's shares has been somewhat limited. The
most significant advantage of the ability of the Holding Company to
repurchase its own shares is that the Holding Company will be able
to facilitate the market for its shares. For example, the Holding
Company will be able to purchase shares from the estates of deceased
shareholders or to otherwise purchase shares from shareholders who
desire to sell their shares but have been unable to locate
purchasers, in situations management deems appropriate. An
important disadvantage of this ability is that Holding Company
management could purchase shares during or in anticipation of a
proxy contest or other hostile takeover attempt from shareholders
who might otherwise favor the proposed action and thus render the
proxy contest or other takeover attempt less likely to succeed,
thereby insulating incumbent management.
INFORMATION CONCERNING THE HOLDING COMPANY
General
The Holding Company was incorporated under the laws of the State of
Ohio on November 21, 1997, at the direction of the Bank's Board of
Directors, to engage in the business of a bank holding company. The
New Bank will be formed as a national bank subsidiary of the Holding
Company. Both the Holding Company and the New Bank will remain
dormant from their respective formations and will not begin to
conduct business until the merger becomes effective. Immediately
following the merger, the Holding Company's sole asset will be 100%
of the outstanding capital stock of the New Bank.
As a bank holding company, the Holding Company has broader corporate
powers than the Bank. Specifically, the Holding Company may own the
capital stock of banks located in Ohio and, under certain
circumstances, in neighboring states; it may engage, either directly
or through one or more nonbank subsidiaries, in certain nonbanking
activities which are closely related to banking; and it may own up
to 5% of the voting capital stock of any corporation, all subject to
applicable law and regulatory provisions as described below.
Supervision and Regulation
The following is a brief summary of certain general aspects of the
governmental supervision and regulation of bank holding companies.
This summary does not purport to be comprehensive and is qualified
in its entirety by reference to the actual laws and regulations
pursuant to which such supervision and regulation is carried out.
The Holding Company will, if the merger is consummated, be a bank
holding company within the meaning of the Bank Holding Company Act
of 1956, as amended (the "Act"). As such, it will be registered
with the Board of Governors of the Federal Reserve System (the
"Board of Governors") and will be subject to regulation by that
agency. The Holding Company will be required to file various
reports with, and will be subject to examination by, the Board of
Governors. Before the Holding Company may become a bank holding
company under the Act, it must submit an application to the Board of
Governors, and its application must be approved. Approval of the
Holding Company's application is a precondition to consummation of
the merger.
The Act requires prior approval of the Board of Governors before a
bank holding company may acquire more than five percent of the
voting stock or substantially all of the assets of any bank or merge
or consolidate with any other bank holding company. If the effect
of a proposed acquisition, merger or consolidation may be
substantially to lessen competition or tend to create a monopoly,
the Board of Governors cannot approve the acquisition unless it
finds that the anti-competitive effects of the acquisition, merger
or consolidation are clearly outweighed by the convenience and needs
of the community to be served. The Act also provides that the
consummation of any acquisition, merger or consolidation must be
delayed until 30 days following the approval of the Board of
Governors. The Attorney General of the United States may, within
this 30 day period, bring an action under federal anti-trust laws,
in which case the effectiveness of such approval is stayed pending
a final ruling of the courts.
The Act also provides that a bank holding company may acquire any
adequately capitalized and adequately managed bank in a state other
than the home state of the bank holding company, regardless of
whether such transaction is prohibited by the laws of any state, so
long as the bank to be acquired has been in existence for the lesser
of the minimum period of time specified in the statutory law if its
home state or five (5) years. For purposes of the Act, pursuant to
12 U.S.C. 215(a)(d)(1)(C), a bank that has been chartered solely for
the purpose of, and does not open for business prior to, acquiring
control of, or acquiring all or substantially all of the assets of,
an existing bank, shall be deemed to have been in existence for the
same period of time as the bank to be
Subject to certain exceptions, a bank holding company is also
prohibited from acquiring direct or indirect ownership or control of
more than 5% of the voting shares of any company which is not a bank
and from engaging directly or indirectly in activities unrelated to
banking or managing or controlling banks. One of the exceptions to
this prohibition permits activities by a bank holding company or its
subsidiaries which the Board of Governors has determined to be so
closely related to banking or managing or controlling banks as to be
a proper incident thereto. In determining whether a particular
activity is a proper incident to banking or managing or controlling
banks, the Board of Governors considers whether performance of the
activity by an affiliate of a bank holding company can reasonably be
expected to produce benefits to the public, such as greater
convenience, increased competition or gains in efficiency that
outweigh possible adverse effects, such as undue concentration or
unsound banking practices. The Board of Governors has adopted
regulations prescribing those activities which it presently regards
as permissible for bank holding companies and their subsidiaries.
Some of the activities are: servicing loans and other extensions of
credit; performing certain data processing services; engaging in
certain personal and real property leasing; making or acquiring
loans and other extensions of credit as would be made by a mortgage,
finance, credit card or factoring company; and under certain
circumstances acting as any or all of the following: investment or
financial advisor, insurance agent or broker, and underwriter for
credit life insurance and credit accident and health insurance.
The Act, the Federal Reserve Act and the Federal Deposit Insurance
Act also subject bank holding companies and their subsidiaries to
certain restrictions on any extensions of credit by subsidiary banks
to the bank holding company or any of its subsidiaries, or
investments in the stock or other securities thereof, and on the
taking of such stocks or securities as collateral for loans to any
borrower. Further, under the Act and the regulations of the Board
of Governors, a bank holding company and its subsidiaries are
effectively prohibited from engaging in certain tie-in arrangements
in connection with any extension of credit, sale or lease of any
property or furnishing of services.
There are various legislative enactments and regulations pending
which could affect the business of the Holding Company. However,
what other legislation might be enacted or what other regulations
might be adopted, or if enacted or adopted the effect thereof,
cannot be predicted.
INFORMATION REGARDING THE BANK
General
The Bank was organized as a national banking association organized
in 1900 and has been in continuous operation since that date. It is
engaged in the general commercial banking business through its main
banking office located in Ross County, Ohio and through its two
branch offices at the corner of Main and Springfield Streets in
Frankfort, Ohio and at 1006 Western Avenue, Chillicothe, Ohio. In
addition, the Bank provides normal retail banking services,
including the acceptance of demand, savings, money market and time
deposits and the making of various types of loans. Other services
provided by the Bank include collection, safekeeping, investment and
various other services to meet the public's banking needs. The
significant banking market for Chillicothe, which encompasses
portions of Ross, Fayette, Highland, Jackson, Pike, Vinton, Pickaway
and Hocking Counties, includes approximately 36 other commercial
banks, 12 thrift institutions and four credit unions. The address
of the main office of the Bank is 33 West Main Street, Chillicothe,
Ohio 45601; telephone (614) 775-6777. No changes in control of the
Bank have occurred within the past 36 months.
Selected Financial Data
The following selected financial data has been derived from
unaudited financial statements or call reports for the years ended
December 31, 1993, 1994, 1995, 1996 and 1997. The information is
based on financial statements provided by Bank management that
contain all adjustments believed to be required to reflect financial
condition and operating results fairly for the periods indicated.
This data should be read in conjunction with the Bank's financial
statements and their related notes contained in the Annual Report
delivered herewith (see "FINANCIAL STATEMENTS").
<TABLE>
<CAPTION>
For the Years Ended December 31
For the
Period ended
September
30, 1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Total Interest
Income $ 5,287 $ 7,082 $ 6,798 $ 6,556 $ 6,519
Net Interest Income 2,775 3,496 3,361 3,675 3,448
Provision For
Loan Losses 18 0 0 0 20
Other Income 239 304 329 291 310
Other Expenses 2,024 2,452 2,387 2,413 2,353
Income Tax Expenses 259 363 325 389 369
Net Income $ 713 $ 985 $ 978 $ 1,164 $ 1,086
Data Per Share:
Net Income $ 10.33 $ 14.28 $ 14.17 $ 16.87 $ 15.74
Cash Dividends $ 4.00 $ 7.00 $ 7.00 $ 7.00 $ 6.00
Book Value $150.74 $143.78 $140.00 $127.38 $117.51
Total Assets
(in Thousands) $94,303 $99,188 $97,251 $95,280 $96,422
</TABLE>
Management's Discussion and Analysis of Condition and Results of
Operations
The following discussion is presented to aid in understanding the
financial condition and results of operations of The Citizens
National Bank of Chillicothe. This discussion should be read in
conjunction with the financial statements contained in the Annual
Report included with this Proxy Statement/Prospectus.
Results of Operations. The Bank's net earnings increased by 1%
during 1997, to $955,000, or $14.42 per share. The primary
contributor to this increase is increased interest on loans. Total
interest expense decreased $147,000, or 4%, during 1997 (through
September 30, 1997) because of a decrease in deposits. Net interest
income increased $273,000, or 7.8%, from 1996 figures.
Some key performance ratios are the Return On Assets (ROA) and the
Return on Shareholder's Equity (ROE). The Bank's ROA for 1997 (as
of September 30, 1997) was 1% while ROE was 9.8%. The dividend
payout ratio for 1997 (as of September 30, 1997) was 48.5% of the
current year's earnings, or $7.00 per common share of stock.
Total assets decreased 1.7% to $97,500,000. The most significant
change in earning assets occurred in the investment area which
decreased $7,060,000, or 25%, during 1997 (as of September 30,
1997). The particular loan category which experienced the most
dramatic growth was in the area of installment loans. This loan
category grew $ 2,111,000, or 23%, over 1996 (based on data
available as of September 30, 1997). The reason for this
significant growth was an increase in indirect consumer loans. Real
estate mortgage loans represent 5.5% of the Bank's total loan
portfolio.
The major source of the decrease in total assets during 1997 (as of
September 30, 1997) was interest-bearing deposits which decreased by
$1,360,000, or 2.6%, during 1997. Total deposits decreased by
$2,832,000, or 3.2%, to $86,921,000, as of September 30, 1997.
Fixed Assets. Land is carried at cost. Other premises and
equipment are recorded at cost and are depreciated using the
straight-line method. Depreciation is taken over the useful lives
of the respective assets. The total fixed asset cost recorded at
September 30, 1997 was $2,966,000, with accumulated depreciation of
$1,662,000, for a total book asset value of $1,304,000.
Noninterest Income. Noninterest income increased by $102,000, or
12%, from January 1 to September 30, 1997. This increase in income
was largely the result of an increase in fee income.
Noninterest Expense. The increase in noninterest expense of
$363,000 is primarily due to an increase in employee expense of
$135,000 and an increase in operational expense of $173,000. The
increase in operational expense is due to an increase in Federal
Reserve Fees, provision for loan loss, equipment maintenance and
electronic data processing (EDP) charges.
Income Taxes. The Bank's tax expense for the first three quarter of
1997 was $365,000, which represents taxes paid at the statutory rate
of 27%.
Allowance for Loans and Lease Losses. The Bank's practice is to
maintain the allowance for loan losses at a level considered by
management and the Board of Directors to be adequate to provide for
loan losses occurring in the future. Management's evaluation is
based on a continuous review of the risk associated with the loan
portfolio mix and includes consideration of actual loan losses, the
local and regional economic conditions, the present and prospective
financial conditions of borrowers, and the volume of new loan
demand. The Bank's policy is to charge off loans when, in
management's opinion, collection in full is in doubt. All loans
charged off are subject to continuous review, and concerted efforts
are made to maximize recovery.
The allowance for loan and lease losses at September 30, 1997 was
$395,000, or 0.58% of total loans outstanding. The Bank had no
loans on nonaccrual status at the end of the third quarter of 1997,
compared to $134,000 at the end of 1996. The Bank had no Other Real
Estate Owned (OREO) property at September 30, 1997. Loans 90 days
or more past due and still accruing interest on September 30, 1997
totaled $216,000, or 0.3% of total loans outstanding.
Liquidity. Liquidity measures the ability of the Bank to meet
borrowing needs and deposit withdrawal requirements of its
customers. Investment securities, particularly those of shorter
maturities, and Federal Funds Sold are the principal sources of the
Bank's liquidity. Investment securities at September 30, 1997 that
matured in one year or less were approximately 7,950,000, or 39% of
the investment securities portfolio. Federal Funds Sold amounted to
$5,000,000 at September 30, 1997. In addition, other types of
accounts such as cash and due from banks as well as loans maturing
in less than one year are also sources of liquidity. Total sources
of liquidity at September 30, 1997 amounted to approximately
$14,831,000, or 15% of total assets.
Capital. Shareholder's equity at September 30, 1997 was
$10,351,000, or 10.6% of total assets.
Current regulatory guidelines require national banks to maintain a
minimum total capital (shareholder's equity) ratio of 3.0% of total
assets. Primary capital consists of shareholder's equity plus the
allowance for loan and lease losses less any intangible assets. At
September 30, 1997 the Bank's primary capital ratio was 8.09%. The
Bank had $63,000 of intangible assets at September 30, 1997.
Supervision and Regulation
The Bank, as a national banking association, as defined under the
National Bank Act, 12 U.S.C. 21 (the "Bank Act") is regulated
primarily by the Comptroller of the Currency, and is also subject to
various other federal and state laws. The New Bank will also be
regulated by the Comptroller of the Currency and subject to other
federal and state laws and regulations to the same extent as the
Bank, and also to regulation as a subsidiary of a registered bank
holding company.
The Bank Act permits a national banking association or a state bank
to merge into a national banking association located within the same
state, with the approval of the Comptroller of the Currency. The
transaction must be approved by a majority of the board of directors
of each association or state bank, be ratified and confirmed by the
affirmative vote of the shareholders of each association or state
bank owning at least two thirds of its capital stock outstanding, or
by such greater proportion in the case of a state bank as the state
where it is organized so require, at a meeting of the shareholders.
Under the Bank Act, any shareholder who votes against the merger or
who, prior to such meeting, notifies the presiding officer in
writing, may receive the value of the shares held by him or her when
the merger is approved by the Comptroller, when a written request is
made to the merging bank at any time before thirty days after the
consummation of the merger.
A national bank also may engage in an merger under the Bank Act with
an out-of-state bank if it fulfills the requirements of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994, 12
U.S.C. 1831(u) (the "Riegle-Neal Act"). The Riegle-Neal Act permits
interstate branch banking and mergers, so long as none of the home
states of the concerned banks has enacted a law after the date of
enactment of the Riegle-Neal Act, September 24, 1994 and before June
1, 1997 that expressly prohibits merger transactions involving out-of-state
banks. Ohio no longer has such prohibitive bank merger
laws, nor do its neighboring states of Indiana and Kentucky. The
Holding Company, however, has no current plans to acquire additional
banks either within or outside of Ohio.
MANAGEMENT OF THE BANK AND THE HOLDING COMPANY
Directors and Executive Officers
The conversion of the Bank into a holding company structure is
simply a change in the legal structure of the present business of
the Bank and is not meant to cause a change in any of the present
management or business policies of the Bank. The Bank will continue
to serve all of its shareholders, depositors and other customers as
it has in the past.
The Holding Company has the same Directors as the Bank. However,
the Board of Directors of the Holding Company is divided into two
classes of Directors with overlapping terms. Class I will serve an
initial one-year term and Class II a two-year term. Commencing with
the first annual meeting of the shareholders of the Holding Company,
each Class whose members are to be elected will thereafter be
elected to serve a two-year term. The Directors and Officers of the
Holding Company are:
DIRECTORS
CLASS I CLASS II
James M. Cutright Thomas W. Beard
Jerry B. Whited John H. Kochensparger, III
Edward Steel Joe Lane
Rosemary Kochensparger
EXECUTIVE OFFICERS
Chairman: James M. Cutright
President: Thomas W. Beard
Secretary/Treasurer: John H. Kochensparger, III
The following table sets forth information as to each person who
currently serves as a Director or executive officer of the Bank and
who also will serve as a Director of the Holding Company following
the merger, and as to all such Directors and executive officers as
a group, as well as the number of shares of the Bank beneficially
owned by each as of December 19, 1997:
<PAGE>
<TABLE>
<CAPTION>
Shares of Common Stock of
the Bank Beneficially
Owned on December 10,
1997(1)
<S> <C> <C> <C> <C> <C>
Name and Principal Position With Position With Age Number Percent of
Occupation During Bank Holding Company Class(2)
Past Five Years
Thomas W. Beard President, President 49 70 shares 0.1%
Bank Executive CEO and and Director
Director
James M. Cutright Chairman Chairman 70 755 shares 1.1%
Attorney of the Board of the Board
John H. Kochensparger, III Director Secretary/Treas. 53 10,440 shares 15.1%
Salesman and Director
Rosemary Kochensparger Director Director 83 3,000 shares 4.3%
Homemaker
Joe Lane Director Director 62 230 shares 0.3%
Retired Business Owner
Edward N. Steel Director Director 82 3155 shares 4.6%
Retired Farmer
Jerry B. Whited Director Director 47 70 shares 0.1%
All directors and
executive officers
as a group (7 persons) 17,720 shares 25.6%
<FN>
(1) Includes shares held in the name of spouses, minor children, certain relatives, trusts or
estates whose share ownership under the beneficial ownership rules of the Securities and Exchange
Commission, is to be aggregated with that of the Director or officer whose stock ownership is
shown.
(2)Following the merger, all percentage amounts as to Holding Company ownership will remain
unchanged.
</FN>
</TABLE>
<PAGE>
All persons referred to above as currently being directors or
officers of the Bank will continue to hold similar positions with
the resulting bank after the merger is effective.
Executive Compensation
No executive officer of the Bank had aggregate cash compensation for
the year ended December 31, 1997 in excess of $100,000, including
any cash bonuses.
The aggregate cash compensation paid to all executive officers of
the Bank (5 persons) during the year ended December 31, 1997 was
$252,199.42, which includes amounts paid in employee benefits on
behalf of each employee.
The Board of Directors of the Bank meets monthly for a total of
twelve (12) meetings per year. Members of the Board of Directors
hold monthly committee meetings. Directors receive approximately
$1,010.00 per month for service on the Board of Directors.
Additionally, the Bank pays premiums for health and life insurance
on behalf of each director in the amounts of $7,424 for the director
and a spouse and $2,906 for the director, alone, per year.
Including Board meetings and Committee meetings, which all Directors
attend, the Board of Directors met approximately fifty-two (52)
times during the fiscal year ended December 31, 1997. Each
incumbent Director attended at least 80% of the total number of
Board meetings and over half of the Directors attended over 95% of
the total number of meetings.
CERTAIN BENEFICIAL OWNERS
Under Rule 13(d) of the Securities Exchange Act of 1934, a
beneficial owner of a security is any person who directly or
indirectly has or shares voting power or investment power over such
security. Such beneficial owner under this definition need not
enjoy the economic benefit of such securities. The following are
the only shareholders (or group as that term is used in Rule 13d-3)
deemed to be beneficial owners of 5% or more of the Common Stock of
the Bank as of December 31, 1997:
Title of Class Name of Amount and Percent of
Beneficial Nature of Class
Owner Beneficial
Ownership
Common Stock, John H. 10,440(1) 15.1%
$15.00 par value Kochensparger, III
Common Stock, Phillips Family 7,103(2) 10.3%
$15.00 par value Voting Trust
Common Stock, Anne K. Powers 10,968(3) 15.97%
$15.00 par value
(1) John H. Kochensparger, III and Anne K. Powers, brother and
sister, each possess equal voting authority over the shares in the
Kochensparger II Trust, which holds 10,470 shares of the common
stock of the Bank. Thus 5,235 of the total 10,470 shares held in
the trust are attributed to each of John H. Kochensparger, III and
Anne K. Powers, for the purposes of Rule 13(d) of the Securities
Exchange Act of 1934. John H. Kochensparger, III also is the direct
owner of 5,205 shares.
(2) These shares, held in trust, are voted as a unit by the five
trustees.
(3) Anne K. Powers owns 5,373 directly and 5,235 in trust (see note
1 above). Additionally, 110 shares are attributed to Anne K. Powers
because they are owned by her spouse, and Anne K. Powers and her
spouse jointly own another 250 shares.
COMMON STOCK MARKET INFORMATION
There is no established public trading market for Bank Common Stock,
and one is not expected to develop for Holding Company Common Stock.
However, as transfer agent, the Bank is aware of trades in its
stock. Such trades and the estimated prices thereof are set forth
in the table set forth below for the periods indicated. The
estimates of the average of the prices at which the trades took
place are based upon trades made by the Bank's shareholders of which
the Bank's officers and directors are aware. Trades may have taken
place at higher or lower prices of which management is not aware,
and because there is no active market for the stock, the prices
shown on the table below may not be representative of actual values:
Year Estimated Prices Number of Shares Number of
Traded Per Year Transactions Per Year
1995 $110.00(1) 7,961 5
1996 $113.00 64 3
1997 $133.00 81 2
(1) The Bank was not informed of the selling price in four out of
the five stock transactions in 1995.
The Bank's Common Stock was held of record by approximately 173
persons as of December 10, 1997. Immediately following consummation
of the merger, the Holding Company will have the same number of
shareholders as the Bank had immediately prior to the merger except
to the extent any shareholders elect to exercise dissenters' rights
due to the conversion. Assuming there are no dissenting
shareholders, the number of outstanding shares of the Holding
Company will be exactly ten (10) times the number of shares as that
of the Bank, or 690,000, and each shareholder's percentage ownership
interest in the Holding Company after the merger will be identical
to his or her percentage ownership interest in the Bank prior to the
merger.
During the fiscal years ended December 31, 1995, 1996 and 1997, the
Bank has paid dividends quarterly, as set forth in the following
table:
Period Ended Dividend Paid Per Share
June, 1995 $4.00
December, 1995 $3.00
June, 1996 $4.00
December, 1996 $3.00
June, 1997 $4.00
December, 1997* $3.00
* Dividend declared December 1, 1997 is payable in January of 1998.
It is expected that the Holding Company will continue to pay
dividends on a similar schedule, to the extent permitted by the
business and other factors beyond management's control, see
"DESCRIPTION OF COMMON STOCK - Dividends."
LEGAL MATTERS
Certain legal matters will be passed upon for the Holding Company by
Dinsmore & Shohl, its special counsel, 1900 Chemed Center, 255 East
Fifth Street, Cincinnati, Ohio 45202.
OTHER BUSINESS
It is not anticipated that any other business will arise during the
Annual Meeting as the management of the Bank has no other business
to present and does not know that any other person will present any
other business. However, if any other business should be presented
at the meeting, the persons named in the enclosed proxy intend to
take such action as will be in harmony with the policies of the
management of the Bank.
By Order of The Board of Directors
Dated: January 23, 1998 Thomas W. Beard
President
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY, FOR WHICH
A RETURN ENVELOPE IS PROVIDED.<PAGE>
APPENDIX A
PLAN AND AGREEMENT OF MERGER
This Plan and Agreement of Merger, dated as of January 16, 1998, is
hereby entered into by and between The Citizens National Bank of
Chillicothe, Chillicothe, Ohio, a national banking association
organized and existing under the laws of the United States, whose
address is 33 West Main Street, Chillicothe, Ohio, 45601 (the
"Bank"), and First Capital Bancshares, Inc., a corporation formed
under the General Corporation Law of the State of Ohio ("Holding
Company"). In addition, as soon as reasonably and legally possible
Holding Company will form as a wholly-owned subsidiary, a new
national banking association organized and existing under the laws
of the United States ("New Bank") under the name The CNB Interim
Bank, which will upon such formation become a party to this
Agreement and to the Agreement of Merger attached hereto and made a
part hereof as Exhibit A. All obligations of the New Bank will,
until properly assumed by it by its execution of this Agreement, be
made and assumed on its behalf by Holding Company. The Bank,
Holding Company and the New Bank are herein sometimes referred to
collectively as the "Parties", and individually as a "Party".
W I T N E S S E T H:
WHEREAS, Holding Company will, upon the formation of the New Bank be
the owner of all the outstanding shares of the capital stock of the
New Bank, except for any directors' qualifying shares;
WHEREAS, the Parties desire and contemplate that on the Closing Date
(as hereinafter defined) the Bank shall merge with and into the New
Bank, with the New Bank as the corporation surviving, pursuant to
the Agreement of Merger attached hereto and made a part hereof as
Exhibit A (the "Agreement of Merger" or "Merger Agreement"), and
thereupon the New Bank, as successor to the Bank shall commence
business as a bank under the name The Citizens National Bank of
Chillicothe in Ross County, Ohio;
WHEREAS, upon the consummation of the merger contemplated by the
Agreement of Merger (the "Merger") the shares of the outstanding
Common Stock, par value $15 per share, of the Bank (other than those
held by dissenting shareholders) ("Bank Common Stock") shall be
converted into newly issued shares of the Common Stock without par
value of Holding Company at the rate of ten (10) shares of the
Common Stock of Holding Company for each share of Bank Common Stock
issued and outstanding on the effective date of the Merger, and
immediately after the Closing Date, Holding Company will own all of
the outstanding shares of the New Bank, and the former shareholders
of the Bank will own all of the outstanding shares of Common Stock
of Holding Company; and
WHEREAS, this Agreement and the Agreement of Merger (collectively
the "Agreements"), and the transactions and other acts respectively
contemplated thereby, have been authorized and approved by the
Boards of Directors of the Bank and Holding Company, and upon its
formation by the Board of Directors of the New Bank.
NOW, THEREFORE, the Bank, Holding Company and the New Bank agree as
follows:
A. The Closing Date
The transactions contemplated by this Agreement shall be consummated
and the "Closing" shall occur as of the close of business on the
date (the "Closing Date") the Merger is approved in final form by
the Comptroller of the Currency (together with the issuance of all
requisite certificates).
B. Efforts Prior To The Closing
The Parties will each use all reasonable efforts to cause the
Closing to occur and the conditions set forth in Section D hereof to
be satisfied with all reasonable dispatch, and none of them will
undertake any course of action inconsistent with such intended
result.
C. The Closing
Upon the Closing, Holding Company will issue to such person or
persons as the Bank shall designate in writing the shares of Holding
Company's Common Stock, without par value, ("Holding Company
Common") necessary to consummate the merger under the Agreement of
Merger.
From and after the Closing each holder of a certificate or
certificates theretofore representing shares of Bank Common Stock
shall surrender such certificate or certificates to the Bank and
shall receive in exchange therefor, in respect of the certificate or
certificates so surrendered, a certificate or certificates
representing the number of shares of Holding Company Common into and
for which the shares of Bank Common Stock theretofore represented by
such surrendered certificate or certificates have been converted
pursuant to the provisions of Article III, Section 3.1 of the
Agreement of Merger.
Until surrendered pursuant to the provisions hereof, each
certificate or certificates theretofore representing shares of Bank
Common Stock shall be deemed for all purposes (other than for the
payment of dividends or other distributions, if any, to the
shareholders of Holding Company) to represent the number of shares
of Holding Company into and for which the shares of Bank Common
Stock theretofore represented thereby shall have been converted
pursuant to the provisions of Article III, Section 3.1 of the
Agreement of Merger.
No dividends or other distributions, if any, payable to the holders
of shares of Holding Company Common shall be paid to the holders of
a certificate or certificates theretofore representing shares of
Bank Common Stock; provided however, that upon the surrender and
exchange of such certificate or certificates theretofore
representing shares of Bank Common Stock pursuant to the provisions
hereof, there shall then be paid to the record holders of a
certificate or certificates for shares of Holding Company Common
issued in exchange therefor the amount, without interest thereon, of
all dividends and other distributions, if any, declared with respect
to shares of Holding Company Common to holders of record of shares
of Holding Company Common as of any record date after the Closing
and prior to or coincident with the date of such surrender and
exchange, with respect to the number of shares of Holding Company
Common represented thereby.
D. Conditions Precedent
The obligations of each of the Parties to cause the transactions
respectively contemplated by this Agreement, the Agreement of Merger
and thus the Closing to occur, shall be subject to the satisfaction
of the following conditions except as such Party may waive the same
in writing in accordance with Section E hereof:
(1) Action by Comptroller of the Currency. At or prior to the
Closing, the Comptroller of the Currency, the head of the federal
government agency that regulates national banks, shall have:
(a) approved in final form the incorporation and formation of the
New Bank as a national banking association under and pursuant to the
laws of the United States; and
(b) approved the Agreement of Merger, as well as the Merger
contemplated thereby, in accordance with the applicable laws of the
United States;
and each such approval shall be in full force and effect at the
Closing Date.
(2) Orders by the Board of Governors of the Federal Reserve System.
At or prior to the Closing, the Board of Governors of the Federal
Reserve System (i) shall have granted Holding Company's application
for approval to become a bank holding company pursuant to Section
3(a)(1) of the Bank Holding Company Act of 1956, as amended, and
consummation of the transactions contemplated by this Agreement
shall be in compliance with such approval, which shall be in full
force and effect at the Closing.
(3) Bank Shareholder Approval. This Agreement and the Agreement of
Merger shall have been duly adopted and approved by the affirmative
vote of the holders of at least two-thirds of the outstanding shares
of the Bank's Common Stock entitled to vote on the proposal to so
approve such Agreements.
(4) Securities Law Compliance. The Shares of the Holding Company's
Common Stock to be issued to the holder of Bank Common Stock upon
the consummation of the merger in exchange for their Shares of Bank
Common Stock shall be duly registered under the Securities Act of
1933, as amended, under a registration statement on Form S-4 and in
accordance with the terms and conditions of the regulations of the
Securities and Exchange Commission, and also properly registered or
otherwise qualified under all other applicable state securities
laws, as legally required, and no stop order shall be in effect
under any such federal or state securities law.
(5) Tax Consequences. At or prior to the Closing, the Parties shall
be confident that for Federal income tax purposes (a) the Merger
will constitute a reorganization within the meaning of Section
368(a)(1) of the Internal Revenue Code of 1986, as amended, (b) no
gain or loss will be recognized to any shareholder of the Bank upon
the exchange of Bank Common Stock for Holding Company Common Stock
in the Merger, (c) the basis of the Holding Company Common Stock so
received by a Bank shareholder upon the Merger will be, in the hands
of such shareholder, the same as the basis of the Bank Common Stock
surrendered in exchange therefor, and (d) the holding period of the
Holding Company Common Stock thus received by a shareholder of the
Bank will include the holding period of the shares of Bank Common
Stock surrendered in exchange therefor provided that such shares are
capital assets in the hands of the shareholders.
(6) Shareholders Dissent. The shareholders of the Bank shall have
taken the action contemplated by paragraph D(3) herein and the
holders in the aggregate of not more than 3,450 shares (5% of the
69,000 total outstanding shares) of Bank Common Stock (or such
lesser number as may be required to comply with any conditions or
requirements imposed by the Comptroller of the Currency or the Board
of Governors of the Federal Reserve System) shall have either voted
against the Merger or given notice in writing at or prior to the
meeting at which the Merger was ratified and confirmed that they
dissent from the Merger, in accordance with applicable law.
(7) Litigation. On the Closing Date there shall be no court order
in effect enjoining or preventing consummation of any of the
transactions contemplated by this or any of the other Agreements;
and there shall be no litigation, governmental investigation or
proceeding pending or threatened for the purpose of enjoining or
preventing the consummation of any of the transactions contemplated
by this or any of the other Agreements or otherwise claiming that
such consummation is improper and which the Board of Directors of
the Bank shall in good faith determine, with advice of counsel, (i)
has a reasonable likelihood of being successfully prosecuted, and
(ii) if successfully prosecuted, would materially and adversely
affect the benefits intended for the shareholders of the Bank under
this Agreement.
(8) Opinion of Counsel. Messrs. Dinsmore & Shohl shall be prepared
to deliver to the Parties their opinion, dated the Closing Date, to
the effect that (i) Holding Company and the New Bank both are duly
incorporated, validly existing and in good standing, and have all
requisite power and authority to own properties and conduct the
business herein contemplated to be owned and conducted by each of
them after the Closing Date, under, in each case, the laws of each
corporation's state of incorporation; (ii) each of the Agreements,
as well as the transactions respectively contemplated thereby, have
been duly authorized and approved by all requisite corporate action
on the part of each of the respective parties thereto; (iii) the
Merger has become effective pursuant to all applicable federal laws
and all applicable laws of the State of Ohio, and upon becoming
effective each of the outstanding shares of Bank Common Stock
(excluding shares held by those shareholders of the Bank who
perfected their rights as dissenting shareholders under applicable
federal law) was converted into ten (10) shares of Holding Company
Common Stock as contemplated by the Merger Agreement; and (iv) all
of the outstanding shares of Holding Company Common Stock are duly
authorized, validly issued, fully paid and non-assessable. Messrs.
Dinsmore & Shohl shall also be prepared to give all such other
written opinions at the Closing Date as any of the Parties
reasonably may request.
(9) Board of Directors of Holding Company. Upon the Closing, the
Board of Directors of Holding Company shall consist of such persons
as shall have been elected by the shareholders of the Holding
Company, as sole shareholder of the New Bank, acting under the
direction of the Holding Company's Board of Directors.
(10) Holding Company Articles. Prior to Closing, Holding Company
shall not have amended its Articles of Incorporation to other than
the form set forth in Exhibit B attached hereto and made a part
hereof except to increase its authorized capital stock to 1,500,000
shares of Common Stock without par value. (Also attached hereto as
a part of Exhibit B but not subject to any restriction on amendment
are the Code of Regulations of Holding Company.)
(11) Holding Company Common Stock. The Shares of Common Stock into
which the Shares of Common Stock of the Bank will be converted upon
the consummation of the merger shall be validly issued and
outstanding fully paid and non-assessable.
E. Miscellaneous
(1) Termination. This Agreement may be terminated and the Agreement
of Merger may be terminated and abandoned prior to the Closing,
either before or after the meeting of the Bank's shareholders herein
provided for: (a) by mutual consent of the Parties, authorized by
their respective Boards of Directors; or (b) by written notice from
any Party to the other Parties, authorized by the Board of Directors
of the Party giving such notice, if any of the other Parties shall
have breached in any material respect any of the obligations
hereunder and such breach shall not have been abated; or (c) by
written notice from the Bank to the other Parties, authorized by the
Board of Directors of the Bank if the Closing shall not have
occurred by September 1, 1998.
(2) Waiver and Amendment. Any of the provisions of the Agreements
may be waived at any time by any Party which is, or the shareholders
which are, entitled to the benefit thereof upon the authority of the
Board of Directors of such Party, provided that as to such waiver
after the last vote of the shareholders of such Party with respect
to the Agreements, such waiver shall not, in the judgment of the
Board of Directors of such Party, materially and adversely affect
the benefits of such Party or its shareholders intended under the
Agreements. Any of the provisions of the Agreements may be modified
at any time prior to or after the vote hereon (or thereon as the
case may be) of shareholders of any Party, by agreement in writing
approved by the Board of Directors of each Party thereto and
executed in the same manner (but not necessarily by the same
persons) as such Agreement so to be modified, provided that such
modifications after the last vote of the shareholders of a Party
hereon shall not, in the judgment of the Board of Directors of such
Party, materially and adversely affect the benefits of such Party or
its shareholders intended under the Agreements.
(3) Delegation. To the extent permitted by law, the powers of the
Board of Directors of each Party under and with respect to this
Agreement may be delegated by such Board of Directors (which,
whenever referred to herein shall be understood to include the
Executive Committee of such Board, if any) to any officer or
officers of such Party, and any notices, consents or other action
referred to in this Agreement to be given or taken by any Party may
be given or taken on its behalf by any officer so authorized.
(4) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but such
counterparts taken together shall constitute one and the same
instrument.
Attest: The Citizens National Bank of Chillicothe
("Bank")
By:
First Capital Bancshares, Inc.
("Holding Company")
By:
The CNB Interim Bank hereby agrees to and assumes all the
obligations and agreements contained herein which were agreed to and
assumed on its behalf by First Capital Bancshares, Inc.
The CNB Interim Bank ("New Bank")
By:
Date:<PAGE>
EXHIBIT A TO
PLAN AND AGREEMENT OF MERGER
APPENDIX A-1
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER, dated as of January 16, 1998, by and among
THE CNB INTERIM BANK ("CNB"), THE CITIZENS NATIONAL BANK OF
CHILLICOTHE ("Bank"), and FIRST CAPITAL BANCSHARES, INC., an Ohio
corporation;
W I T N E S S E T H:
WHEREAS, the Bank is a banking association organized under the laws
of the United States, being located at 33 West Main Street,
Chillicothe, County of Ross, in the State of Ohio, with a capital of
$10,401,000, divided into 69,000 shares of Common Stock, each of
$15.00 par value, surplus of $1,035,000, and retained earnings of
$8,331,000 as of September 30, 1997;
WHEREAS, CNB is a banking association in organization under the laws
of the United States, to be located at 33 West Main Street,
Chillicothe, County of Ross, in the State of Ohio, with a capital of
$60,000, divided into 1,000 shares of common stock, each of $50.00
par value, surplus of $10,000, with no retained earnings as of
September 30, 1997;
WHEREAS, Bank is authorized to have outstanding 69,000 shares of
Common Stock, of which, as of the date hereof, 69,000 shares are
issued and outstanding; and
WHEREAS, CNB is authorized to have outstanding 1,000 shares of
Common Stock, of which 1,000 shares are presently subscribed; and
WHEREAS, First Capital Bancshares, Inc. ("Parent"), an Ohio
corporation and principal subscriber to the shares of CNB, has
agreed to make available to CNB at the Closing that number of shares
of its Common Stock without par value of Parent ("Parent Common")
necessary to consummate the merger contemplated hereby; and
WHEREAS, the Directors of Bank and CNB (such corporations being
hereinafter sometimes called the "Constituent Corporations") deem it
advisable for the mutual benefit of the Constituent Corporations,
their respective shareholders and others that Bank be merged into
CNB upon the terms and conditions hereinafter set forth, and such
Directors have approved this Agreement of Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and in accordance with the laws of the
United States, Bank and CNB hereby agree that, subject to the terms
and conditions hereinafter set forth, Bank shall be merged into CNB
and that the terms and conditions of such merger, including the mode
of carrying the same into effect and the manner and basis of making
distribution to the shareholders of the Constituent Corporations,
shall be as follows:
ARTICLE I
1.1 Upon the Closing on the Closing Date, as defined in Article IV,
Section 4.1 below, Bank shall be merged into CNB which shall be the
surviving corporation and shall continue to be governed by the
applicable federal laws. CNB, as such surviving corporation, is
hereinafter sometimes referred to as the "Receiving Association."
ARTICLE II
2.1 Effective as of the time that this merger shall become
effective, as specified in the merger approval to be issued by the
Comptroller of the Currency, the Articles of Association of CNB,
amended as hereinafter provided and attached hereto as Schedule 1,
shall be the Articles of Association of the Receiving Association
until the same shall thereafter be further amended in accordance
with law. Upon the Closing, Article FIRST of the Articles of
Association of CNB shall be deemed amended to change the name of CNB
to "THE CITIZENS NATIONAL BANK OF CHILLICOTHE." The Receiving
Association reserves the right to further amend, alter, change or
repeal after such merger any provision contained in its Articles of
Association, and all rights conferred in this Agreement of Merger
are subject to such reserved power.
2.2 The Board of Directors of the Receiving Association shall
consist of seven (7) persons until such time after the Closing as
such number may be changed in accordance with the Regulations of the
Receiving Association. The names and addresses of the first
Directors of the Receiving Association (each of whom shall serve
until the next annual meeting of shareholders and until his
successor is elected, or until his earlier resignation, removal from
office or death) at the time of the Closing are:
DIRECTOR ADDRESS
1. Thomas W. Beard 33 West Main Street,
Chillicothe, Ohio 45601
2. James M. Cutright 33 West Main Street,
Chillicothe, Ohio 45601
3. John H. Kochensparger, III 33 West Main Street,
Chillicothe, Ohio 45601
4. Rosemary Kochensparger 33 West Main Street,
Chillicothe, Ohio 45601
5. Joe Lane 33 West Main Street,
Chillicothe, Ohio 45601
6. Edward N. Steel 33 West Main Street,
Chillicothe, Ohio 45601
7. Jerry W. Whited 33 West Main Street,
Chillicothe, Ohio 45601
If upon the Closing or thereafter there exists a vacancy in the
Board of Directors of the Surviving Corporation, such vacancy may
be filled by the remaining members of the Board of Directors in the
manner provided by law and the regulations of the Receiving
Association.
2.3 The officers of Bank immediately prior to the Closing shall be
the officers of the Receiving Association and shall hold office,
subject to the regulations of the Receiving Association, at the
pleasure of the Board of Directors.
2.4 The business of the Receiving Association shall be that of a
national banking association and shall be conducted at its main
office, to be located at 33 West Main Street, Chillicothe, Ross
County, Ohio, and its legally established branches.
2.5 Upon the Closing, the effect of the merger shall be as provided
by the applicable provisions of federal law. Without limiting the
foregoing, and subject thereto, upon the Closing, the existence of
Bank shall cease as a separate entity but shall continue in the
Receiving Association, subject to the rights of creditors which
shall be preserved unimpaired; the Receiving Association shall have,
without further act or deed, all property, rights, powers, duties
and obligations of each of the Constituent Corporations and trusts
and to the duties and liabilities connected therewith, and shall
perform every such trust or relation in the same manner as if it had
itself originally assumed the trust or relation and the obligation
and liabilities connected therewith within the limits of the charter
of the Receiving Association.
ARTICLE III
The terms of the merger, the mode of carrying the same into effect
and the manner and basis of making distribution to the shareholders
of the Constituent Corporations shall be as follows:
3.1 Forthwith upon the Closing, each share of Bank Common
outstanding immediately prior to the Closing (excluding shares held
by those shareholders of Bank who have perfected their rights as
dissenting shareholders) shall be converted into and become ten (10)
shares of Parent Common. The number of authorized shares of Common
Stock, $50 par value per share, of CNB will, by virtue of the
merger, be 1,000 upon consummation of the merger, all of which will
be issued and outstanding and all of which will continue in
existence as the shares of Common Stock of the Receiving
Association.
3.2 The shares of Parent Common into which shares of Bank Common are
converted pursuant to the provisions of Section 3.1 above shall be
the shares furnished for such purpose by Parent as referred to in
the third recital clause at the beginning of this Agreement.
3.3 From and after the Closing each holder of a certificate or
certificates theretofore representing shares of Bank Common shall
surrender such certificate or certificates to Bank, and shall
receive in exchange therefor a certificate or certificates
representing the number of shares of Parent Common into and for
which the shares of Bank Common theretofore represented by such
surrendered certificate or certificates have been converted pursuant
to the provisions of Section 3.1 above.
3.4 Until surrendered pursuant to the provisions of Section 3.3
above, each certificate or certificates theretofore representing
shares of Bank Common shall be deemed for all purposes (other than
for the payment of dividends or other distributions, if any, to the
shareholders of Parent) to represent the number of shares of Parent
into and for which the shares of Bank Common thereto represented
thereby shall have been converted pursuant to the provisions of
Section 3.1 above.
3.5 No dividends or other distributions, if any, payable to the
holders of shares of Parent Common shall be paid to the holders of
a certificate or certificates theretofore representing shares of
Bank Common; provided however, that upon the surrender and exchange
of such certificate or certificates theretofore representing shares
of Bank Common pursuant to the provisions of Section 3.3 above,
there shall then be paid to the record holders of a certificate or
certificates for shares of Parent Common issued in exchange
therefor, the amount, without interest thereon, of all dividends and
other distributions, if any, declared with respect to shares of
Parent Common to holders of record of shares of Parent Common as of
any record date after the Closing and prior to or coincident with
the date of such surrender and exchange, with respect to the number
of shares of Parent Common represented thereby.
3.6 Upon the merger becoming effective in accordance with the terms
of Article IV hereof, Parent shall repurchase all shares of Parent
Common originally issued to the Incorporator of Parent to facilitate
Parent's organization. Such purchase shall be in an amount equal to
the amount expended by such person to originally purchase such
shares.
ARTICLE IV
4.1 The merger shall become effective, and the "Closing" shall
occur, as of the close of business on the date (the "Closing Date")
when the Merger is approved in final form by the Comptroller of the
Currency (together with the issuance of all requisite certificates).
ARTICLE V
5.1 If the Plan and Agreement of Merger among Parent, Bank and CNB,
dated as of January 16, 1998, is terminated in accordance with the
terms thereof, then this Agreement of Merger shall simultaneously
terminate without further action by the Constituent Corporations.
In the event of such termination the Board of Directors of each of
the Constituent Corporations shall direct its officers not to file
this Agreement of Merger as provided above, notwithstanding
favorable action on this Agreement of Merger by the shareholders of
the respective Constituent Corporations.
ARTICLE VI
6.1 This Agreement of Merger may be executed in any number of
counterparts, each of which shall be deemed to be an original, but
such counterparts together shall constitute one and the same
instrument.
6.2 Any of the provisions of this Agreement of Merger may be waived
at any time by the party which is, or the shareholders of which are,
entitled to the benefit thereof upon the authority of the Board of
Directors of such party, provided that as to such waiver after the
last vote of the shareholders of such party hereon such waiver shall
not, in the judgment of the Board of Directors of such party, affect
materially and adversely the benefits of such party or its
shareholders intended under this Agreement of Merger. Any of the
provisions of this Agreement of Merger may be modified at any time
prior to or after the vote hereon of shareholders of any party, by
agreement in writing approved by the Board of Directors of each
party and executed in the same manner (but not necessarily by the
same persons) as this Agreement of Merger, provided that such
modification after the last vote of the shareholders of a party
hereon shall not, in the judgment of the Board of Directors of such
party, affect materially and adversely the benefits of such party or
its shareholders intended under this Agreement of Merger.
IN WITNESS WHEREOF, The Citizens National Bank of Chillicothe; The
CNB Interim Bank and First Capital Bancshares, Inc. have caused
their respective corporate seals to be hereunto affixed and these
presents to be signed by their respective officers thereunto duly
authorized, all as of the day and year aforesaid.
THE CITIZENS NATIONAL BANK OF CHILLICOTHE
Attest: ("Bank")
Thomas W. Beard James M. Cutright
CEO and President Chairman of the Board
THE CNB INTERIM BANK
Attest: ("CNB")
Thomas W. Beard James M. Cutright
CEO and President Chairman of the Board
FIRST CAPITAL BANCSHARES, INC.
Attest: ("Parent")
Thomas W. Beard James M. Cutright
CEO and President Chairman of the Board
<PAGE>
SCHEDULE 1 TO
AGREEMENT OF MERGER
AMENDED ARTICLES OF ASSOCIATION
OF
THE CITIZENS NATIONAL BANK OF CHILLICOTHE
(formerly The CNB Interim Bank; Survivor by Merger of
The Citizens National Bank of Chillicothe
with and into The CNB Interim Bank)
THE CNB INTERIM BANK, a banking association organized under the laws
of the United States, adopts these Amended Articles of Association
to supersede and take the place of its existing Articles of
Association, and all previously adopted amendments thereto, that are
in force at this time, and for such purpose certifies as follows:
FIRST: The name of this Association shall be THE CITIZENS NATIONAL
BANK OF CHILLICOTHE.
SECOND: The place where its principal office is to be located is
Chillicothe, Ross County, Ohio, and its principal business there
transacted.
THIRD: Said Association is formed for the purposes of (a) receiving
money on deposit on such terms as may be agreed, and of doing the
business of a national bank; (b) of disposing of box vaults for
safekeeping of valuables by lease or otherwise; (c) of investing and
loaning the funds of the Association and those received by it on
deposit; and (d) of doing a commercial banking business; and in
furtherance of said purposes to exercise all the powers which may be
lawfully exercised by an association formed therefor, and to do all
things necessary or incident thereto.
FOURTH: The maximum number of shares which the Association is
authorized to have outstanding is 1,000 shares of common stock with
a par value of Fifty and no/100 Dollars ($50) per share.
<PAGE>
APPENDIX A-2
ARTICLES OF INCORPORATION
OF
FIRST CAPITAL BANCSHARES, INC.
The undersigned, desiring to form a corporation for profit, under
the General Corporation Law of Ohio, does hereby certify:
FIRST: The name of this Corporation shall be FIRST CAPITAL
BANCSHARES, INC.
SECOND: The place in Ohio where its principal office is to be
located is Chillicothe, County of Ross.
THIRD: The purpose for which the Corporation is formed is to engage
in any lawful act or activity for which corporations may be formed
under Chapter 1701 of the Ohio Revised Code.
FOURTH: The maximum number of shares which the Corporation is
authorized to have outstanding is Eight Hundred Fifty (850) shares,
all of which shall be designated Common Stock and shall be without
par value.
FIFTH: The number of Directors of the Corporation shall be fixed
from time to time by its Code of Regulations and may be increased or
decreased as therein provided, but the number thereof shall in no
event be less than five. The Board of Directors shall be divided
into two classes, as nearly equal in number as the then total number
of Directors constituting the whole Board permits, it not being
required that each class have the same number of members if such is
mathematically impossible with the term of office of one class
expiring each year. At the organizational meeting of shareholders,
Directors of the first class shall be elected to hold office for a
term expiring at the next succeeding Annual Meeting; Directors of
the second class shall be selected to hold office for a term
expiring at the second succeeding Annual Meeting. Thereafter, at
each Annual Meeting of shareholders the successors to the class of
Directors whose term shall then expire shall be elected to hold
office for a term expiring at the second succeeding Annual Meeting
after such election. In the event of any increase in the number of
Directors of the Corporation, the additional Directors shall be so
classified that all classes of Directors shall be increased equally
as nearly as may be possible. In the event of any decrease in the
number of Directors of the Corporation, all classes of Directors
shall be decreased equally as nearly as possible.
SIXTH: (A) Except as otherwise provided in Clause (B) of this
Article SIXTH:
(i) any merger or consolidation of the Corporation with or into any
other corporation;
(ii) any sale, lease, exchange or other disposition of all or any
substantial part of the assets of the Corporation to or with any
other corporation, person or other entity;
(iii) the issuance or transfer of any securities of the Corporation
to any other corporation, person or other entity in exchange for
assets or securities or a combination thereof (except assets or
securities or a combination thereof so acquired in a single
transaction or a series of related transactions having an aggregate
fair market value of less than $250,000), or
(iv) the issuance or transfer of any securities of the Corporation
by the Corporation to any other corporation, person or other entity
for cash;
shall require the affirmative vote of the holders of at least eighty
percent (80%) of the outstanding shares of capital stock of the
Corporation which are not beneficially owned by such other
corporation, person or other entity if, as of the record date for
the determination of shareholders entitled to notice thereof and to
vote thereon, such other corporation, person or entity is the
beneficial owner, directly or indirectly, of 10% or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of Directors, considered for the
purposes of this Article SIXTH as one class. Such affirmative
vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or
in any agreement with any national securities exchange.
(B) The provisions of this Article SIXTH shall not apply to any
transaction described in clauses (i), (ii), (iii) or (iv) of Clause
(A) of this Article SIXTH, (i) with another corporation if a
majority, by vote, of the outstanding shares of all classes of
capital stock of such other corporation entitled to vote generally
in the election of Directors, considered for this purpose as one
class, is owned of record or beneficially by the Corporation and/or
its subsidiaries; (ii) with another corporation, person or other
entity if the Board of Directors of the Corporation shall by
resolution have approved a memorandum of understanding with such
other corporation, person or other entity with respect to and
substantially consistent with such transaction prior to the time
such other corporation, person or other entity became the beneficial
owner, directly or indirectly, of 10% or more of the outstanding
shares of capital stock of the Corporation entitled to vote
generally in the election of Directors; or (iii) approved by
resolution adopted by the affirmative vote of at least a majority of
the members of the whole Board of Directors of the Corporation at
any time prior to the consummation thereof.
(C) For the purposes of this Article SIXTH, a corporation, person or
other entity shall be deemed to be the beneficial owner of any
shares of capital stock of the corporation (i) which it has the
right to acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise; or (ii) which
are beneficially owned, directly or indirectly (including shares
deemed owned through application of clause (i) above), by any other
corporation, person or other entity with which it or its "affiliate"
or "associate" (as defined below) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of capital stock of the Corporation, or which is its
"affiliate" or "associate" as those terms were defined in Rule 12b-2
of the general rules and regulations under the Securities Exchange
Act of 1934. For the purposes of this Article SIXTH, the
outstanding shares of any class of capital stock of the Corporation
shall include shares deemed owned through the application of clauses
(i) and (ii) of this Clause (C) but shall not include any other
shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise.
(D) The Board of Directors of the Corporation shall have the power
and duty to determine for the purposes of this Article SIXTH, on the
basis of information then known to it, whether (i) any other
corporation, person or other entity beneficially owns, directly or
indirectly, 10% or more of the outstanding shares of capital stock
of the Corporation entitled to vote generally in the election of
Directors, or is an "affiliate" or an "associate" (as defined above)
of another, (ii) any proposed sale, lease, exchange or other
disposition of part of the assets of the Corporation involves a
substantial part of the assets of the Corporation, (iii) assets or
securities, or a combination thereof, to be acquired in exchange for
securities of the Corporation, have an aggregate fair market value
of less than $250,000 and whether the same are proposed to be
acquired in a single transaction or a series of related
transactions, and (iv) the memorandum of understanding referred to
above is substantially consistent with the transaction to which it
relates. Any such determination by the Board shall be conclusive
and binding for all purposes of this Article SIXTH.
SEVENTH: The Board of Directors of the Corporation, when evaluating
any offer of another party to (i) purchase or exchange any
securities or property for any outstanding equity securities of the
Corporation, (ii) merge or consolidate the Corporation with another
corporation, or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation,
shall, in connection with the exercise of its judgment in
determining what is in the best interests of the Corporation and its
shareholders, give due consideration not only to the price or other
consideration being offered but also to all other relevant factors,
including without limitation the financial and managerial resources
and future prospects of the other party; the possible effects on the
business of the Corporation and its subsidiaries and on the
depositors, employees, and other constituents of the Corporation and
its subsidiaries; and the possible effects on the communities and
the public interest which the Corporation and its subsidiaries
serve. In evaluating any such offer, the Board of Directors shall
be deemed to be performing their duly authorized duties and acting
in good faith and in the best interests of the Corporation within
the meaning of Section 1701.13 of the Ohio Revised Code, as it may
be amended from time to time, and the Corporation's Code of
Regulations.
EIGHTH: When authorized by the affirmative vote of a majority of the
Board of Directors, without the action or approval of the
shareholders of this Corporation, this Corporation may redeem,
purchase, or contract to purchase, at any time and from time to
time, shares of any class issued by this Corporation for such prices
and upon and subject to such terms and conditions as the Board of
Directors may determine.
NINTH: The statutes of Ohio require that action on certain specified
matters at a shareholders' meeting shall be taken by the affirmative
vote of the holders of more than a majority of shares entitled to
vote thereon, unless other provision is made in the Articles of
Incorporation. On all these specified matters, action may be taken
by the affirmative vote of a two-thirds majority of shares entitled
to vote thereon or, if the vote is required to be by classes, by the
affirmative vote of a two-thirds majority of each class of shares
entitled to vote thereon as a class, except that any amendment,
alteration, addition to or repeal of Article FIFTH, SIXTH or this
Article NINTH and of any of the matters specified above in Article
SIXTH as requiring a vote other than the affirmative vote of the
holders of a two-thirds majority of the shares entitled to vote
thereon, may only be taken by the affirmative vote of the holders of
at least eighty percent (80%) of the outstanding shares of capital
stock of the Company entitled to vote thereon, considered for the
purposes of this Article as one class.
TENTH: As permitted under Section 1706.01 of the Ohio Revised Code,
Shareholders shall have pre-emptive rights with respect to their
shares of capital stock of the Company.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 20th day
of November 1997.
Dorothy K. Corbett, Incorporator
<PAGE>
APPENDIX A-3
CODE OF REGULATIONS
OF
FIRST CAPITAL BANCSHARES, INC.
ARTICLE I
SEAL
The Board of Directors may from time to time adopt such seal or
seals, if any, as they deem appropriate for the use of the
Corporation in transacting its business.
ARTICLE II
SHAREHOLDERS
(a) Annual Meeting. The annual meeting of the shareholders shall be
held at the principal office of the Corporation, or at such other
place either within or without the State of Ohio as may be specified
in the notice required under paragraph (c) of this Article not
earlier than the second Tuesday of February or later than the third
Tuesday of April of each year, as shall be fixed by the Board of
Directors, at which time there shall be elected Directors to serve
until the end of the term to which they are elected and until their
successors are elected and qualified. Any other business may be
transacted at the annual meeting without specific notice of such
business being given, except such business as may require specific
notice by law.
(b) Special Meetings. Special meetings of the shareholders may be
called and held within or without the State of Ohio, as provided by
law.
(c) Notice. Notice of each annual or special meeting of the
shareholders shall be given in writing either by the President, any
Vice President, the Secretary, or any Assistant Secretary, not less
than ten (10) days before the meeting. Any shareholder may, at any
time, waive any notice required to be given under these Regulations.
(d) Quorum. The shareholders present in person or by proxy at any
meeting shall constitute a quorum unless a larger proportion is
required to take the action stated in the notice of the meeting, in
which case, to constitute a quorum, there shall be present in person
or by proxy the holders of record of shares entitling them to
exercise the voting power required by the Articles of Incorporation
of the Corporation or applicable law to take the action stated.
(e) Order of Business. At all shareholders' meetings the order of
business shall be as follows unless changed by a majority vote:
1. Reading of minutes of previous meeting and acting thereon;
2. Reports of Directors and Committees;
3. Financial report or statement;
4. Reports from Chairman, President or other officers;
5. Unfinished business;
6. Election of Directors;
7. New or miscellaneous business;
8. Adjournment.
(f) Organization. The Chairman of the Board shall preside at all
meetings of the shareholders, but in his absence the President shall
preside, and in his absence the shareholders shall elect another
officer or a shareholder to so preside. The Secretary of the
Corporation shall act as Secretary of all meetings of the
shareholders, but in the absence of the Secretary at any meeting of
the shareholders, the presiding officer may appoint any person to
act as Secretary of the meeting.
ARTICLE III
DIRECTORS
(a) Number. The Board of Directors shall be composed of seven (7)
persons, as shall be fixed by the shareholders in accordance with
applicable law, who shall be elected in accordance with the
provisions of the Articles of Incorporation by action of the
shareholders. Any Director's office created by the Directors by
reason of an increase in their number may be filled by action of a
majority of the Directors then in office.
(b) Changes. The number of Directors fixed in accordance with the
immediately preceding paragraph may also be increased or decreased
by the Directors at a meeting or by action in writing without a
meeting, and the number of Directors as so changed shall be the
number of Directors until further changed in accordance with this
Section; provided, that no such decrease in the number of Directors
shall have the effect of shortening the term of any incumbent
Director; and provided, further, that the number of Directors shall
not be increased by the Directors to more than three Directors
beyond the number of Directors as fixed at the most recently held
meeting of shareholders called for the purpose of electing
Directors.
(c) Nominations. Nominations for the election of Directors may be
made by the Board of Directors or a proxy committee appointed by the
Board of Directors or by any shareholder entitled to vote in the
election of Directors generally. However, any shareholder entitled
to vote in the election of Directors generally may nominate one or
more persons for election as Directors at a meeting only if written
notice of such shareholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United
States mail, postage prepaid, to the Secretary of the Corporation
not later than (1) with respect to an election to be held at an
annual meeting of shareholders, 45 days in advance of the
corresponding date for the date of the preceding year's annual
meeting of shareholders, and (2) with respect to an election to be
held at a special meeting of shareholders for the election of
Directors, the close of business on the seventh day following the
date on which notice of such meeting is first given to shareholders.
Each such notice shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the shareholder
is a holder of record of stock of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; and (d) the consent
of each nominee to serve as a Director of the Corporation if so
elected. The chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing
procedure.
(d) Vacancies. Vacancies in the Board of Directors shall be filled
as provided by the laws of the State of Ohio then in effect.
(e) Time of Meeting. The Board of Directors shall meet at the
principal office of the Corporation, at least annually, immediately
following the annual meeting of the shareholders, but the Directors
shall have the authority to change the time and place of such
meeting by the adoption of By-Laws or by resolution.
(f) Call and Notice. Meetings of the Board of Directors other than
the annual meeting may be called at any time by the Chairman of the
Board and shall be called by the Chairman upon the request of two
members of the Board. Such meetings may be held at any place within
or without the State of Ohio. Notice of the annual meeting need not
be given and each director shall take notice thereof, but this
provision shall not be held to prevent the giving of notice in such
manner as the Board may determine. The Board shall decide what
notice shall be given and the length of time prior to the meetings
that such notice shall be given of all other meetings. Any meeting
at which all of the directors are present shall be a valid meeting
whether notice thereof was given or not and any business may be
transacted at such a meeting.
(g) Presence Through Communications Equipment. Meetings of the
Board of Directors, and meetings of any Committee thereof, may be
held through any communications equipment if all persons
participating can hear each other, and participation in a meeting
pursuant to this subparagraph (g) shall constitute presence at such
a meeting.
(h) By Laws. The Board of Directors may adopt By Laws for their own
government and that of the Corporation provided such By Laws are not
inconsistent with the Articles of Incorporation or these
Regulations.
ARTICLE IV
COMMITTEES
The Board of Directors may, by resolution, designate not less than
three (3) of its number to serve on an Executive Committee or such
other committee or committees as the Board may from time to time
constitute. The Board of Directors may delegate to any such
Executive Committee any of the authority of the Directors, however
conferred, other than that of filling vacancies among the Directors
or in any committee of the Directors and to incur debts, excepting
for current expenses, unless specifically authorized. The specific
duties and authority of any such committee or committees shall be
stated in the resolution constituting the same.
ARTICLE V
OFFICERS
(a) Number. The officers of the Corporation shall be a Chairman of
the Board, a President, one or more Vice Presidents, a Secretary and
a Treasurer. Any two or more of the offices may be held by the same
persons, but no officer shall execute, acknowledge, or verify any
instrument in more than one capacity if such instrument is required
to be executed, acknowledged or verified by two or more officers.
(b) Other Officers. The Board of Directors is authorized in its
discretion to establish the office of Executive Vice President, and
shall have the further power to provide for such other officers,
assistant officers and agents as it shall deem necessary from time
to time and may dispense with any of said offices and agencies at
any time.
(c) Election, Term and Removal. At the first meeting of the Board
of Directors after the annual meeting of shareholders, the Board
shall select one of its members by a majority vote to be Chairman of
the Board and shall select one of its members by a majority vote to
be President of the Corporation. It shall also select all other
officers of the Corporation by a majority vote, but none of such
other officers shall be required to be members of the Board, except
the Chairman of the Board and President. All officers of the
Corporation shall hold office for one year and until their
successors are elected and qualified.
(d) Vacancies and Absence. If any office shall become vacant by
reason of the death, resignation, disqualification, or removal of
the incumbent thereof, or other cause, the Board of Directors may
elect a successor to hold office for the unexpired term in respect
to which such vacancy occurred or was created. In case of the
absence of any officer of the Corporation or for any reason that the
Board of Directors may determine as sufficient, the said Board may
delegate the powers and duties of such officer to any other officer
or to any director, except where otherwise provided by these
Regulations or by statute, for the time being.
ARTICLE VI
DUTIES OF OFFICERS
(a) Chairman of the Board. The Chairman of the Board of Directors
shall preside at all meetings of the Board and of the shareholders,
appoint all special or other committees unless otherwise ordered by
the Board, confer with and advise all other officers of the
Corporation, and perform such other duties as may be delegated to
him from time to time by the Board.
(b) President. The President shall be the Chief Executive Officer
and active head of the Corporation, and in the recesses of the Board
of Directors and the Executive Committee, if the Board establishes
such a committee, shall have general control and management of all
its business and affairs. He shall make such recommendations to the
Board of Directors, or any committees thereof, as he thinks proper,
and he shall bring before said Board such information as may be
required touching the business and property of the Corporation. He
shall perform generally all the duties incident to the office of
President, as required or authorized by law and such as are usually
vested in the President of a similar corporation.
(c) Vice Presidents. The Vice Presidents, including the Executive
Vice President, if the Board establishes such office, shall perform
such duties as may be delegated to them by the Board of Directors,
or assigned to them from time to time by the Board of Directors or
the President. The Executive Vice President, if the Board
establishes such office, or the Vice President, or in the event
there shall be more than one Vice President, such Vice President as
may be designated by the Board, shall perform the duties and have
the powers of the President in case of the absence of the latter
from his office, and during such absence such Vice President shall
be authorized to exercise all the functions of the President and
shall sign all papers and perform all duties as acting President.
(d) Secretary. The Secretary shall keep a record of all proceedings
of the Board of Directors, and of all meetings of shareholders, and
shall perform such other duties as may be assigned to him by the
Board of Directors or the President.
(e) Treasurer. The Treasurer shall have charge of the funds and
accounts of the Corporation and shall keep proper books of account
showing all receipts, expenditures and disbursements of the
Corporation, with vouchers in support thereof. The Treasurer shall
also from time to time, as required, make reports and statements to
the Directors as to the financial condition of the Corporation, and
submit detailed statements of receipts and disbursements; he or she
shall perform such other duties as shall be assigned to him or her
from time to time by the Board of Directors or the President.
(f) Bonds of Officers. The Board of Directors shall determine which
officers, if any, of the Corporation shall give bond, and the terms
and amount thereof, the expense to be paid by the Corporation.
ARTICLE VII
INDEMNIFICATION
The Corporation shall indemnify each director and each officer of
the Corporation, and each person employed by the Corporation who
serves at the written request of the Chairman or President of the
Corporation as a director, trustee, officer, employee, or agent of
another corporation, domestic or foreign, non-profit or for profit,
partnership, joint venture, trust or other enterprise, to the full
extent permitted by Ohio law. The term "officer" as used in this
Article VII shall include the Chairman of the Board, the President,
each Vice President, the Treasurer, the Secretary, the Controller,
the Auditor, the Counsel and any other person who is specifically
designated as an "officer" within the operation of this Article VII
by action of the Board of Directors. The Corporation may indemnify
assistant officers, employees and others by action of the Board of
Directors to the extent permitted by Ohio law.
ARTICLE VIII
STOCK
(a) Certificates of Stock. Each shareholder of this Corporation
whose stock has been fully paid for shall be entitled to a
certificate or certificates, showing the number of shares registered
in his or her name on the books of the Corporation. Each
certificate shall be signed by the Chairman of the Board or the
President or any Vice President and by the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer. A full record
of each certificate, as issued, shall be entered on the stub
thereof.
(b) Transfers of Stock. Shares shall be transferable on the books
of the Corporation by the holders thereof in person or by a duly
authorized attorney upon surrender of the Certificates therefor with
duly executed assignment endorsed thereon or attached thereto.
Evidence of authority to endorse any certificate and to request its
transfer shall be produced to the Corporation. In case of transfer
by executors, administrators, guardians or other legal
representatives or fiduciaries, appropriate legal evidence of their
authority to act shall be produced and may be required to be filed
with the Corporation. No transfer shall be made until the stock
certificate in question and such evidence of authority are delivered
to the Corporation.
(c) Transfer Agents and Registrars. The Board of Directors may
appoint an agent or agents to keep the records of the shares of the
Corporation, or to transfer or to register shares, or both, in Ohio
or any other state and shall define the duties and liabilities of
any such agent or agents.
(d) Lost, Destroyed or Mutilated Certificates. If any certificate
of stock in this Corporation becomes worn, defaced or mutilated, the
Directors, upon production and surrender thereof, may order the same
canceled, and may issue a new certificate in lieu of the same. If
any certificate of stock be lost or destroyed, a new certificate may
be issued upon such terms and under such regulations as may be
adopted by the Board of Directors.
(e) Corporation's Right of First Refusal on the Stock. Each
Shareholder of the Corporation agrees that he or she will not,
during his or her lifetime give, sell, transfer, trade, pledge or
otherwise encumber, or permit to be encumbered by liens or the legal
or equitable interest of another, any portion or all of the shares
of Common Stock owned by him or her, except subject and in
accordance with the terms of this Code of Regulations. Any
Shareholder (the "Selling Shareholder") who desires to dispose of
any or all of his or her shares of Common Stock during his or her
lifetime shall first give the Corporation the opportunity to match
the terms of any offer the Selling Shareholder may have from an
unrelated bona fide purchaser in accordance with the following terms
of this Article VIII(e) before the Selling Shareholder may sell such
shares to a bona fide purchaser.
The Selling Shareholder shall make a written offer to the
Corporation. Such written offer shall set forth the number of
shares of Common Stock which the Selling Shareholder proposes to
dispose of, the price per share, the name, address and telephone
number of the third party offeror (and of any person or entity for
whom the third party offeror is acting as agent or nominee and who
will become the beneficial owner of the shares of Common Stock
specified in the offer if a purchase occurs pursuant thereto), and
all other material terms and conditions of the proposed sale or
disposition.
On or before the expiration of thirty (30) days after the date of
the notice given, the Corporation may, at its option, elect to
purchase all or any part of the shares of Common Stock described in
the offer on the terms contained therein.
The Corporation shall exercise its election to purchase by written
notice to the Selling Shareholder. Failure by the Corporation to
exercise its election in the respective time period provided above
shall be deemed rejection of the offer as of the last day of such
time period. The Corporation's notice, as the case may be, shall
specify a date for the closing of the purchase which shall be not
more than ten (10) days after the date of such notice.
All shares offered for purchase to the Corporation must be purchased
on the terms contained in the offer required hereunder. If the
Corporation declines to purchase all of the shares of Common Stock
offered, then the Selling Shareholder shall be free to dispose of
all such shares of Common Stock offered for purchase to the
Corporation for a period of sixty (60) days in accordance with and
upon the same terms and conditions, including purchase price,
contained in the original written offer, after which time if such
shares remain unsold they shall again be subject to the restrictions
contained in Regulations.
Notwithstanding any terms of this Article VIII(e) to the contrary,
any shareholder may transfer his or her stock to immediate family
member(s) at any time and on any terms provided that such family
member(s) acknowledges and agrees in writing to be bound by all the
terms and conditions contained herein. In the case of death of a
shareholder, the decedent shareholder may bequeath his or her stock
to immediate family member(s) so long as such family member(s)
acknowledges and agrees in writing to be bound by all the terms and
conditions contained herein.
(f) Endorsement on Stock Certificates. Each certificate
representing shares of Common Stock of the Corporation now held by
the Shareholders or to be issued to them shall bear the following
legend:
The right to transfer, sell, exchange, give, pledge, encumber or
otherwise dispose of the shares of stock represented by this
certificate is restricted in accordance with the Code of Regulations
of the Corporation, as the same may be amended from time to time.
The Corporation will mail to any shareholder a copy of such Code of
Regulations without charge within five days after receipt of written
request therefor.
The Corporation agrees that it will cause a similar endorsement to
be placed on all certificates hereafter issued by it relating to the
shares of Common Stock which are subject to the terms of the Code of
Regulations.
ARTICLE IX
AMENDMENTS
These Regulations, or any of them, may be altered, amended, added to
or repealed as provided by law and the Articles of Incorporation of
the Corporation.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Holding Company's Code of Regulations provides that the Holding
Company shall indemnify to the full extent permitted by law any
person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director, officer, trustee, or
employee of the Holding Company or of another corporation if serving
at the request of the Holding Company. Indemnification of agents of
the Holding Company is permitted at the discretion of the Board of
Directors.
In general, Ohio law provides that a corporation may indemnify such
persons against expenses, including attorneys' fees, judgments,
fines, and amounts paid in settlement actually and reasonably
incurred by them in connection with such suits, actions or
proceedings if the person seeking indemnification acted in good
faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful; provided, however, that in the case of an
action by or in the name of the claim or issue as to which such
person has been adjudged to be liable to negligence or misconduct
unless and to the extent that the court in which the action was
brought holds that indemnification is warranted.
The Holding Company's Code of Regulations, as permitted by Ohio law,
also provides that the Holding Company may purchase and maintain
insurance on behalf of any of the persons which it may indemnify, as
described, above against such types of liability.
Item 21. Exhibits and Financial Statement Schedules.
(a) The following exhibits are included as part of this Registration
Statement:
Exhibit Description
No.
2 Plan and Agreement of Merger, including Agreement of Merger
3.1 Articles of Incorporation of First Capital Bancshares, Inc.
3.2 Code of Regulations of First Capital Bancshares, Inc.
5, 23 Opinion and Consent of Messrs. Dinsmore & Shohl
23 Opinion of Messrs. Robb, Dixon, Francis, Davis, Oneson &
Company
21 Subsidiary of the Registrant
22 Form of Proxy
25* Power of Attorney
_______________________
* Contained on the signature page to this Registration Statement on
Form S-4.
Item 22. Undertakings.
(1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered
hereunder through use of a prospectus, which is a part of this
registration statement, by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items of the
applicable form.
(2) The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the
Securities Act of 1933 and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt
means. This includes information contained in the documents filed
subsequent to the effective date of the registration statement
through the date of responding to the request.
(4) The undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement
when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the
City of Chillicothe, State of Ohio on this 23rd day of January,
1998.
FIRST CAPITAL BANCSHARES, INC.
By: /s/ Thomas W. Beard
Thomas W. Beard, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons, in the capacities indicated and on the dates indicated.
Each person whose signature appears below hereby appoints Thomas W.
Beard to be his attorney-in-fact, for him or her in his or her name,
place and stead, in any capacity, to sign any and all amendments
relating to this Registration Statement, and to file the same with
the Securities and Exchange Commission.
Principal Executive Officer:
/s/ Thomas W. Beard
Thomas W. Beard
Principal Financial Officer:
/s/ Thomas W. Beard
Thomas W. Beard
Directors of the Bank:
/s/ Thomas W. Beard
Thomas W. Beard
/s/ James M. Cutright
James M. Cutright
/s/ John H. Kochensparger, III
John H. Kochensparger, III
/s/ Rosemary Kochensparger
Rosemary Kochensparger
/s/ Joe L. Lane
Joe L. Lane
/s/ Edward N. Steel
Edward N. Steel
/s/ Jerry W. Whited
Jerry W. Whited
EXHIBIT INDEX
Exhibit No. Description Page in
Sequential
Numbering
System
2 Plan and Agreement of Merger,
including Agreement of Merger*
3.1 Articles of Incorporation of
First Capital Bancshares, Inc.**
3.2 Code of Regulations of First
Capital Bancshares, Inc.***
5, 23 Opinion and Consent of Messrs.
Dinsmore & Shohl
23 Consent of Messrs. Robb, Dixon,
Francis, Davis, Oneson & Company
21 Subsidiary of the Registrant
22 Form of Proxy
25 Power of Attorney****
*Contained as Appendices A and A-1 to Proxy Statement/Prospectus
**Contained as Appendix A-2 to Proxy Statement/Prospectus
***Contained as Appendix A-3 to Proxy Statement/Prospectus
****Contained in the Signature Pages to the Registration Statement
<PAGE>
EXHIBIT 5, 23
Charles F. Hertlein, Jr.
(513) 977-8315
December 19, 1997
The Citizens National Bank of Chillicothe
33 West Main Street
Chillicothe, Ohio 45601
Ladies and Gentlemen:
This opinion is rendered for use in connection with the Registration
Statement on Form S-4, prescribed pursuant to the Securities Act of
1933, to be filed by First Capital Bancshares, Inc. (the "Company")
with the Securities and Exchange Commission on or about December 19,
1997, under which up to 690,000 shares of the Company's Common Stock
without par value ("Common Stock") are to be registered.
We hereby consent to the filing of this opinion as Exhibits 5 and 23
to the Registration Statement and to the reference to our name in
the Registration Statement.
As counsel to the Company, we have examined and are familiar with
originals or copies, certified or otherwise identified to our
satisfaction, of such statutes, documents, corporate records,
certificates of public officials, and other instruments as we have
deemed necessary for the purpose of this opinion, including the
Company's Articles of Incorporation and Code of Regulations and the
record of proceedings of the shareholders and directors of the
Company.
Based upon the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing
and in good standing as a corporation under the laws of the State of
Ohio.
2. When the Registration Statement shall have been declared
effective by order of the Securities and Exchange Commission and up
to 690,000 shares of the Common Stock to be issued for sale to the
public shall have been issued and sold upon the terms set forth in
the Registration Statement, such shares will be legally and validly
issued and outstanding, fully-paid and nonassessable.
Very truly yours,
DINSMORE & SHOHL LLP
/s/ Charles F. Hertlein, Jr.
Charles F. Hertlein, Jr.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation in regulatory applications relative
to the formation of a one bank holding company of our independent
auditors report dated January 24, 1997 for the financial statements
of The Citizens National Bank, Chillicothe, Ohio, as of and for the
year ending December 31, 1996.
/s/ ROBB, DIXON, FRANCIS, ONESON & COMPANY
<PAGE>
EXHIBIT 21
Subsidiary of Registrant
The Registrant has no subsidiaries.
<PAGE>
EXHIBIT 22
PROXY
THE CITIZENS NATIONAL BANK OF CHILLICOTHE
33 West Main Street
Chillicothe, Ohio 45601
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS CALLED FOR
FEBRUARY 24, 1998
THIS PROXY IS SOLICITED BY MANAGEMENT AND UNLESS OTHERWISE MARKED
WILL BE VOTED FOR THE PROPOSAL.
The undersigned, having received notice of the Annual Meeting of
Shareholders of The Citizens National Bank of Chillicothe,
Chillicothe, Ohio to be held at 1:30 p.m., Tuesday, February 24,
1998, at the main office of the bank, located at 33 West Main
Street, Chillicothe, Ohio, hereby designates and appoints Carmi
Jones III and William H. Nolan, or any of them, as attorneys and
proxies for the undersigned, with full power of substitution, to
vote for and in the name of the undersigned all shares of the Common
Stock of The Citizens National Bank of Chillicothe which the
undersigned is entitled to vote at such Annual Meeting of
Shareholders, or at any adjournment thereof, such proxies being
directed to vote as specified below on the following proposal:
Management recommends a vote FOR the proposal.
Proposal 1 To elect seven directors as nominated below:
FOR ALL DIRECTORS _________ AGAINST ALL _________
Individual Directors:
Thomas W. Beard FOR______ AGAINST______
James M. Cutright FOR______ AGAINST______
John H. Kochensparger, III FOR______ AGAINST______
Rosemary Kochensparger FOR______ AGAINST______
Joe L. Lane FOR______ AGAINST______
Edward N. Steel FOR______ AGAINST______
Jerry W. Whited FOR______ AGAINST______
Proposal 2 To vote on the approval of the following Resolution:
RESOLVED, That the Plan and Agreement of Merger, dated as of January
16, 1998, by and between The Citizens National Bank of Chillicothe
and First Capital Bancshares, Inc., together with the Agreement of
Merger appended thereto as Exhibit A, providing for the merger of
The Citizens National Bank of Chillicothe with and into The CNB
Interim Bank and the conversion of The Citizens National Bank of
Chillicothe into a holding company structure, are hereby approved,
ratified, adopted and confirmed.
FOR______ AGAINST______ ABSTAIN______
Proposal 3 To ratify the engagement of the Bank's auditors:
RESOLVED, That shareholders of the Company hereby ratify the action
of the board of directors in retaining Robb, Dixon, Francis, Davis,
Oneson & Company as the independent auditors of the Bank for 1998.
FOR______ AGAINST______ ABSTAIN______
If this Proxy is properly signed but one or more of the above
ballots are not marked, such proxies are authorized to vote the
shares represented by this proxy in accordance with their
discretion. It is the present intention of such proxies to vote for
the election of directors as nominated herein, for the merger
proposal and for the ratification of the auditors, and in the best
interest of the Bank, in the judgment of the proxies, concerning any
other matters presented at the meeting.
The undersigned reserves the right to revoke this Proxy at any time
until the Proxy is voted at the Annual Meeting. The Proxy may be
revoked by a later dated Proxy, by giving written notice to the Bank
at any time before the Proxy is voted, or in open meeting.
DATED:_________________________ ____________________________
Signature
_________________________________ ____________________________
(Number of Shares) Signature
(Please sign Proxy as your name appears on your stock
certificate(s). Joint owners should each sign personally. When
signing as attorney, executor, administrator, trustee, guardian or
corporate officer, please give your full title as such.)
ALL FORMER PROXIES
ARE HEREBY REVOKED
PLEASE DATE, SIGN, AND MAIL THIS PROXY TO THE PROXY COMMITTEE, IN
CARE OF THE CITIZENS NATIONAL BANK OF CHILLICOTHE, 33 WEST MAIN
STREET, CHILLICOTHE, OHIO 45601. A PRE-ADDRESSED ENVELOPE IS
ENCLOSED.
