<PAGE> 1
As filed with the Securities and Exchange Commission
on January 14, 1993
Registration No. 33-51575
________________________________________________________________________________
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
POST EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
TRANS FINANCIAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
Kentucky 61-1048868
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
500 East Main Street
Bowling Green, Kentucky 42101
(Address of Principal Executive Offices)
Copy to:
Douglas M. Lester, President Stewart E. Conner, Esq.
Trans Financial Bancorp, Inc. Wyatt, Tarrant & Combs
500 East Main Street 2800 Citizens Plaza
Bowling Green, Kentucky 42101 Louisville, Kentucky 40202
(Name and address of agent for service)
(502) 781-5000
(Telephone number, including area code, of agent for service)
<PAGE> 2
TRANS FINANCIAL BANCORP, INC.
CROSS REFERENCE SHEET
PURSUANT TO REGULATION S-K, ITEM 501(B)
<TABLE>
<CAPTION>
FORM S-4 ITEM AND CAPTION LOCATION OR CAPTION IN PROSPECTUS
------------------------- ---------------------------------
<S> <C>
A. Information About the Transaction
1. Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus . . . . . . . . . . . . . Facing page of Registration Statement; Outside
Front Cover Page of Proxy Statement-Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . . . . . . Available Information; Incorporation of Certain
Information by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Information . . . . Summary; Selected Consolidated Financial
Information
4. Terms of the Transaction . . . . . . . . . . Summary; The Merger; Description of Trans
Financial Common Stock and Rights; Comparative
Stock Prices and Dividends; Certain Differences
in Rights of Shareholders
5. Pro Forma Financial Information . . . . . . Pro Forma Financial Information
6. Material Contacts with the Company
Being Acquired . . . . . . . . . . . . . . . Summary; The Merger
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to Be Underwriters . . . . . . . . . Not Applicable
8. Interests of Named Experts and
Counsel . . . . . . . . . . . . . . . . . . Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . . . Not Applicable
B. Information About the Registrant
10. Information with Respect to S-3
Registrants . . . . . . . . . . . . . . . . Not Applicable
11. Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . Not Applicable
12. Information with Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . Incorporation of Certain Information by
Reference; Summary; Trans Financial Bancorp, Inc.
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
13. Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . Incorporation of Certain Information by Reference
14. Information with Respect to
Registrants Other Than S-3 or S-2
Registrants . . . . . . . . . . . . . . . . Not Applicable
C. Information About the Company Being Acquired
15. Information with Respect to S-3
Companies . . . . . . . . . . . . . . . . . Not Applicable
16. Information with Respect to S-2 or S-3
Companies . . . . . . . . . . . . . . . . . Incorporation of Certain Information by
Reference; Summary; Kentucky Community Bancorp,
Inc.
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies . . . . . . Not applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited . . . . . Incorporation of Certain Information by
Reference; Summary; The Special Meeting; The
Merger; Management and Additional Information
19. Information if Proxies, Consents or
Authorizations are not to be
Solicited or in an Exchange Offer . . . . . Not Applicable
</TABLE>
<PAGE> 4
KENTUCKY COMMUNTIY BANCORP, INC.
33-35 West Second Street
Maysville, Kentucky 41056
(606) 564-3381
January 14, 1994
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of Kentucky Community Bancorp, Inc., to be held on Tuesday, February 15, 1994,
at 9:30 a.m. local time, at Kentucky Community's offices (also the offices of
The State National Bank of Maysville), 33-35 West Second Street, Maysville,
Kentucky. At this very important meeting you will be asked to consider and
approve the proposed merger of Kentucky Community with and into Trans Financial
Bancorp, Inc., Bowling Green, Kentucky. Details of the proposed transaction
and additional related information are set forth in the attached Notice and
Proxy Statement-Prospectus. You are urged to read these materials carefully
before voting your shares at the Special Meeting.
In the merger, each outstanding share of Kentucky Community will be
converted into 5.3 shares of Trans Financial common stock, involving the
issuance by Trans Financial of up to 1,374,985 shares of its common stock. The
attached Proxy Statement-Prospectus serves as a Proxy Statement for Kentucky
Community with respect to matters to be considered at the Special Meeting, and
it also serves as a Prospectus for the shares of Trans Financial common stock
to be issued in the Merger.
Your Board of Directors has unanimously aproved the proposed merger
described in the attached materials and believes the proposed transaction is
in the best interest of Kentucky Community shareholders. The Board therefore
recommends that shareholders vote FOR the merger at the Special Meeting.
The Board of Directors has received an opinion from Keefe Managers,
Inc., New York, New York, Kentucky Community's financial advisor, that as of
the date of the accompanying Proxy Statement-Prospectus, the
financial consideration to be paid in the merger is fair to shareholders of
Kentucky Community from a financial point of view.
<PAGE> 5
January 14, 1994
Page 2
A Proxy is enclosed. Please indicate your voting instructions and
sign, date and mail this Proxy promptly in the return envelope provided.
Whether or not you plan to attend the Special Meeting in person, it is
important that you return the enclosed Proxy so that your Kentucky Community
shares are voted.
Sincerely,
Thomas R. Wallingford
Chairman of the Board and
Chief Executive Officer
<PAGE> 6
KENTUCKY COMMUNITY BANCORP, INC.
33-35 West Second Street
Maysville, Kentucky 41056
(606) 564-3381
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 15, 1994
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
Kentucky Community Bancorp, Inc. ("Kentucky Community") will be held at its
offices (which are also the offices of The State National Bank of Maysville),
33-35 West Second Street, Maysville, Kentucky, on Tuesday, February 15, 1994,
at 9:30 a.m. local time, for the purpose of voting on the approval of the
Agreement and Plan of Reorganization and a related Plan of Merger, as amended,
by and between Kentucky Community and Trans Financial Bancorp, Inc., providing
for the merger of Kentucky Community with and into Trans Financial as described
in the accompanying Proxy Statement-Prospectus.
Only Kentucky Community shareholders of record as of the close of business
on January 6, 1994 have the right to receive notice of and to vote at the
Special Meeting and any adjournment(s) thereof.
The accompanying document constitutes the Proxy Statement of Kentucky
Community for its Special Meeting of Shareholders and it also constitutes a
Prospectus for Trans Financial Bancorp, Inc. with respect to its issuance of
common stock in the merger. A copy of the Agreement and Plan of Reorganization
and the related Plan of Merger, as amended, is attached to the accompanying
Proxy Statement-Prospectus as Appendix A-1 and A-2, respectively.
Shareholders of Kentucky Community are entitled to assert dissenters'
rights under Subtitle 13 of the Kentucky Business Corporation Act, a copy of
which is attached as Appendix C to the accompanying Proxy Statement-Prospectus.
You are cordially invited to attend the Special Meeting in person. Whether
or not you plan to attend the meeting, 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
---------------------------------
Secretary to the Board
January 14, 1994
<PAGE> 7
PROXY STATEMENT
KENTUCKY COMMUNITY BANCORP, INC.
_____________________
PROSPECTUS
TRANS FINANCIAL BANCORP, INC.
_____________________
This Prospectus of Trans Financial Bancorp, Inc. ("Trans Financial")
relates to up to 1,374,985 shares of Common Stock of Trans Financial ("Trans
Financial Common Stock") issuable to the shareholders of Kentucky Community
Bancorp, Inc. ("Kentucky Community") upon consummation of the proposed merger
(the "Merger") herein described of Kentucky Community with and into Trans
Financial pursuant to the terms and subject to the conditions of the Agreement
and Plan of Reorganization dated November 9, 1993, between Trans Financial and
Kentucky Community and the related Plan of Merger (collectively, the "Merger
Agreement"). The Merger Agreement is attached as Appendix A and is
incorporated herein by reference. This Prospectus also serves as the Proxy
Statement of Kentucky Community for its special meeting of shareholders (the
"Special Meeting") to be held on February 15, 1994. At the Special Meeting,
the shareholders of Kentucky Community will be asked to consider and vote on
the Merger Agreement and the transactions contemplated thereby. See "THE
SPECIAL MEETING".
Upon consummation of the Merger, each outstanding share of Kentucky
Community will be converted into 5.3 shares (the "Exchange Ratio") of Trans
Financial Common Stock, subject to provisions for payment of cash for
fractional shares. On January 3, 1994, the closing price of Trans Financial
Common Stock, as quoted by the NASDAQ National Market, was $16.25.
This Proxy Statement-Prospectus does not cover any resales of Trans
Financial Common Stock received by affiliates of Kentucky Community.
This Proxy Statement-Prospectus, along with the form of proxy, is
first being mailed on or about January 14, 1994 to shareholders of Kentucky
Community.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS SUCH COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
____________________________________
The date of this Proxy Statement-Prospectus is January 14,
1994.
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trans Financial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Kentucky Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Voting of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Revocability of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Recommendation of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Conditions to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Resales of Trans Financial Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Recent Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Markets and Market Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Comparative Unaudited Per Share Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SELECTED CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Date, Place and Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Voting and Revocation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Parties to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Recommendation of the Board of Directors and Reasons
for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Conditions to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
No Solicitation of Transactions by Kentucky Community . . . . . . . . . . . . . . . . . . . . . . . 47
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Management and Operations After the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
2
<PAGE> 9
<TABLE>
<S> <C>
Indemnification of Directors and Officers
of Kentucky Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Resales of Trans Financial Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
DESCRIPTION OF TRANS FINANCIAL COMMON STOCK AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
COMPARATIVE STOCK PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
MANAGEMENT AND ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
APPENDIX A-1 - Agreement and Plan of Reorganization
APPENDIX A-2 - Amended and Restated Plan of Merger
APPENDIX B - Opinion of Keefe Managers, Inc.
APPENDIX C - Subtitle 13 of Kentucky Business
Corporation Act
</TABLE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE TRANS FINANCIAL COMMON
STOCK OFFERED BY THIS PROXY STATEMENT-PROSPECTUS, NOR DOES IT CONSTITUTE THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR
FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF TRANS FINANCIAL OR KENTUCKY
COMMUNITY SINCE THE DATE HEREOF OR THAT INFORMATION IN THIS PROXY
STATEMENT-PROSPECTUS OR IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THE DATES THEREOF.
3
<PAGE> 10
AVAILABLE INFORMATION
Trans Financial has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement ("Registration Statement") on Form
S-4 relating to the shares of Trans Financial Common Stock to be issued in the
Merger. This Proxy Statement-Prospectus does not contain all of the
information set forth in the Registration Statement and exhibits thereto
covering the securities offered hereby which Trans Financial has filed with the
Commission, certain portions of which have been omitted pursuant to the rules
and regulations of the Commission, and to which portions reference is hereby
made for further information with respect to Trans Financial and the securities
offered hereby. The information omitted may be obtained from the public
reference facilities of the Commission or inspected and copied at the principal
and regional offices of the Commission set forth below.
Trans Financial and Kentucky Community are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, Trans Financial and
Kentucky Community file reports, other information and, in the case of Trans
Financial, proxy statements, with the Commission. Such reports, other
information and proxy statements can be inspected and copied at the
Commission's public reference room located at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at the public reference facilities in the
Commission's regional offices located at: 7 World Trade Center, Thirteenth
Floor, New York, New York 10048; and Suite 1400, Northwestern Atrium Center,
500 West Madison Street, Chicago, Illinois 60661. Copies of such material can
be obtained at prescribed rates by writing to the Securities and Exchange
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D. C.
20549.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. A COPY OF THE DOCUMENTS
INCORPORATED BY REFERENCE (EXCLUDING EXHIBITS UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION INCORPORATED
HEREIN) THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH WILL BE PROVIDED BY
FIRST CLASS MAIL WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER,
TO WHOM THIS PROXY STATEMENT-PROSPECTUS IS DELIVERED, UPON ORAL OR WRITTEN
REQUEST OF ANY SUCH PERSON. WITH RESPECT TO TRANS FINANCIAL DOCUMENTS,
REQUESTS SHOULD BE DIRECTED TO VINCE BERTA, TREASURER AND CHIEF FINANCIAL
OFFICER, TRANS FINANCIAL BANCORP, INC., 500 EAST MAIN STREET, BOWLING GREEN,
KENTUCKY 42101 (TELEPHONE (502) 745- 7504). WITH RESPECT TO KENTUCKY COMMUNITY
DOCUMENTS, REQUESTS SHOULD BE DIRECTED TO THOMAS R. WALLINGFORD, CHAIRMAN AND
CHIEF
4
<PAGE> 11
EXECUTIVE OFFICER, KENTUCKY COMMUNITY BANCORP, INC., 33-35 WEST SECOND STREET,
MAYSVILLE, KENTUCKY 41056 (TELEPHONE (606) 564-3381). IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE SPECIAL MEETING, ANY SUCH
REQUEST SHOULD BE MADE BY FEBRUARY 8, 1994
The following documents filed with the Commission by Trans Financial
are incorporated herein by reference: (a) Annual Report on Form 10-K for the
year ended December 31, 1992; (b) Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1993, June 30, 1993 and September 30, 1993; and (c)
Current Reports on Form 8-K dated January 15, 1993, April 6, 1993, July 21,
1993 (as amended August 16, 1993 and August 30, 1993) and January 10, 1994.
The following documents filed with the Commission by Kentucky Community, are
incorporated herein by reference: (a) Annual Report on Form 10-KSB for the year
ended December 31, 1992; (b) Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 1993, June 30, 1993 and September 30, 1993; and (c) Current
Report on Form 8-KSB dated November 15, 1993.
Any statement contained herein or in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
or in any other subsequently filed document which also is, or is deemed to be,
incorporated herein by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed to constitute a
part hereof, except as so modified or superseded.
This Proxy Statement-Prospectus is accompanied by Trans Financial's
Annual Report to Shareholders for the year ended December 31, 1992 and
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993 and by
Kentucky Community's Annual Report on Form 10-KSB for the year ended December
31, 1992 and Quarterly Report on Form 10-QSB for the quarter ended September
30, 1993.
SUMMARY
The following summary is not intended to be complete and is qualified
in all respects by the more detailed information included in this Proxy
Statement-Prospectus, the Appendices hereto and the documents incorporated
herein by reference. As used in this Proxy Statement-Prospectus, the terms
"Trans Financial" and "Kentucky Community" refer to such corporations,
respectively, and where the context requires, such corporations and their
subsidiaries on a consolidated basis. All information concerning Trans
Financial included in this Proxy Statement-Prospectus has been furnished by
Trans Financial and all information concerning Kentucky Community included in
this Proxy Statement-Prospectus has been furnished by Kentucky Community.
Neither Trans Financial nor Kentucky Community
5
<PAGE> 12
warrants the accuracy or completeness of information relating to the
other party. All per share information contained herein with respect to Trans
Financial has been adjusted for a 4-for-3 stock split effected on December 18,
1992 and a 4- for-3 stock split effected on December 16, 1991. All per share
information contained herein with respect to Kentucky Community has been
adjusted for a 2-for-1 stock split effected on December 17, 1991.
TRANS FINANCIAL
Trans Financial is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"), and a savings and loan
holding company registered under Section 10(e)(3) of the Home Owners' Loan Act.
Trans Financial's activities are conducted through its principal subsidiary,
Trans Financial Bank, N.A., Bowling Green, Kentucky, one other wholly- owned
bank subsidiary, Trans Financial Bank, Pikeville, Kentucky, and two
wholly-owned thrift subsidiaries, Trans Financial Bank, Federal Savings Bank,
Russellville, Kentucky, and Trans Financial Bank of Tennessee, F.S.B.,
Tullahoma, Tennessee. Trans Financial provides its banking related services
through 39 offices of its subsidiaries located in Kentucky and Tennessee. At
September 30, 1993, Trans Financial had consolidated total assets of
approximately $1.2 billion, net loans of approximately $753 million and total
shareholders' equity of approximately $74.3 million.
Trans Financial's principal executive offices are located at 500 East
Main Street, Bowling Green, Kentucky 42101. Its telephone number is (502)
781-5000.
KENTUCKY COMMUNITY
Kentucky Community is a bank holding company registered under the BHC
Act. Kentucky Community's activities are conducted through its three banking
subsidiaries, The State National Bank, Maysville, Kentucky, Peoples First Bank,
Morehead, Kentucky, and Farmers Liberty Bank, Augusta, Kentucky. At September
30, 1993, Kentucky Community had consolidated total assets of approximately
$171.3 million, net loans of approximately $102.6 million and shareholders'
equity of approximately $13.2 million.
Kentucky Community's principal executive offices are located at 33-35
West Second Street, Maysville, Kentucky. Its telephone number is (606)
564-3381.
THE MERGER
The Merger Agreement provides for the merger of Kentucky Community
with and into Trans Financial, under the articles of incorporation and bylaws of
Trans Financial. Upon consummation of the Merger, each outstanding share of
Kentucky Community Common Stock will be converted into 5.3 shares of Trans
Financial Common
6
<PAGE> 13
Stock. Holders of shares of Kentucky Community Common Stock will receive cash,
without interest, in lieu of fractional shares of Trans Financial Common Stock.
See "THE MERGER-Terms Of the Merger".
After the Merger, Kentucky Community will represent approximately 13%
of Trans Financial's consolidated total assets and approximately 17% of Trans
Financial's consolidated net income (based on the historical financial
statements of Trans Financial and Kentucky Community as of and for the nine
months ended September 30, 1993). Kentucky Community's former shareholders will
represent approximately 16% of Trans Financial's voting power (based on the
outstanding shares of Trans Financial Common Stock at September 30, 1993). See
"THE MERGER--Terms of the Merger" and "PRO FORMA FINANCIAL INFORMATION."
THE SPECIAL MEETING
The Special Meeting of Kentucky Community's shareholders to consider
and vote on the Merger Agreement will be held on Tuesday, February 15, 1994 at
9:30 a.m. local time at Kentucky Community's offices at 33-35 West Second
Street, Maysville, Kentucky. Only holders of record of Kentucky Community
Common Stock at the close of business on January 6, 1994 will be entitled to
vote at the Special Meeting. At such date, there were outstanding and entitled
to vote 259,431 shares of Kentucky Community Common Stock. Each share of
Kentucky Community Common stock is entitled to one vote. For additional
information relating to the special meeting, see "THE SPECIAL MEETING".
VOTE REQUIRED
Approval of the Merger Agreement by the shareholders of Kentucky
Community requires the affirmative vote of a majority of the votes entitled to
be cast by the holders of record of Kentucky Community Common Stock. As of the
record date for the Special Meeting, Kentucky Community directors and executive
officers and their affiliates held approximately 11% of the outstanding
Kentucky Community Common Stock. All currently intend to vote in favor of the
Merger Agreement. See "THE SPECIAL MEETING--Vote Required" and "THE
MERGER--Conditions To the Merger".
VOTING OF PROXIES
Kentucky Community Common Stock represented by all properly executed
proxy forms received in time for the Special Meeting will be voted at such
Meeting in the manner specified by the holders thereof. Proxy forms that do
not contain voting instructions will be voted in favor of approval of the
Merger Agreement.
7
<PAGE> 14
It is not expected that any matter other than those referred to herein
will be brought before the Special Meeting. If, however, other matters are
properly presented, the persons named as proxies will vote in accordance with
their judgment with respect to such matters. See "THE SPECIAL MEETING--Voting
and Revocation of Proxies".
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed Kentucky Community form does not
preclude a shareholder from attending the Special Meeting and voting in person.
A shareholder may revoke a proxy at any time prior to the vote on the Merger by
filing with the Secretary of Kentucky Community a duly executed revocation or
proxy form bearing a later date or by voting in person at the Special Meeting.
Attendance at the Special Meeting will not of itself constitute revocation of a
proxy form. See "THE SPECIAL MEETING--Voting and Revocation of Proxies".
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of Kentucky Community (by a unanimous vote) has
approved the Merger Agreement. The Board of Directors of Kentucky Community
believes the Merger is fair to and in the best interests of the shareholders of
Kentucky Community and recommends a vote for the matters to be voted upon by
the shareholders of Kentucky Community in connection with the Merger. See "THE
MERGER--Background Of The Merger", "-- Recommendation Of The Board of
Directors and Reasons for the Merger".
The Board of Directors of Trans Financial has also unanimously
approved the Merger. The approval of the Merger by Trans Financial
shareholders is not required and will not be sought.
OPINION OF FINANCIAL ADVISOR
Kentucky Community's financial advisor, Keefe Managers, Inc., has
rendered its opinion to Kentucky Community's Board of Directors that the
Merger is fair from a financial point of view to the shareholders of Kentucky
Community. A copy of such opinion is set forth as Appendix B and should be
read in its entirety with respect to the assumptions made, other matters
considered and limitations on the reviews undertaken. See "THE MERGER--Opinion
of Financial Advisor".
EFFECTIVE TIME OF THE MERGER
The Merger will become effective upon the filing of Articles of Merger
with the Kentucky Secretary of State or at such later date and time specified
therein. The Articles of Merger are expected to be filed on or before the
fifth day after the receipt of all necessary approvals of the Merger and the
expiration of all
8
<PAGE> 15
applicable waiting periods, or at such other time as Trans Financial and
Kentucky Community may agree. Subject to the conditions specified in the
Merger Agreement, the parties currently expect that the Merger will become
effective on or before February 25, 1994, although there can be no assurance
as to whether or when the Merger will occur. See "THE MERGER--Effective Time
of the Merger"; "--Conditions to the Merger".
CONDITIONS TO THE MERGER
The respective obligations of Trans Financial and Kentucky Community
to consummate the Merger are subject to certain conditions, including (i) the
approval by the shareholders of Kentucky Community of the Merger Agreement by
the vote required under applicable law at the Special Meeting, (ii) the receipt
of all necessary regulatory approvals on terms and conditions satisfactory to
Trans Financial and (iii) certain other conditions customary in transactions of
this nature. See "THE MERGER--Conditions to the Merger".
REGULATORY APPROVALS
The Merger is subject to the approval of the Federal Reserve Board
under the BHC Act and of the Commissioner of the Kentucky Department of
Financial Institutions. See "THE MERGER--Regulatory Approvals".
WAIVER AND AMENDMENT
Prior to the Effective Time of the Merger, any provision of the Merger
Agreement may be waived, to the extent permitted by law, by the party entitled
to the benefits of such provision. In addition, the Merger Agreement may be
amended at any time upon the written agreement of Trans Financial and Kentucky
Community without the approval of shareholders. See "THE MERGER--Waiver and
Amendment".
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any
time prior to the Merger, whether before or after any requisite shareholder
approval (i) by mutual agreement of the Boards of Directors of Trans
Financial and Kentucky Community, or (ii) by either the Board
of Directors of Trans Financial or the Board of Directors of Kentucky Community
at any time after July 31, 1994, or (iii) by either Trans Financial or Kentucky
Community in the event of a material breach by the other party of any
representation, warranty, covenant or other agreement contained in the Merger
Agreement, which breach is not cured after 30 days written notice to the
breaching party, provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement contained
in the Merger
9
<PAGE> 16
Agreement, or (iv) by Trans Financial in the event that shareholders owning
more than 9% of Kentucky Community Common Stock dissent from the Merger. See
"THE MERGER--Terms Of the Merger", "--Conditions to the Merger", "--Regulatory
Approvals", "--Waiver and Amendment", "--Termination" and "--Dissenters'
Rights".
RESALES OF TRANS FINANCIAL COMMON STOCK
Trans Financial Common Stock received by affiliates of Kentucky
Community, generally directors and executive officers, may not be resold
without registration under the Securities Act except in compliance with Rules
144 and 145 or as otherwise permitted under the Securities Act. See "THE
MERGER--Resales of Trans Financial Common Stock".
STOCK OPTION AGREEMENT
As a condition to entering into the Merger Agreement, Trans Financial
required Kentucky Community to enter into a stock option agreement (the "Stock
Option Agreement") pursuant to which Kentucky Community granted to Trans
Financial an option (the "Option") to purchase 85,840 shares of Kentucky
Community Common Stock representing 24.9% of the issued and outstanding shares
of Kentucky Community Common Stock (on a pro forma basis assuming the Option is
exercised) at a price of $84.80 per share, subject to the terms and conditions
set forth in the Stock Option Agreement. The option price is equal to the last
sales price reported on the NASDAQ National Market for Trans Financial Common
Stock on November 8, 1993, the last trading day prior to the execution and
delivery of the Merger Agreement and the Stock Option Agreement, multiplied by
the Exchange Ratio. The Option may only be exercised upon the occurrence of
certain trigger events, which generally relate to an acquisition of control of,
or a significant equity interest in or significant assets of, Kentucky
Community by a third party, or certain proposals or offers with respect
thereto. To the knowledge of Trans Financial and Kentucky Community, none of
such events has occurred as of the date hereof. See "THE MERGER -- Stock
Option Agreement".
The Stock Option Agreement could have the effect of discouraging
persons who now or prior to the Effective Time of the Merger might be
interested in acquiring all of or a significant interest in Kentucky Community
from considering or proposing such an acquisition, even if such persons were
prepared to propose greater consideration per share for Kentucky Community
Common Stock than the consideration per share represented by the Exchange
Ratio. In addition, the Merger Agreement provides that Kentucky Community and
its respective subsidiaries will not, directly or indirectly, solicit or
encourage, or take any other action to facilitate, any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
takeover proposal. See "The MERGER--No Solicitation of Transactions by Kentucky
Community."
10
<PAGE> 17
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, to the extent a shareholder of
Kentucky Community exchanges his or her shares of Kentucky Community Common
Stock for Trans Financial Common Stock in the Merger, (i) no gain or loss will
be recognized by a Kentucky Community shareholder who receives solely shares of
Trans Financial Common Stock pursuant to the Merger, (ii) the aggregate tax
basis of the Trans Financial Common Stock received by a Kentucky Community
shareholder will equal the aggregate tax basis of the Kentucky Community stock
surrendered therefor by such shareholder, and (iii) the holding period of the
Trans Financial Common Stock received will generally include the holding period
of the Kentucky Community Common Stock surrendered. A Kentucky Community
shareholder receiving cash in the Merger in lieu of fractional shares or upon
the exercise of dissenters' rights generally will recognize a taxable gain or
loss for federal income tax purposes equal to the difference between the amount
of cash received in the Merger and the shareholder's tax basis in the shares of
Kentucky Community Common Stock surrendered. For a more complete description
of the federal income tax consequences of the Merger, see "THE MERGER-Certain
Federal Income Tax Consequences". Due to the individual nature of the tax
consequences of the Merger, it is recommended that each Kentucky Community
shareholder consult his or her own tax advisor concerning the tax consequences
of the Merger.
DISSENTERS' RIGHTS
Any shareholder of Kentucky Community will have the right to dissent
from the Merger and to demand a determination of the fair value of the
shareholder's shares in the event the Merger is approved and the Merger
consummated. The right of any shareholder to receive the fair value of his or
her shares is contingent upon strict compliance with the provisions of Subtitle
13 of the Kentucky Business Corporation Act ("KBCA"), a copy of which is
included as Appendix C to this Proxy Statement-Prospectus. See "THE
MERGER-Dissenters' Rights".
Pursuant to Subtitle 13 of the KBCA, any holder of Kentucky Community
Common Stock who desires to dissent from the Merger must initially take two
actions to perfect his or her rights. First, the shareholder must deliver to
Kentucky Community, before the vote on the Merger is taken, written notice of
his or her intent to demand payment for his or her shares if the Merger is
effectuated. Merely voting against the Merger or returning a proxy indicating
a vote against the Merger will not satisfy this notice requirement. Second,
the shareholder must not vote his or her shares in favor of the Merger. A
shareholder's failure to vote with respect to the Merger will not, by itself,
constitute a waiver of that shareholder's right to dissent under the KBCA.
However, if a shareholder returns a signed proxy but does not specify a vote
against approval of the Merger or a direction to abstain, the proxy, if not
11
<PAGE> 18
revoked, will be voted for approval of the Merger, which will have the effect
of waiving that shareholder's dissenter's rights.
RECENT DEVELOPMENTS
On December 27, 1993, Trans Financial entered into a definitive
Agreement and Plan of Reorganization with Peoples Financial Services, Inc.,
("Peoples Financial"), a bank and thrift holding company headquartered in
Cookeville, Tennessee, pursuant to which Peoples Financial will merge into
Trans Financial and each outstanding share of Peoples Financial will be
exchanged for 5.5 shares of Trans Financial, or an aggregate of approximately
1.3 million shares of Trans Financial Common Stock. As of September 30, 1993,
Peoples Financial had total assets of approximately $120 million. The
consolidated historical financial statements of Peoples Financial, and the
historical financial statements of Citizens Federal Savings Bank, Peoples
Financial's wholly-owned subsidiary, and the related notes, are incorporated
herein by reference to Trans Financial's Current Report on Form 8-K dated
January 10, 1993. See "RECENT DEVELOPMENTS" and "PRO FORMA FINANCIAL
INFORMATION".
MARKETS AND MARKET PRICES
Trans Financial Common Stock is traded in the over-the-counter market
and quoted on the NASDAQ National Market under the symbol TRFI. Shares of
Kentucky Community Common Stock trade infrequently and therefore no meaningful
information regarding a market price of Kentucky Community Common Stock exists.
See "COMPARATIVE STOCK PRICES AND DIVIDENDS". The following table sets forth
the closing price per share of Trans Financial Common Stock as quoted on the
NASDAQ National Market and the equivalent per share price (as explained below)
of Kentucky Community Common Stock on November 8, 1993, the first business day
preceding public announcement of the execution of the Merger Agreement, and on
January 3, 1994.
<TABLE>
<CAPTION>
Market Price Trans Financial Equivalent
Per Share At: Common Stock Per Share Price
------------- ------------ ---------------
<S> <C> <C>
November 8, 1993 $16.00 $84.80
January 3, 1994 $16.25 $86.13
</TABLE>
The equivalent per share price of shares of Kentucky Community Common
Stock at each specified date represents the closing price of a share of Trans
Financial Common Stock on such date multiplied by the Exchange Ratio. However,
no assurance can be given as to the market price of Trans Financial Common
Stock at or after the Effective Time of the Merger and shareholders are advised
to obtain current market quotations for Trans Financial Common Stock.
COMPARATIVE UNAUDITED PER SHARE INFORMATION
The following summary presents selective comparative per share
information: [i] for Trans Financial on an historical basis and on a pro forma
combined basis assuming the Merger, including and excluding the acquisition of
Peoples Financial, had been effective during the periods presented, and [ii]
for Kentucky Community on an historical basis and on an equivalent pro forma
basis for all periods presented. The equivalent pro forma per share data
represents Kentucky Community's equivalent book value, cash dividends and net
income per share based on the Exchange Ratio. The comparative per share
information has been prepared giving effect to the Merger as a pooling of
interests. For a description of the effects of pooling of interests accounting
on the Merger and the historical financial statements of Trans Financial, see
"THE MERGER-Accounting Treatment". The comparative per share information should
be read in conjunction with the historical consolidated financial statements of
Trans Financial and Kentucky Community and the related notes thereto included
in documents incorporated herein by reference, and in conjunction with the pro
forma financial information contained elsewhere in this Proxy
Statement-Prospectus.
12
<PAGE> 19
See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE" and "PRO FORMA
FINANCIAL INFORMATION". The following information is not necessarily
indicative of the results of operations or combined financial position that
would have resulted had the Merger been consummated at the beginning of the
periods indicated, nor is it necessarily indicative of the results of
operations of future periods or future combined financial position. All per
share information for Trans Financial Common Stock has been adjusted for a
4-for-3 stock split effected on December 18, 1992 and a 4-for-3 stock split
effected on December 16, 1991. All per share information for Kentucky
Community Common Stock has been adjusted for a 2-for-1 stock split effected on
December 17, 1991.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
FOR THE NINE MONTHS --------------------------------
ENDED SEPTEMBER 30, 1993 1992 1991 1990
------------------------ ---- ---- ----
<S> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE (BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE)
(PRIMARY):
TRANS FINANCIAL
Historical $ 0.92 $ 1.30 $ 1.29 $ 1.28
Pro forma combined
Including Peoples acquisition 0.92 1.21 0.98 0.84
Excluding Peoples acquisition 0.93 1.25 1.14 1.00
KENTUCKY COMMUNITY
Historical 5.11 5.24 4.14 2.44
Pro forma equivalent (1)
Including Peoples acquisition 4.88 6.41 5.19 4.45
Excluding Peoples acquisition 4.93 6.63 6.04 5.30
NET INCOME PER COMMON SHARE (BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE)
(FULLY DILUTED):
TRANS FINANCIAL
Historical $ 0.92 $ 1.30 $ 1.17 $ 1.14
Pro forma combined
Including Peoples acquisition 0.92 1.21 0.94 0.81
Excluding Peoples acquisition 0.93 1.25 1.07 0.95
KENTUCKY COMMUNITY
Historical 5.11 5.24 4.14 2.44
Pro forma equivalent (1)
Including Peoples acquisition 4.88 6.41 4.98 4.29
Excluding Peoples acquisition 4.93 6.63 5.67 5.04
DIVIDENDS DECLARED PER COMMON SHARE:
Trans Financial - historical $ 0.3825 $ 0.44 $ 0.36 $ 0.34
Trans Financial - pro forma combined (2) 0.3825 0.44 0.36 0.34
Kentucky Community - historical 0.65 0.525 0.50 0.50
Kentucky Community - pro forma
equivalent (1) 2.03 2.33 1.91 1.80
STOCKHOLDERS' EQUITY PER
COMMON SHARE AT END OF PERIOD:
Trans Financial - historical $10.03 $ 9.42 - -
Trans Financial - pro forma combined
Including Peoples acquisition 9.78 9.00 - -
Excluding Peoples acquisition 9.96 9.31 - -
Kentucky Community - historical 51.17 46.50 - -
Kentucky Community - pro forma
equivalent (1)
Including Peoples acquisition 51.83 47.70 - -
Excluding Peoples acquisition 52.79 49.34 - -
</TABLE>
__________________________
(1) Represents Kentucky Community's equivalent stockholder's equity,
cash dividends and net income per share based on the Exchange
Ratio.
(2) Assumes no change in cash dividends declared per share.
13
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following tables set forth certain historical financial information
for Trans Financial, Kentucky Community and Peoples Financial and certain pro
forma financial information giving effect to the Merger as if it had been
effective during the periods presented, including and excluding the acquisition
of Peoples Financial, as if each had been effective during the periods
presented. The selected historical financial information is based on, derived
from, and should be read in conjunction with, the historical consolidated
financial statements of Trans Financial, Kentucky Community, Peoples Financial
and Citizens Federal Savings Bank (Peoples Financial's wholly-owned subsidiary)
and the related notes thereto, included in the documents incorporated herein
by reference. See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE". All
of the following selected financial information should be read in conjunction
with the pro forma financial information including the notes thereto,
appearing elsewhere in this Proxy Statement-Prospectus. See "PRO FORMA
FINANCIAL INFORMATION." All per share information for Trans Financial Common
Stock has been adjusted for a 4-for-3 stock split effected December 18, 1992
and a 4-for-3 stock split effected December 16, 1991. All per share
information for Kentucky Community Common Stock has been adjusted for a
2-for-1 stock split effected December 17, 1991.
The unaudited pro forma financial information is not necessarily
indicative of the results that actually would have occurred had the Merger been
consummated on the dates indicated or that may be obtained in the future.
Interim unaudited information for Trans Financial and Kentucky Community
reflect, in the opinion of the managements of Trans Financial and Kentucky
Community, respectively, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such information. Interim
results are not necessarily indicative of the results which may be expected for
any other interim period or for the year as a whole.
14
<PAGE> 21
TRANS FINANCIAL BANCORP, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Nine
Months
Ended Year Ended December 31,
9/30/93 ------------------------------------------------------------
(unaudited) 1992 1991 1990 1989 1988
---------- -------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Net interest income $ 29,205 $ 31,396 $ 18,733 $ 16,489 $ 15,551 $ 14,539
Provision for loan losses 1,321 1,216 750 1,529 1,324 831
Net interest income
after provision for loan losses 27,884 30,180 17,983 14,960 14,227 13,708
Non-interest income 9,941 11,064 6,542 5,179 4,323 3,950
Non-interest expense 27,904 27,498 17,957 14,873 13,560 14,109
Income tax expense 2,990 4,686 2,028 1,412 1,197 752
Income before cumulative affect
of accounting change $ 6,931 $ 9,060 $ 4,540 $ 3,854 $ 3,793 $ 2,797
Per common share:
Income before cumulative effect
of accounting change:
Primary $ 0.92 $ 1.30 $ 1.29 $ 1.28 $ 1.27 $ 0.94
Fully diluted 0.92 1.30 1.17 1.14 1.13 0.85
Stockholders' equity at year end 10.03 9.42 8.44 7.68 6.90 5.88
Cash dividends declared 0.3825 0.44 0.36 0.34 0.31 0.26
At year end:
Total assets $1,178,743 $978,481 $586,680 $485,725 $430,510 $409,945
Total loans, net of unearned income 752,466 545,758 347,055 327,879 289,023 271,026
Total deposits 1,002,462 860,338 509,301 418,048 378,391 336,063
Total stockholders' equity 74,308 69,532 40,533 28,046 22,831 19,683
Allowance for loan losses 8,288 5,537 4,192 4,106 3,389 2,878
Selected ratios:
Return on average assets 0.92% 1.09% 0.89% 0.90% 0.92% 0.72%
Return on average stockholders' equity 12.96 14.02 14.41 15.52 17.42 14.66
Average stockholders' equity
to average total assets 7.10 7.80 6.18 5.77 5.31 4.95
Leverage ratio 5.88 6.54 6.17 5.01 - -
Tier one risk-based capital ratio 8.66 10.50 8.42 6.41 - -
Total risk-based capital ratio 13.84 11.41 10.55 8.81 - -
Dividend payout 41.58 34.04 27.62 26.47 24.08 28.00
Allowance for loan losses as a
percentage of average net loans 1.32 1.07 1.23 1.36 1.21 1.13
Nonperforming loans as a
percentage of year end net loans 1.01 1.11 2.06 1.67 1.08 1.07
Net charge-offs as a
percentage of average net loans 0.21 0.17 0.19 0.29 0.29 0.28
Net interest margin 4.21 4.13 4.01 4.22 4.20 4.23
</TABLE>
15
<PAGE> 22
KENTUCKY COMMUNITY BANCORP, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED YEAR ENDED DECEMBER 31,
9/30/93 ------------------------------------------------------------
(unaudited) 1992 1991 1990 1989 1988
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net interest income $ 5,607 $ 7,202 $ 6,482 $ 5,954 $ 5,838 $ 5,811
Provision for loan losses 338 838 772 1,052 1,486 520
Net interest income
after provision for loan losses 5,269 6,364 5,710 4,902 4,352 5,291
Non-interest income 989 1,514 1,396 1,238 1,067 1,104
Non-interest expense 4,469 6,157 5,748 5,392 5,195 5,042
Income tax expense (credit) 481 372 293 120 (193) 187
Income before cumulative effect
of accounting change $ 1,308 $ 1,349 $ 1,065 $ 628 $ 417 $ 1,166
Per common share:
Income before cumulative effect
of accounting change:
Primary $ 5.11 $ 5.24 $ 4.14 $ 2.44 $ 1.61 $ 4.54
Fully diluted 5.11 5.24 4.14 2.44 1.61 4.54
Stockholders' equity at year end 51.17 46.50 41.60 37.79 35.82 34.82
Cash dividends declared 0.65 0.53 0.50 0.50 0.50 0.50
At year end:
Total assets $ 171,296 $167,491 $166,138 $161,019 $158,434 $153,375
Total loans, net of unearned income 104,565 102,448 98,570 96,773 97,865 102,749
Total deposits 154,388 150,889 148,228 143,483 140,663 134,865
Total stockholders' equity 13,220 11,963 10,702 9,722 9,212 8,994
Allowance for loan losses 1,963 1,980 1,791 1,641 1,476 934
Selected ratios:
Return on average assets 1.02% 0.82% 0.65% 0.39% 0.27% 0.77%
Return on average stockholders' equity 13.40 11.76 10.43 6.56 4.54 13.85
Average stockholders' equity
to average total assets 7.49 6.95 6.18 6.01 5.93 5.55
Leverage ratio 6.78 6.12 5.46 5.32 - -
Tier one risk-based capital ratio 11.18 10.12 8.71 8.55 - -
Total risk-based capital ratio 12.43 13.71 12.30 11.29 - -
Dividend payout 12.10 10.02 12.08 20.47 30.93 10.51
Allowance for loan losses as a
percentage of average net loans 1.88 1.94 1.84 1.70 1.47 0.93
Nonperforming loans as a
percentage of year end loans 1.00 0.74 2.02 1.32 2.01 0.76
Net charge-offs as a
percentage of average net loans 0.35 0.63 0.64 0.92 0.94 0.36
Net interest margin 4.79 4.84 4.45 4.41 4.38 4.47
</TABLE>
16
<PAGE> 23
Peoples Financial Services, Inc.
Consolidated Selected Financial Data
<TABLE>
<CAPTION>
Nine
Months
Ended Year Ended December 31,
9/30/93 ----------------------------------------------------------
(unaudited) 1992 1991 1990 1989 1988
-------- ------- ------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Net interest income $3,864 $4,733 $3,438 $2,424 1,937 1,503
Provision for loan losses 157 263 470 274 618 426
Net interest income
after provision for losses 3,707 4,470 2,968 2,150 1,319 1,077
Non-interest income 859 748 859 749 398 263
Non-interest expense 2,618 3,198 2,815 2,317 2,089 1,644
Income tax expense (credit) 780 792 435 172 (48) (84)
Income before cumulative effect
of accounting change $1,168 $1,228 $577 $410 $ (324) $ (220)
Per common share:
Income before cumulative effect
of accounting change:
Primary $5.01 $5.41 $2.63 $1.89 $0.80 ($0.52)
Fully diluted 5.01 5.41 2.63 1.89 0.80 (0.52)
Stockholders' equity at year end 47.45 44.49 38.52 35.71 33.72 35.29
Cash dividends declared - - - - - -
At year end:
Total assets $119,918 $112,210 $103,282 84,786 77,342 67,285
Total loans, net of unearned income 67,161 65,484 62,075 49,699 41,844 33,739
Total deposits 107,924 102,232 92,936 74,193 66,220 54,911
Total stockholders' equity 11,236 9,146 7,918 7,341 6,931 7,254
Allowance for loan losses 1,075 922 836 555 481 263
Selected ratios:
Return on average assets 1.33 % 1.14 % 0.62 % 0.51 % (0.46) % (0.36) %
Return on average stockholders' equity 14.91 14.41 7.63 5.77 (4.49) (4.18)
Average stockholders' equity
to average total assets 8.94 7.93 8.12 8.90 10.26 8.58
Leverage ratio 9.37 8.15 7.67 8.66 8.96 10.78
Tier one risk-based capital ratio 9.29 8.08 7.60 8.60 8.91 10.74
Total risk-based capital ratio 10.17 8.90 8.41 9.25 9.52 11.13
Dividend payout - - - - - -
Allowance for loan losses as a
percentage of average net loans 1.57 1.46 1.48 1.20 1.25 0.86
Nonperforming loans as a
percentage of year end loans 0.58 1.93 2.02 2.80 6.72 2.57
Net charge-offs as a
percentage of average net loans 0.01 0.28 0.33 0.43 1.04 1.12
Net interest margin 4.78 4.70 3.94 3.29 3.06 2.65
</TABLE>
17
<PAGE> 24
TRANS FINANCIAL BANCORP, INC.
Pro Forma Consolidated Selected Financial Data
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1993
---------------------------------------------------------
TRANS KENTUCKY PRO FORMA PEOPLES PRO FORMA
FINANCIAL COMMUNITY EXCLUDING FINANCIAL INCLUDING
BANCORP BANCORP PEOPLES SERVICES PEOPLES
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net interest income $ 29,205 $ 5,607 $ 34,812 $ 3,864 $ 38,676
Provision for loan losses 1,321 338 1,659 157 1,816
Net interest income after
provision for loan losses 27,884 5,269 33,153 3,707 36,860
Non-interest income 9,941 989 10,930 859 11,789
Non-interest expenses 27,904 4,469 32,373 2,618 34,991
Income tax expense 2,990 481 3,471 780 4,251
Income before cumulative effect
of accounting change $ 6,931 $ 1,308 $ 8,239 $ 1,168 $ $ 9,407
Per common share:
Income before cumulative effect
of accounting change:
Primary $ 0.92 $ 5.11 $ 0.93 $ 5.01 $ 0.92
Fully diluted 0.92 5.11 0.93 5.01 0.92
Stockholders' equity at year end 10.03 51.17 9.96 47.45 9.78
Cash dividends declared 0.3825 0.65 -
At year end:
Total assets $ 1,178,743 $ 171,296 $ 1,350,039 $ 119,918 $ 1,469,957
Total loans, net of unearned income 752,466 104,565 857,031 67,161 924,192
Total deposits 1,002,462 154,388 1,156,850 107,924 1,264,774
Total stockholders' equity 74,308 13,220 87,528 11,236 98,764
Allowance for loan losses 8,288 1,963 10,251 1,075 11,326
Selected ratios:
Return on average assets 0.92 % 1.02 % 0.93 % 1.33% 0.97%
Return on average stockholders' equity 12.96 13.40 13.03 14.91 13.23
Average stockholders' equity
to average total assets 7.10 7.49 7.17 8.94 7.33
Leverage ratio 5.88 6.78 5.99 9.37 6.27
Tier one risk-based capital ratio 8.66 11.18 8.83 9.29 8.88
Total risk-based capital ratio 13.84 12.43 13.57 10.17 13.17
Dividend payout 41.58 12.10 41.13 - 41.58
Allowance for loan losses as a
percentage of average net loans 1.32 1.88 1.40 1.57 1.42
Nonperforming loans as a
percentage of year end loans 1.01 1.00 1.01 0.58 0.98
Net charge-offs as a
percentage of average net loans 0.21 0.35 0.25 0.01 0.23
Net interest margin 4.21 4.79 4.28 4.78 4.32
</TABLE>
18
<PAGE> 25
TRANS FINANCIAL BANCORP, INC.
Pro Forma Consolidated Selected Financial Data
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1992
---------------------------------------------------------
TRANS KENTUCKY PRO FORMA PEOPLES PRO FORMA
FINANCIAL COMMUNITY EXCLUDING FINANCIAL INCLUDING
BANCORP BANCORP PEOPLES SERVICES PEOPLES
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net interest income $ 31,396 $ 7,202 $ 38,598 $ 4,733 $ 43,331
Provision for loan losses 1,216 838 2,054 263 2,317
Net interest income after
provision for loan losses 30,180 6,364 36,544 4,470 41,014
Non-interest income 11,064 1,514 12,578 748 13,326
Non-interest expenses 27,498 6,157 33,655 3,198 36,853
Income tax expense 4,686 372 5,058 792 5,850
Income before cumulative effect
of accounting change $ 9,060 $ 1,349 $ 10,409 $ 1,228 $ 11,637
Per common share:
Income before cumulative effect
of accounting change:
Primary $ 1.30 $ 5.24 $ 1.25 $ 5.41 $ 1.21
Fully diluted 1.30 5.24 1.25 5.41 1.21
Stockholders' equity at year end 9.42 46.50 9.31 44.49 9.00
Cash dividends declared 0.44 0.53 -
At year end:
Total assets $ 978,481 $ 167,491 $ 1,145,972 $ 112,210 $ 1,258,182
Total loans, net of unearned income 545,758 102,488 648,246 65,484 713,730
Total deposits 860,338 150,889 1,011,227 102,232 1,113,459
Total stockholders' equity 69,532 11,963 81,495 9,146 90,641
Allowance for loan losses 5,537 1,980 7,517 922 8,439
Selected ratios:
Return on average assets 1.09 % 0.82 % 1.05 % 1.14 % 1.06
Return on average stockholders' equity 14.02 11.76 13.68 14.41 13.75
Average stockholders' equity
to average total assets 7.80 6.95 7.66 7.93 7.69
Leverage ratio 6.54 6.12 6.48 8.15 6.63
Tier one risk-based capital ratio 10.50 10.12 10.44 8.08 10.12
Total risk-based capital ratio 11.41 13.71 11.84 8.90 11.44
Dividend payout 34.04 10.02 35.40 - 36.57
Allowance for loan losses as a
percentage of average net loans 1.07 1.94 1.22 1.46 1.24
Nonperforming loans as a
percentage of year end loans 1.11 0.74 1.05 1.93 1.13
Net charge-offs as a
percentage of average net loans 0.17 0.63 0.25 0.28 0.25
Net interest margin 4.13 4.84 4.25 4.70 4.30
</TABLE>
19
<PAGE> 26
TRANS FINANCIAL BANCORP, INC.
Pro Forma Consolidated Selected Financial Data
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1991
------------------------------------------------------
TRANS KENTUCKY PRO FORMA PEOPLES PRO FORMA
FINANCIAL COMMUNITY EXCLUDING FINANCIAL INCLUDING
BANCORP BANCORP PEOPLES SERVICES PEOPLES
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net interest income $ 18,733 $ 6,482 $ 25,215 $ 3,438 $ 28,653
Provision for loan losses 750 772 1,522 470 1,992
Net interest income after
provision for loan losses 17,983 5,710 23,693 2,968 26,661
Non-interest income 6,542 1,396 7,938 859 8,797
Non-interest expenses 17,957 5,748 23,705 2,815 26,520
Income tax expense 2,028 293 2,321 435 2,756
Income before cumulative effect
of accounting change $ 4,540 $ 1,065 $ 5,605 $ 577 $ 6,182
Per common share:
Income before cumulative effect
of accounting change:
Primary $ 1.29 $ 4.14 $ 1.14 $ 2.63 $ 0.98
Fully diluted 1.17 4.14 1.07 2.63 0.94
Stockholders' equity at year end 8.44 41.60 8.28 38.52 7.87
Cash dividends declared 0.36 0.50 -
At year end:
Total assets $ 586,680 $ 166,138 $ 752,818 $ 103,282 $ 856,100
Total loans, net of unearned income 347,055 98,570 445,625 62,075 507,700
Total deposits 509,301 148,228 657,529 92,936 750,465
Total stockholders' equity 40,533 10,702 51,235 7,918 59,153
Allowance for loan losses 4,192 1,791 5,983 836 6,819
Selected ratios:
Return on average assets 0.89 % 0.65 % 0.83 % 0.62 % 0.80%
Return on average stockholders' equity 14.41 10.43 13.44 7.63 12.55
Average stockholders' equity
to average total assets 6.18 6.18 6.18 8.12 6.41
Leverage ratio 6.17 5.46 5.99 7.67 6.19
Tier one risk-based capital ratio 8.42 8.71 8.48 7.60 8.33
Total risk-based capital ratio 10.55 12.30 10.98 8.41 10.56
Dividend payout 27.62 12.08 31.25 - 36.36
Allowance for loan losses as a
percentage of average net loans 1.23 1.84 1.36 1.48 1.38
Nonperforming loans as a
percentage of year end loans 2.06 2.02 2.05 2.02 2.05
Net charge-offs as a
percentage of average net loans 0.19 0.64 0.29 0.33 0.30
Net interest margin 4.01 4.45 4.12 3.94 4.10
</TABLE>
20
<PAGE> 27
TRANS FINANCIAL BANCORP, INC.
Pro Forma Consolidated Selected Financial Data
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1990
------------------------------------------------------
TRANS KENTUCKY PRO FORMA PEOPLES PRO FORMA
FINANCIAL COMMUNITY EXCLUDING FINANCIAL INCLUDING
BANCORP BANCORP PEOPLES SERVICES PEOPLES
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net interest income $ 16,489 $ 5,954 $ 22,443 $ 2,424 $ 24,867
Provision for loan losses 1,529 1,052 2,581 274 2,855
Net interest income after
provision for loan losses 14,960 4,902 19,862 2,150 22,012
Non-interest income 5,179 1,238 6,417 749 7,166
Non-interest expenses 14,873 5,392 20,265 2,317 22,582
Income tax expense 1,412 120 1,532 172 1,704
Income before cumulative effect
of accounting change $ 3,854 $ 628 $ 4,482 $ 410 $ 4,892
Per common share:
Income before cumulative effect
of accounting change:
Primary $ 1.28 $ 2.44 $ 1.00 $ 1.89 $ 0.84
Fully diluted 1.14 2.44 0.95 1.89 0.81
Stockholders' equity at year end 7.68 37.79 7.48 35.71 7.02
Cash dividends declared 0.34 0.50 -
At year end:
Total assets $ 485,725 $ 161,019 $ 646,744 $ 84,786 $ 731,530
Total loans, net of unearned income 327,879 96,773 424,652 49,699 474,351
Total deposits 418,048 143,483 561,531 74,192 635,723
Total stockholders' equity 28,046 9,722 37,768 7,341 45,109
Allowance for loan losses 4,106 1,641 5,747 555 6,302
Selected ratios:
Return on average assets 0.90 % 0.39 % 0.76 % 0.51 % 0.73%
Return on average stockholders' equity 15.52 6.56 13.03 5.77 11.79
Average stockholders' equity
to average total assets 5.77 6.01 5.84 8.90 6.20
Leverage ratio 5.01 5.32 5.25 8.66 5.65
Tier one risk-based capital ratio 6.41 8.55 6.64 8.60 6.92
Total risk-based capital ratio 8.81 11.29 9.39 9.25 9.37
Dividend payout 26.47 20.47 33.88 - 40.33
Allowance for loan losses as a
percentage of average net loans 1.36 1.70 1.44 1.20 1.42
Nonperforming loans as a
percentage of year end loans 1.67 1.32 1.59 2.80 1.72
Net charge-offs as a
percentage of average net loans 0.29 0.92 0.44 0.43 0.44
Net interest margin 4.22 4.41 4.27 3.29 4.15
</TABLE>
21
<PAGE> 28
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed balance sheets as of
September 30, 1993, give effect, as of that date, to the Merger, with and
without the acquisition of Peoples Financial by Trans Financial. The pro
forma condensed statements of income for the nine months ended September 30,
1993 and the years ended December 31, 1992, 1991 and 1990 are in effect a
restatement of the historical income statements of each entity as if the
Merger, including and excluding the acquisition of Peoples Financial, had been
consummated for all periods.
The Merger is expected to be accounted for under the pooling of
interests method of accounting. Under the pooling of interests method of
accounting, the historical basis of the assets and liabilities of Trans
Financial and Kentucky Community will be combined at the Effective Time of
the Merger and carried forward at their previously recorded amounts, and the
shareholders' equity accounts of Trans Financial and Kentucky Community will
be combined on Trans Financial's consolidated balance sheet. No goodwill or
other intangible assets will be created. Financial statements of Trans
Financial issued after the Merger will be restated retroactively to reflect the
consolidated operations of Trans Financial and Kentucky Community as if the
Merger had taken place prior to the periods covered by such financial
statements. See "THE MERGER-Accounting Treatment."
The pro forma statements are not necessarily indicative of the
financial position or the results of operations of the combined entities as
they may be in the future or as they might have been had the transaction been
consummated for all periods presented.
The pro forma financial information should be read in conjunction with
the separate historical financial statements of Trans Financial and Kentucky
Community, Peoples Financial and Citizens Federal Savings Bank and related
notes thereto included in documents incorporated by reference herein. See
"INCORPORATION OF CERTAIN INFORMATION BY REFERENCE" and "RECENT DEVELOPMENTS".
22
<PAGE> 29
TRANS FINANCIAL BANCORP, INC.
Pro Forma Condensed Balance Sheet
September 30, 1993
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
PRO
TRANS KENTUCKY PRO FORMA
FINANCIAL COMMUNITY FORMA EXCLUDING
BANCORP (1) BANCORP (1) ADJUSTMENTS PEOPLES
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Assets
------
Cash and due from banks $ 45,741 $ 5,016 $ $ 50,757
Interest bearing deposits with banks 547 200 747
Federal funds sold and resale agreements 27,100 6,919 34,019
Mortgage loans held for sale 35,129 - 35,129
Securities available for sale 25,523 22,741 48,264
Investment securities 243,451 27,300 270,751
Loans, net 744,178 102,602 846,780
Premises and equipment 26,557 2,244 28,801
Other assets 30,517 4,274 34,791
----------- ----------- ----------- -----------
Total assets $ 1,178,743 $ 171,296 $ - $ 1,350,039
=========== =========== =========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Deposits $ 1,002,462 $ 154,388 $ $ 1,156,850
Federal funds purchased and resale agreements 32,720 32,720
Other liabilities 7,481 578 8,059
Long term debt and other notes payable 61,772 3,110 64,882
----------- ----------- ----------- -----------
Total liabilites 1,104,435 158,076 - 1,262,511
Preferred stock - - -
Common stock 13,897 1,305 1,273 (2) 16,475
Additional paid-in capital 39,320 934 (1,312)(2) 38,942
Retained earnings 24,991 11,020 36,011
Treasury stock (39) 39 (2) -
Unrealized loss on marketable equity securities (128) (128)
Employee Stock Ownership Plan borrowings (3,772) (3,772)
----------- ----------- ----------- -----------
Total stockholders' equity 74,308 13,220 - 87,528
----------- ----------- ----------- -----------
Total liabilities and
stockholder's equity $ 1,178,743 $ 171,296 $ - $ 1,350,039
=========== =========== =========== ===========
<CAPTION>
PRO
PEOPLES PRO FORMA
FINANCIAL FORMA INCLUDING
SERVICES(1) ADJUSTMENTS PEOPLES
----------- ----------- -----------
<S> <C> <C> <C>
Assets
------
Cash and due from banks $ 4,531 $ $ 55,288
Interest bearing deposits with banks 989 1,736
Federal funds sold and resale agreements 5,011 39,030
Mortgage loans held for sale 1,868 36,997
Securities available for sale 3,779 52,043
Investment securities 32,805 303,556
Loans, net 66,085 912,865
Premises and equipment 2,331 31,132
Other assets 2,519 37,310
----------- ----------- -----------
Total assets $ 119,918 $ - $ 1,469,957
=========== =========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Deposits $ 107,924 $ $ 1,264,774
Federal funds purchased and resale agreements 32,720
Other liabilities 758 8,817
Long term debt and other notes payable 64,882
----------- ----------- -----------
Total liabilites 108,682 - 1,371,193
Preferred stock -
Common stock 2,368 99 (3) 18,942
Additional paid-in capital 3,665 (99)(3) 42,508
Retained earnings 5,203 41,214
Treasury stock -
Unrealized loss on marketable equity securities (128)
Employee Stock Ownership Plan borrowings (3,772)
----------- ----------- -----------
Total stockholders' equity 11,236 - 98,764
----------- ----------- -----------
Total liabilities and
stockholder's equity $ 119,918 $ - $ 1,469,957
=========== =========== ===========
</TABLE>
See accompanying notes to pro forma financial information.
23
<PAGE> 30
TRANS FINANCIAL BANCORP, INC.
Pro Forma Condensed Statement of Income
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1993
-----------------------------------------------------------------------------
TRANS KENTUCKY PRO FORMA PEOPLES PRO FORMA
FINANCIAL COMMUNITY EXCLUDING FINANCIAL INCLUDING
BANCORP (1) BANCORP (1) PEOPLES (4) SERVICES (1) PEOPLES (4)
---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans $ 39,525 $ 6,658 $ 46,183 $ 5,011 $ 51,194
Securities 10,366 2,254 12,620 1,604 14,224
Other 2,631 289 2,920 204 3,124
-------- ------- -------- -------- -------
Total interest income 52,522 9,201 61,723 6,819 68,542
Interest expense:
Deposits 22,118 3,379 25,497 2,955 28,452
Short-term borrowings 498 498 498
Notes payable 701 215 916 916
-------- ------- -------- -------- -------
Total interest expense 23,317 3,594 26,911 2,955 29,866
-------- ------- -------- -------- -------
Net interest income 29,205 5,607 34,812 3,864 38,676
Provision for loan losses 1,321 338 1,659 157 1,816
-------- ------- -------- -------- -------
Net interest income after
provision for loan losses 27,884 5,269 33,153 3,707 36,860
-------- ------- -------- -------- -------
Non-interest income 9,941 989 10,930 859 11,789
Non-interest expenses 27,904 4,469 32,373 2,618 34,991
-------- ------- -------- -------- -------
Income before income taxes 9,921 1,789 11,710 1,948 13,658
Income tax expense 2,990 481 3,471 780 4,251
-------- ------- -------- -------- -------
Income before cumulative effect
of accounting change $ 6,931 $ 1,308 $ 8,239 $ 1,168 $ 9,407
======== ======= ======== ======== =======
Income applicable to common stock $ 6,931 $ 1,308 $ 8,239 $ 1,168 $ 9,407
======== ======= ======== ======== =======
Weighted average shares outstanding:
Primary 7,521 8,896 10,212
Fully diluted 7,521 8,896 10,212
Earnings per common share:
Primary $ 0.92 $ 0.93 $ 0.92
======== ======== =======
Fully diluted $ 0.92 $ 0.93 $ 0.92
======== ======== =======
</TABLE>
See accompanying notes to pro forma financial information.
24
<PAGE> 31
TRANS FINANCIAL BANCORP, INC.
Pro Forma Condensed Statement of Income
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1992
------------------------------------------------------------
TRANS KENTUCKY PRO FORMA PEOPLES PRO FORMA
FINANCIAL COMMUNITY EXCLUDING FINANCIAL INCLUDING
BANCORP (1) BANCORP (1) PEOPLES (4) SERVICES (1) PEOPLES (4)
---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans $ 46,099 $ 9,369 $ 55,468 $ 6,730 $ 62,198
Securities 16,694 3,137 19,831 2,343 22,174
Other 614 417 1,031 149 1,180
--------- -------- -------- ------- --------
Total interest income 63,407 12,923 76,330 9,222 85,552
Interest expense:
Deposits 30,822 5,361 36,183 4,426 40,609
Short-term borrowings 902 17 919 63 982
Notes payable 287 343 630 630
--------- -------- -------- ------- --------
Total interest expense 32,011 5,721 37,732 4,489 42,221
--------- -------- -------- ------- --------
Net interest income 31,396 7,202 38,598 4,733 43,331
Provision for loan losses 1,216 838 2,054 263 2,317
--------- -------- -------- ------- --------
Net interest income after
provision for loan losses 30,180 6,364 36,544 4,470 41,014
Non-interest income 11,064 1,514 12,578 748 13,326
Non-interest expenses 27,498 6,157 33,655 3,198 36,853
--------- -------- -------- ------- --------
Income before income taxes 13,746 1,721 15,467 2,020 17,487
Income tax expense 4,686 372 5,058 792 5,850
--------- -------- -------- ------- --------
Income before cumulative effect
of accounting change $ 9,060 $ 1,349 $ 10,409 $ 1,228 $ 11,637
======== ======= ======== ======= =========
Income applicable to common stock $ 9,004 $ 1,349 $ 10,353 $ 1,228 $ 11,581
======== ======= ======== ======= ========
Weighted average shares outstanding:
Primary 6,906 8,281 9,597
Fully diluted 6,906 8,281 9,597
Earnings per common share:
Primary $ 1.30 $ 1.25 $ 1.21
======== ======== ========
Fully diluted $ 1.30 $ 1.25 $ 1.21
======== ======== ========
</TABLE>
See accompanying notes to pro forma financial information.
25
<PAGE> 32
TRANS FINANCIAL BANCORP, INC.
Pro Forma Condensed Statement of Income
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1991
-------------------------------------------------------------
TRANS KENTUCKY PRO FORMA PEOPLES PRO FORMA
FINANCIAL COMMUNITY EXCLUDING FINANCIAL INCLUDING
BANCORP (1) BANCORP (1)PEOPLES (4) SERVICES (1) PEOPLES (4)
----------- ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans $ 35,858 $ 10,365 $ 46,223 $ 6,435 $ 52,658
Securities 9,582 3,435 13,017 2,311 15,328
Other 523 796 1,319 242 1,561
----------- -------- -------- -------- ----------
Total interest income 45,963 14,596 60,559 8,988 69,547
Interest expense:
Deposits 25,561 7,606 33,167 5,352 38,519
Short-term borrowings 466 56 522 198 720
Notes payable 1,203 452 1,655 1,655
----------- -------- -------- -------- ----------
Total interest expense 27,230 8,114 35,344 5,550 40,894
----------- -------- -------- -------- ----------
Net interest income 18,733 6,482 25,215 3,438 28,653
Provision for loan losses 750 772 1,522 470 1,992
----------- -------- -------- -------- ----------
Net interest income after
provision for loan losses 17,983 5,710 23,693 2,968 26,661
Non-interest income 6,542 1,396 7,938 859 8,797
Non-interest expenses 17,957 5,748 23,705 2,815 26,520
----------- -------- -------- -------- ----------
Income before income taxes 6,568 1,358 7,926 1,012 8,938
Income tax expense 2,028 293 2,321 435 2,756
----------- -------- -------- -------- ----------
Income before cumulative effect
of accounting change $ 4,540 $ 1,065 $ 5,605 $ 577 $ 6,182
=========== ======== ======== ========= ============
Income applicable to common stock $ 4,227 $ 1,065 $ 5,292 $ 577 $ 5,869
=========== ======== ======== ========= ============
Weighted average shares outstanding:
Primary 3,277 4,652 5,968
Fully diluted 3,921 5,296 6,612
Earnings per common share:
Primary $ 1.29 $ 1.14 $ 0.98
=========== ======= ============
Fully diluted $ 1.17 $ 1.07 $ 0.94
=========== ======== ============
</TABLE>
See accompanying notes to pro forma financial information.
26
<PAGE> 33
TRANS FINANCIAL BANCORP, INC.
Pro Forma Condensed Statement of Income
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1990
---------------------------------------------------------------------------
TRANS KENTUCKY PRO FORMA PEOPLES PRO FORMA
FINANCIAL COMMUNITY EXCLUDING FINANCIAL INCLUDING
BANCORP (1) BANCORP (1) PEOPLES (4) SERVICES (1) PEOPLES (4)
------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans $ 34,463 $ 10,816 $ 45,279 $ 5,326 $ 50,605
Securities 6,834 3,162 9,996 2,086 12,082
Other 652 952 1,604 313 1,917
------ ------ ------ ----- ------
Total interest income 41,949 14,930 56,879 7,725 64,604
Interest expense:
Deposits 23,207 8,332 31,539 4,996 36,535
Short-term borrowings 995 82 1,077 305 1,382
Notes payable 1,258 562 1,820 1,820
------ ----- ------ ----- ------
Total interest expense 25,460 8,976 34,436 5,301 39,737
------ ----- ------ ----- ------
Net interest income 16,489 5,954 22,443 2,424 24,867
Provision for loan losses 1,529 1,052 2,581 274 2,855
------ ----- ----- ----- ------
Net interest income after
provision for loan losses 14,960 4,902 19,862 2,150 22,012
Non-interest income 5,179 1,238 6,417 749 7,166
Non-interest expenses 14,873 5,392 20,265 2,317 22,582
------ ----- ------ ----- ------
Income before income taxes 5,266 748 6,014 582 6,596
Income tax expense 1,412 120 1,532 172 1,704
------ ----- ------ ----- -----
Income before cumulative effect
of accounting change $ 3,854 $ 628 $ 4,482 $ 410 $ 4,892
====== ===== ===== ==== =====
Income applicable to common stock $ 3,536 $ 628 $ 4,164 $ 410 $ 4,574
====== ===== ===== ==== =====
Weighted average shares outstanding:
Primary 2,773 4,148 5,464
Fully diluted 3,440 4,815 6,131
Earnings per common share:
Primary $ 1.28 $ 1.00 $ 0.84
====== ====== ======
Fully diluted $ 1.14 $ 0.95 $ 0.81
====== ====== ======
</TABLE>
See accompanying notes to pro forma
financial information.
27
<PAGE> 34
TRANS FINANCIAL BANCORP, INC.
Notes to Pro Forma Financial Information
(1) Represents historical balance sheet or income statement of respective
entities.
(2) Adjustments to increase Trans Financial's Common Stock
to reflect the adjusted number of shares outstanding after the Merger,
with an offsetting reduction in additional paid-in capital, and to reflect
the cancellation of Kentucky Community treasury stock.
(3) Adjustments to increase Trans Financial's Common Stock to reflect the
adjusted number of shares outstanding after the Peoples acquisition, with
an offsetting reduction in additional paid-in capital.
(4) No adjustments to the historical statements of income are necessary
in the circumstances under the pooling of interests method of accounting.
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THE SPECIAL MEETING
GENERAL
This Proxy Statement-Prospectus is being furnished to holders of
Kentucky Community Common Stock in connection with the solicitation of proxies
by the Board of Directors of Kentucky Community for use at the Special Meeting
to consider and vote upon the approval of the Merger Agreement and the
transactions contemplated thereby and to transact such other business as may
properly come before the Special Meeting or any adjournments or postponements
thereof. Each copy of this Proxy Statement-Prospectus mailed to holders of
Kentucky Community Common Stock is accompanied by a form of proxy for use at
the Special Meeting.
This Proxy Statement-Prospectus is also furnished by Trans Financial
to Kentucky Community shareholders as a prospectus in connection with the
issuance by Trans Financial of shares of Trans Financial Common Stock pursuant
to the Merger.
DATE, PLACE AND TIME
The Special Meeting will be held at the main office of Kentucky
Community, 33-35 West Second Street, Maysville, Kentucky, on Tuesday,
February 15, 1994 at 9:30 a.m. local time.
RECORD DATE
The Board of Directors of Kentucky Community has fixed the close of
business on January 6, 1994 as the record date for the determination of
shareholders of Kentucky Community entitled to receive notice of and to vote at
the Special Meeting.
VOTE REQUIRED
As of the record date for the Special Meeting, there were 259,431
shares of Kentucky Community Common Stock outstanding. Each share of Kentucky
Community Common Stock outstanding on such record date is entitled to one vote
on each matter properly submitted at the Special Meeting. Approval of the
Merger Agreement by the shareholders of Kentucky Community requires the
affirmative vote of a majority of the votes entitled to be cast by the holders
of record of Kentucky Community Common Stock.
As of January 3, 1994, directors and executive officers of
Kentucky Community and their affiliates owned beneficially an aggregate of
28,472 shares of Kentucky Community Common stock, or approximately 11%
of the shares of Kentucky Community Common Stock outstanding on such
date. Directors and executive officers of Kentucky Community have indicated
their intention to vote their shares of Kentucky Community Common Stock in
favor of the proposal to approve the Merger Agreement.
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As of January 3, 1994, Kentucky Community's bank subsidiaries held
14,217 shares or 5.5 % of the outstanding shares of Kentucky Community
Common Stock, in various fiduciary, representative and custodial capacities.
Such shares will be voted in accordance with the governing agreements and
applicable law.
THE BOARD OF DIRECTORS OF KENTUCKY COMMUNITY UNANIMOUSLY RECOMMENDS
THAT KENTUCKY COMMUNITY SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER.
VOTING AND REVOCATION OF PROXIES
Shares of Kentucky Community Common Stock represented by a proxy
properly signed and received at or prior to the Special Meeting, unless
subsequently revoked, will be voted in accordance with the instructions
thereon. If a proxy is signed and returned without indicating any voting
instructions, shares of Kentucky Community Common Stock represented by the
proxy will be voted for the proposal to approve the Merger Agreement. Any
proxy given pursuant to this solicitation may be revoked by the person giving
it at any time before the proxy is voted by the filing of an instrument
revoking it or of a duly executed proxy bearing a later date with the Secretary
of Kentucky Community prior to or at the Special Meeting, or by voting in
person at the Special Meeting. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed as
follows: Kentucky Community Bancorp, Inc., 33-35 West Second Street,
Maysville, Kentucky 41056, Attention: Secretary. Attendance at the Special
Meeting will not in and of itself constitute revocation of a proxy.
KENTUCKY COMMUNITY SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES
WITH THEIR PROXY CARDS. A TRANSMITTAL FORM WITH INSTRUCTIONS WITH RESPECT TO
THE SURRENDER OF KENTUCKY COMMUNITY COMMON STOCK CERTIFICATES WILL BE MAILED TO
EACH KENTUCKY COMMUNITY SHAREHOLDER AS SOON AS PRACTICABLE AFTER THE EFFECTIVE
TIME.
The Board of Directors of Kentucky Community is not aware of any
business to be acted upon at the Special Meeting other than as described
herein. If, however, other matters are properly brought before the Special
Meeting, or any adjournments or postponements thereof, the persons appointed as
proxies will have discretion to vote or act thereon according to their best
judgment.
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and employees
of Kentucky Community, who will not be specifically compensated for such
services, may solicit proxies from the shareholders of Kentucky Community,
personally or by telephone or telegram or other forms of communication.
Brokerage houses, nominees, fiduciaries and other custodians will be requested
to
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forward soliciting materials to beneficial owners and will be reimbursed for
their reasonable expenses incurred in doing so. Kentucky Community will bear
its own expenses in connection with the solicitation of proxies for the Special
Meeting, except that Trans Financial and Kentucky Community each will pay
one-half of the costs incurred in printing and mailing this Proxy Statement-
Prospectus, the form of proxy and other proxy materials. See "THE
MERGER-Expenses."
THE MERGER
This section of the Proxy Statement-Prospectus describes certain
aspects of the proposed Merger. To the extent that it relates to the Merger
Agreement, the following description does not purport to be complete and is
qualified in its entirety by reference to the Merger Agreement, which is
attached as Appendix A to this Proxy Statement-Prospectus and is incorporated
herein by reference. All shareholders are urged to read the Merger Agreement,
as well as the other appendices, in their entirety. All per share information
contained herein with respect to Trans Financial has been adjusted for a
4-for-3 stock split effected on December 18, 1992 and a 4-for-3 stock split
effected on December 16, 1991. All per share information contained herein with
respect to Kentucky Community has been adjusted for a 2-for-1 stock split
effected on December 17, 1991.
PARTIES TO THE MERGER
TRANS FINANCIAL BANCORP, INC.
Trans Financial is a bank holding company under the Bank Holding
Company Act of 1956, as amended, and a savings and loan holding company under
Section 10(e)(3) of the Home Owners' Loan Act headquartered in Bowling Green,
Kentucky. Trans Financial, with consolidated total assets of approximately
$1.2 billion at September 30, 1993, conducts its operations through 20 offices
of its two commercial bank subsidiaries, Trans Financial Bank, N.A., Bowling
Green, Kentucky, and Trans Financial Bank, Pikeville, Kentucky, and 19 offices
of its two thrift subsidiaries, Trans Financial Bank, Federal Savings Bank,
Russellville, Kentucky, and Trans Financial Bank of Tennessee, F.S.B.,
Tullahoma, Tennessee.
Trans Financial's operating strategy is to provide its customers with
the financial sophistication and breadth of products of a regional bank, while
successfully retaining the local appeal and level of service of a community
bank. In addition to traditional deposit and lending products and services,
Trans Financial derives noninterest income from its corporate customers with
fee based trust and employee benefit services and fee based depository and cash
management products. Trans Financial provides a full range of retail banking
services including consumer, installment and residential lending, savings and
checking deposit products,
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estate planning and related trust services, and corporate trust and employee
benefit services. Trans Financial's customers may also obtain full service
retail brokerage services from offices of INVEST located in its offices.
Trans Financial's principal executive offices are located at 500 East
Main Street, Bowling Green, Kentucky 42101 (telephone (502) 781-5000).
KENTUCKY COMMUNITY BANCORP, INC.
Kentucky Community is a bank holding company under the BHC Act,
headquartered in Maysville, Kentucky. Kentucky Community engages in a wide
range of commercial banking activities through its banking subsidiaries, The
State National Bank, Maysville, Kentucky, Peoples First Bank, Morehead,
Kentucky, and Farmers Liberty Bank, Augusta, Kentucky. At September 30, 1993,
Kentucky Community had consolidated total assets of approximately $171.3
million.
Kentucky Community's principal executive offices are located at 33-35
West Second Street, Maysville, Kentucky 41056 (telephone (606) 564-3381).
BACKGROUND OF THE MERGER
Since 1984, when Kentucky enacted legislation to permit multi-bank
holding companies, there has been an increasing trend toward consolidation
within the commercial banking industry in Kentucky, as well as on a national
level. The past several years have been a period of substantial and rapid
change in the banking industry within Kentucky, characterized by intensifying
competition from Kentucky banks and other financial services companies within
and outside of Kentucky. In particular, several Kentucky banks are now
affiliates of large regional bank holding companies headquartered outside of
Kentucky with significantly greater financial and managerial resources.
Because of this trend toward consolidation, the Board of Directors of Kentucky
Community established a Strategic Planning Committee in 1989 to explore and
consider in a deliberate fashion various strategic alternatives available to
Kentucky Community. The initial members of the Strategic Planning Committee
were former directors Harry C. Denham and Andrew C. Duke and current directors
Bill B. Hendrickson and Thomas R. Wallingford. In 1992, John B. Shropshire,
an executive officer of Kentucky Community until his resignation in August,
1993, and director E. T. Kirk also became members of the Strategic Planning
Committee. The present members of the Strategic Planning Committee, and the
members of that Committee at all times during the consideration and negotiation
of the Merger, are Messrs. Hendrickson, Wallingford and Kirk.
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In 1989, Kentucky Community received an informal and preliminary
expression of interest from a one-bank holding company in Central Kentucky
whose shares do not actively trade in any established trading market. This
bank holding company, substantially similar to Kentucky Community in terms of
consolidated assets, proposed generally a so-called "merger of equals" in which
shareholders would exchange their shares for stock in the surviving company
based on Kentucky Community's and the other institution's relative book values.
As a result of this informal expression of interest, the Strategic Planning
Committee determined to receive financial and investment banking advice on an
ongoing basis from Chartwell Capital Ltd., an investment banking firm of which
Charles J. Thayer is the principal. Chartwell Capital, a member of the National
Association of Securities Dealers, provides specialized investment banking and
advisory services primarily to financial institutions. Mr. Thayer, prior to
organizing Chartwell Capital, was Executive Vice President of PNC Bancorp,
Pittsburgh, Pennsylvania, where he had senior management responsibility for
corporate treasury, merger and acquisition activity, investor relations,
strategic planning, risk management and PNC Capital Markets. Mr. Thayer served
as Executive Vice President and Chief Financial Officer of Citizens Fidelity
Corporation, Kentucky's largest bank holding company, prior to its merger with
PNC in 1987. The Strategic Planning Committee, after discussions with its
financial advisor, ultimately decided to inform the community bank holding
company proposing a "merger of equals" that the Strategic Planning Committee
believed at that time that is was in the best interests of Kentucky Community
and its shareholders, subsidiaries, employees, customers and communities for
Kentucky Community to remain independent.
In May of 1990, the Strategic Planning Committee determined to explore
what possible affiliations might exist with several larger bank holding
companies having actively traded stock, should the Committee at some point
conclude that maintaining Kentucky Community as an independent, locally owned
bank holding company was no longer in the best long-term interests of Kentucky
Community and its shareholders. The Strategic Planning Committee authorized
Chartwell Capital to contact several large regional bank holding companies
generally headquartered in or having a major banking presence in Louisville,
Kentucky or Cincinnati, Ohio, all of whom have shares that actively trade in a
national trading market. None of these companies indicated any serious
interest in exploring a negotiated transaction with Kentucky Community.
During the summer of 1991, large regional bank holding companies were
again contacted by Chartwell Capital and again none of these companies
expressed any serious interest in an affiliation with Kentucky Community.
Throughout 1992 and the first half of 1993, Mr. Thayer continued to maintain
informal contact with several large regional bank holding companies but none of
these companies made any effort to commence negotiations. Also during this
period Mr. Wallingford from time to time maintained contact with the Central
Kentucky community bank holding company that
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continued to be interested in a "merger of equals" with Kentucky Community.
In August, 1993, Kentucky Community received expressions of
interest from several community banking organizations located in Kentucky, none
of which had shares that actively traded in an established trading market.
Kentucky Community was also contacted by a bank holding company in Eastern
Kentucky whose shares trade in a national trading market. The Strategic
Planning Committee met with Chartwell's Mr. Thayer on September 19, 1993 to
review its strategic alternatives, including remaining independent, evaluate
whether and how to respond to the expression of interest from the Eastern
Kentucky bank holding company, and explore what other alternatives, if any,
existed that would involve a substantial premium to market value, increase
dividend income and enable shareholders of Kentucky Community to receive shares
that actively trade in a national trading market. Mr. Thayer reviewed with the
Strategic Planning Committee the financial benefits of a possible affiliation
with various publicly traded financial institutions, including Trans Financial.
Following a detailed discussion with its financial advisor, the Strategic
Planning Committee determined that Chartwell Capital should informally contact
Trans Financial on a "no names" basis to determine whether Trans Financial
would be interested in a possible affiliation in the northeastern part of
Kentucky.
Trans Financial thereafter indicated to Chartwell Capital that it
would be interested in having discussions with its client. The Strategic
Planning Committee thereafter authorized Chartwell Capital to commence
discussions with Trans Financial generally for the following reasons: Trans
Financial was viewed as having established a multi-state franchise value that
had been created through non-dilutive affiliations with above-average
institutions; Trans Financial was viewed as being capable of paying a
significant premium above market value for Kentucky Community Common Stock
through the issuance of Trans Financial Common Stock that actively traded in a
national trading market; the issuance of Trans Financial Common Stock in
exchange for Kentucky Community Common Stock would provide Kentucky Community
shareholders with a substantial increase in dividend income; Trans Financial
had responded favorably to the Strategic Planning Committee's expression of
interest in a tax free exchange of common stock; Trans Financial Common Stock
traded on the NASDAQ National Market at a weekly average volume
substantially greater than the shares of the large bank holding company in
Eastern Kentucky that had expressed interest in a possible affiliation with
Kentucky Community; Trans Financial was viewed as having significant potential
long-term value for Kentucky Community shareholders in a financial services
industry that is increasingly consolidating; and Trans Financial's stated
objective of serving
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its customers as a "super community" bank was considered important in meeting
the interests of employees, customers, communities and similar constituencies.
On October 20, 1993, Chartwell Capital's Mr. Thayer met with senior
management of Trans Financial to discuss more specifically the possibility of
an affiliation between Kentucky Community and Trans Financial and to conduct
initial due diligence of Trans Financial. During this meeting, Trans Financial
again indicated its willingness to accomplish a transaction that constituted a
tax-free reorganization for federal income tax purposes and expressed its
desire that the transaction qualify for pooling-of-interests accounting
treatment. Trans Financial indicated that it contemplated issuing in the
transaction Trans Financial Common Stock having a value in the range of $80 to
$90 per Kentucky Community share, an indicated exchange ratio in the range of
4.7 to 5.3 shares of Trans Financial Common Stock based on an indicated trading
price of $17 per share. On October 28, the Strategic Planning Committee met
with Chartwell Capital to review the initial due diligence of Trans Financial
and discuss the financial terms of the proposed affiliation. That same day,
senior management of Trans Financial met with senior management of Kentucky
Community. Following this meeting, the Strategic Planning Committee determined
to proceed toward the negotiation of a definitive agreement with Trans
Financial. The Strategic Planning Committee also determined to retain David W.
Harper of Hirn Reed & Harper, Louisville, Kentucky, as special counsel to
Kentucky Community, in view of the fact that Kentucky Community's regular legal
counsel, Wyatt, Tarrant & Combs, also represented Trans Financial and would
represent Trans Financial in connection with any transaction with Kentucky
Community. Kentucky Community subsequently retained Keefe Managers,
Inc., New York, New York, as a financial advisor to Kentucky Community to
render a fairness opinion for the proposed transaction.
On November 1, Mr. Thayer and Matthew F. Byrnes, President of Keefe
Managers, Inc., again met with senior management of Trans Financial as part of
a then ongoing review of Trans Financial and its business and condition
(financial and otherwise). Messrs. Thayer and Byrnes discussed with Trans
Financial's management various operating issues that typically arise in a
merger between bank holding companies, including information systems
consolidation, employee benefits, Trans Financial's practices with respect to
employees, customers and communities of the company affiliating with Trans
Financial, and Trans Financial's products and services. Chartwell Capital and
Keefe Managers also reviewed various financial reports provided by Trans
Financial as part of their due diligence review. The Strategic Planning
Committee met with Chartwell Capital and Hirn Reed & Harper on November 3 to
review the results of the investigation of Trans Financial and the status of
the merger negotiations. With the assistance of its advisors,
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the Strategic Planning Committee, through November 8, negotiated the provisions
of the Merger Agreement. During this period, Trans Financial on several
occasions indicated its unwillingness to enter into any definitive agreement
with Kentucky Community absent a stock option agreement and other provisions in
the definitive agreement that would generally facilitate consummation of the
proposed transaction with Trans Financial and discourage any other party from
making an affiliation or acquisition proposal to Kentucky Community. See "THE
MERGER-No Solicitation of Transactions by Kentucky Community"; "-Stock Option
Agreement".
On November 9, 1993, the Merger Agreement and the Stock Option
Agreement were recommended to the full Board of Directors of Kentucky Community
by the Strategic Planning Committee. During this extended meeting, Kentucky
Community's financial advisors and legal counsel each made presentations to the
Kentucky Community Board of Directors and discussed with it their respective
views and analyses of various aspects of the proposed transaction and the
effects thereof. At the conclusion of this meeting, by unanimous vote of all
directors, the Kentucky Community Board of Directors approved the Merger
Agreement and the transactions contemplated thereby and authorized Kentucky
Community to enter into the Merger Agreement and the Stock Option Agreement.
See "THE MERGER".
RECOMMENDATION OF THE BOARD OF DIRECTORS AND
REASONS FOR THE MERGER
The Board of Directors of Kentucky Community approved the Merger by
the unanimous vote of all directors at the November 9, 1993 meeting. The Board
of Directors of Kentucky Community believes that the terms of the Merger are
fair to and in the best interests of Kentucky Community and its shareholders,
subsidiaries, employees, customers and communities. The Board of Directors
unanimously recommends that the shareholders of Kentucky Community vote FOR
approval of the Merger. See "THE SPECIAL MEETING".
In reaching its conclusion, the Board of Directors of Kentucky
Community considered information provided at the November 9, 1993 Board
meeting, including, among other things, (i) information concerning the
financial performance and condition, business operations, capital levels, asset
quality, loan portfolio breakdown and prospects of Trans Financial, and
information concerning the two companies on a combined basis; (ii) the
structure of the transaction, including the fact that the Merger is expected to
be a tax-free reorganization for federal income tax purposes that qualifies for
pooling-for-interests accounting treatment, while also involving an exchange of
Trans Financial Common Stock that actively trades in a national trading market
in average weekly volumes significantly greater than any other bank holding
company that had expressed even preliminary interest in Kentucky Community
during the approximate three year period during which the Strategic Planning
Committee had reviewed Kentucky Community's strategic
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options; (iii) the likelihood of increased dividend income; (iv) the
fact that holders of Kentucky Community Common Stock would own approximately
15% of the outstanding shares of Trans Financial after the Merger and that
those shareholders' interests would be represented on the Trans Financial Board
of Directors by Mr. Wallingford for some period of time after the Merger; (v)
the recommendation of the Strategic Planning Committee and the presentations
made by Kentucky Community's financial and legal advisors; (vi) the preliminary
view of Mr. Byrnes on behalf of Keefe Managers, Inc. that the Merger was fair
to shareholders of Kentucky Community from a financial point of view, and the
fact that Kentucky Community's obligations under the Merger Agreement were
subject to the delivery of a fairness opinion by Keefe Managers, Inc. (which
fairness opinion has since been delivered and is attached to this Proxy
Statement-Prospectus as Appendix B); (vii) the terms of other recent comparable
transactions involving bank holding companies; and (viii) the significant
potential long-term value for Kentucky Community shareholders in a financial
services industry that is increasingly consolidating. The Kentucky
Community Board also was aware that Trans Financial would likely become one of
the largest independently owned bank holding companies in Kentucky upon
consummation of the proposed acquisition of Liberty National Bancorp, Inc.,
Louisville, Kentucky, by Banc One Corporation, Columbus, Ohio, announced
November 2, 1993.
With respect to the Stock Option Agreement, the Board of Directors
concluded that Trans Financial would not enter into the Merger Agreement, and
consequently shareholders of Kentucky Community would not have the opportunity
to consider and approve a transaction with Trans Financial on the terms
contemplated by the Merger Agreement, unless the Stock Option Agreement was
entered into by Kentucky Community.
OPINION OF FINANCIAL ADVISOR
Keefe Managers, Inc. is a registered investment adviser and consulting
firm specializing in the banking industry. Currently, Keefe Managers manages
client accounts which are invested primarily in bank and thrift securities and
provides various consulting services to the industry. Harry Keefe, Chairman
and CEO of Keefe Managers, is the former Chairman and CEO of Keefe, Bruyette, &
Woods, an investment banking firm specializing in bank and thrift securities,
which he founded in 1962. There is no affiliation between Keefe Managers and
Keefe, Bruyette, & Woods.
At the November 9, 1993 meeting of Kentucky Community's Board of
Directors, Keefe Managers provided its preliminary view, subsequently
confirmed and supplemented by its written opinion to Kentucky Community dated
the date of this Proxy Statement - Prospectus, that the consideration to
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be received by the Kentucky Community stockholders in the transaction with
Trans Financial is fair to the Kentucky Community stockholders from a financial
point of view. No limitations were imposed by Kentucky Community on Keefe
Managers with respect to the investigations made or procedures followed in
rendering its opinion. The full text of Keefe Managers' written opinion to
Kentucky Community's Board of Directors is attached hereto as Appendix B and is
incorporated herein by reference and should be read carefully and in its
entirety in connection with this Proxy Statement-Prospectus. The following
summary of Keefe Managers' opinion is qualified in its entirety by reference to
the full text of the opinion. Keefe Managers' opinion is addressed only to
Kentucky Community's Board of Directors and does not constitute a
recommendation to any Kentucky Community stockholder as to how such stockholder
should vote at the Special Meeting.
In connection with its opinion, Keefe Managers, among other things:
(i) reviewed certain publicly available financial and other data with respect
to Kentucky Community and Trans Financial, including the consolidated financial
statements for recent years and interim periods to date and certain other
relevant financial operating data relating to Kentucky Community and Trans
Financial made available to Keefe Managers from published sources and from the
internal records of Kentucky Community; (ii) reviewed the Merger Agreement;
(iii) reviewed certain historical market prices and trading volumes of Kentucky
Community's common stock and Trans Financial's common stock as reported by
NASDAQ/NMS; (iv) compared Kentucky Community and Trans Financial from a
financial point of view with certain other companies in the financial services
industry that Keefe Managers deemed to be relevant; (v) considered the
financial terms, to the extent publicly available, of selected recent
acquisitions of financial institutions that Keefe Managers deemed to be
comparable, in whole or in part, to the transaction and Kentucky Community;
(vi) reviewed certain information of a business and financial nature regarding
Kentucky Community and Trans Financial furnished to Keefe Managers by Kentucky
Community and Trans Financial, including financial forecasts and related
assumptions; (vii) made inquiries regarding and discussed the transaction and
the Merger Agreement and other matters related thereto with Kentucky
Community's counsel; and (viii) performed such other analyses and examinations
as Keefe Managers deemed appropriate.
In connection with its review, Keefe Managers did not independently
verify any of the foregoing information, and relied on such information and
assumed such information was complete and accurate in all material respects.
Keefe Managers also assumed that there were no material changes in Kentucky
Community's or Trans Financial's assets, financial condition, results of
operations, business or prospects since the date of the last financial
statements made available to Keefe Managers. Keefe Managers relied on advice
of counsel to Kentucky Community as to all legal matters
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with respect to Kentucky Community, the transaction and the Merger Agreement.
In addition, Keefe Mangers did not make an independent evaluation, appraisal or
physical inspection of the assets or individual properties of Kentucky
Community or Trans Financial, nor was Keefe Managers furnished with any such
appraisals. Further, Keefe Managers' opinion was based on economic, monetary
and market conditions existing as of the date of its opinion.
Set forth below is a brief summary of the report presented by Keefe
Managers to the Kentucky Community Board of Directors at the November 9, 1993
meeting.
Analysis of Other Bank Transactions
Keefe Managers reviewed the consideration paid in recently announced
transactions whereby certain banks were acquired. Specifically, Keefe Managers
reviewed two hundred transactions involving publicly and privately owned banks,
with assets ranging in size from $50 million to $500 million, for the time
period January 1, 1992 through October 31, 1993. The breakdown of the
consideration received in these transactions among all stock, cash and a mix of
stock and cash was approximately 48%, 30% and 22%, respectively.
Keefe Managers calculated, among other things, the ratio of price to
book value, price to tangible book value and price to last twelve-month ("LTM")
earnings in these transactions. The calculations for the two hundred bank
transactions described above yielded (i) a median price to book value of 163.4,
(ii) a median price to tangible book value of 168.4, and (iii) a median ratio
of price to LTM earnings of 12.9. Keefe Managers determined, based on the
closing price of Trans Financial Common Stock on November 8, 1993, which was
$16 per share, that the consideration to be paid to the Kentucky Community
stockholders in the transaction represented a ratio of price to book value of
166.4, a price to tangible book value of 191.1, and a ratio of price to LTM
earnings of 12.8.
No other company or transaction used in the above analysis as a
comparison is identical to Kentucky Community, Trans Financial or the
transaction. Accordingly, an analysis of the results of the foregoing is not
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other factors that could affect the public trading value of the
companies and transactions to which Kentucky Community, Trans Financial and the
transaction are being compared.
Contribution Analysis
Keefe Managers analyzed the contribution of each of Kentucky Community
and Trans Financial to among other things, total assets, equity, and net income
of the pro forma combined companies for the
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twelve months ended September 30, 1993. This analysis showed, among other
things, that based on pro forma combined balance sheets and income statements
for Kentucky Community and Trans Financial as of and for the twelve months
ended September 30, 1993, Kentucky Community would have contributed 12.7%,
15.1% and 15.6% of the total assets, equity, and net income, respectively, of
the combined entities. At the exchange ratio of 5.3 shares of Trans Financial
per share of Kentucky Community Common Stock, the Kentucky Community
stockholders would own 15.7% of the pro forma combined companies.
Discounted Cash Flow Analysis
A discounted cash flow analysis was used to compare the alternative of
Kentucky Community remaining independent and considering a strategic
affiliation in five years as compared to the proposed transaction with Trans
Financial. Keefe Managers estimated the future dividend stream that Kentucky
Community could produce over a five-year period, under various assumptions. A
terminal value was estimated of one share of Kentucky Community Common Stock at
the end of the five-year period by applying the median multiple from the
universe of transactions to projected 1998 earnings. The dividend stream and
terminal value were then discounted back to a present value under various
scenarios. The market value of Trans Financial shares on November 8, 1993 to
be exchanged under the proposed Exchange Ratio for one share of Kentucky
Community exceeded the discounted cash flow valuation of one share of Kentucky
Community Common Stock in all scenarios reviewed.
Other Analyses
Market Analysis. Keefe Managers examined the history of the trading
prices for the common stock of Trans Financial and the relationship between
movements in the S&P 500 index and the NASDAQ Banking Index from December 1988
through October 1993.
Liquidity Analysis. The liquidity of Trans Financial Common Stock was
reviewed from December 1988 through October 1993. Specifically, the average
daily volume on a monthly basis for Trans Financial Common Stock was reviewed
since January 1991 and compared to other banks headquartered in Kentucky of
similar or larger asset size than Trans Financial. The liquidity in Trans
Financial Common Stock compared favorably to both Kentucky Community and the
other banks in the analysis.
Dividend Analysis. Based on the Exchange Ratio and current Trans
Financial dividends per share, Keefe Managers estimated that the increase in
dividends for each share of Kentucky Community exchanged would be approximately
170%.
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Peer Group Analysis
Using public and other available information provided, Keefe Managers
analyzed the financial performance of Trans Financial versus a nationwide peer
group of over 35 banks. The peer group was comprised of banks ranging in size
from $200 million to $2 billion in assets for the time period form 1989 through
September 1993.
The financial condition, profitability, and asset quality of Trans
Financial were reviewed on a trend basis and peer group analysis. Various
standard measures were utilized in the analysis including but not limited to
the following: Return on Average Total Assets; Return on Average Equity; Net
Interest Margin: Efficiency Ratio; Equity to assets Ratio; Tangible Common
Equity to Assets Ratio; Non-Performing Assets to Loans; Reserves to
Non-Performing Loans, and Reserves to Loans.
No company used in the comparable company analysis is identical to
Trans Financial. Accordingly, an analysis of the results of the foregoing is
not mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies.
The summary set forth above does not purport to be a complete
description of the presentation by Keefe Mangers to the Kentucky Community
Board of Directors or of the analyses performed by Keefe Managers. The
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. Keefe Managers believes that its analyses and
the summary set forth above must be considered as a whole and that selecting
portions of its analyses and of the factors considered, without considering all
analyses and factors, would create an incomplete view of the process underlying
the analyses set forth in its presentation to the Kentucky Community Board of
Directors. In addition, Keefe Managers may have given various analyses more or
less weight than other analyses and may have deemed various assumptions more or
less probable than other assumptions, so that the ranges of valuations
resulting from any particular analysis described above should not be taken to
be Keefe Managers' view of the actual value of Kentucky Community or the
combined companies. The fact that any specific analysis has been referred to
in the summary above is not meant to indicate that such analysis was given
greater weight than any other analysis.
In performing its analyses, Keefe Managers made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of Kentucky Community
or Trans Financial. The analyses performed by Keefe Managers are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. Such
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analyses were prepared solely as part of Keefe Managers' analysis of the
fairness of the transaction to the Kentucky Community stockholders from a
financial point of view and were provided to the Kentucky Community Board of
Directors in connection with the delivery of Keefe Managers' opinion. The
analyses do not purport to be appraisals or to reflect the prices at which a
company might actually be sold or the prices at which any securities may trade
at the present time or at any time in the future. Keefe Managers used in its
analyses various projections of future performances prepared by the managements
of Kentucky Community and Trans Financial. The projections are based on
numerous variables and assumptions which are inherently unpredictable and must
not be considered certain of occurrence as projected. Accordingly, actual
results could vary significantly from those set forth in such projections.
As described above, Keefe Managers' presentation to the
Kentucky Community Board of Directors was among the many factors taken into
consideration by the Kentucky Community Board in making its determination to
approve the transaction.
For Keefe Managers' services in connection with the transaction,
Kentucky Community has agreed to pay Keefe Managers $50,000 pursuant to the
terms of an engagement letter and has agreed to reimburse Keefe Managers for
certain out-of-pocket expenses. Kentucky Community has agreed in the
Engagement Letter to indemnify Keefe Managers and each of its directors,
officers, agents, employees and shareholders against certain liabilities,
including liabilities under the federal securities laws.
TERMS OF THE MERGER
At the Effective Time of the Merger, Kentucky Community will merge with
and into Trans Financial, with Trans Financial as the surviving
corporation. The articles of incorporation and bylaws of Trans Financial as
in effect immediately prior to the Effective Time shall be the articles of
incorporation and bylaws of the surviving corporation.
The Merger Agreement provides that, upon satisfaction or waiver of all
conditions precedent to the Merger, at the Effective Time of the Merger, each
outstanding share of Kentucky Community Common Stock (other than shares as to
which dissenters' rights have been duly exercised) will be converted
automatically into the right to receive 5.3 shares of Trans Financial Common
Stock (the "Exchange Ratio"). See "THE MERGER-Dissenters' Rights" and
"DESCRIPTION OF TRANS FINANCIAL COMMON STOCK AND RIGHTS".
The Merger Agreement provides that, in the event the number of
outstanding shares of Trans Financial Common Stock are increased, decreased, or
changed into or exchanged for a different number or kind of shares or
securities as a result of a stock split, stock dividend, recapitalization or
other similar transaction, all
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without Trans Financial receiving consideration therefor, then an appropriate
and proportionate adjustment shall be made in the number and kind of shares of
Trans Financial Common Stock to be delivered in the Merger.
No fractional shares of Trans Financial Common Stock will be issued in
the Merger. Instead, the Merger Agreement provides that each holder of shares
of Kentucky Community Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Trans
Financial Common Stock will receive, in lieu thereof, cash (without interest)
in an amount equal to such fractional interest multiplied by the average of the
bid and asked price per share as quoted on the NASDAQ National Market for Trans
Financial Common Stock on the trading day which occurs immediately prior to the
Closing Date. All shares of Kentucky Community Common Stock that are owned by
Kentucky Community as treasury stock immediately prior to the Effective Time
shall be canceled, and no cash, stock or other property will be delivered in
exchange for them.
Shares of Trans Financial Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger will remain issued and
outstanding after the Merger.
Based on the outstanding shares of common stock of Trans Financial and
Kentucky Community as of September 30, 1993 (7,411,769 and 258,371 shares,
respectively), the shareholders of Kentucky Community immediately prior to the
consummation of the Merger will own Trans Financial Common Stock representing
approximately 16% of the shares of Trans Financial Common Stock outstanding
following consummation of the Merger (approximately 14% assuming the
consummation of the Peoples Financial acquisition). See "PRO FORMA FINANCIAL
INFORMATION".
EFFECTIVE TIME OF THE MERGER
The Merger will become effective upon the filing of Articles of Merger
with the Kentucky Secretary of State or at such later date and time as may be
specified in the Articles of Merger. Such filing will be made, subject to the
terms and conditions of the Merger Agreement, on the fifth business day
following the effective date of the last order, approval or exemption of any
federal or state regulatory agency approving the Merger and the expiration of
all applicable waiting periods or such other time as Kentucky Community and
Trans Financial may agree. The parties currently expect that the Effective
Time will be on or before February 25, 1994, although there can be no
assurance as to whether or when the Merger will occur. See "THE
MERGER-Conditions to the Merger" and "-Regulatory Approvals."
SURRENDER OF CERTIFICATES
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No later than seven (7) days after the Closing Date, The State
National Bank, Maysville, Kentucky, acting in the capacity of exchange agent
for Trans Financial (the "Exchange Agent"), will mail or deliver to each former
holder of record of shares of Kentucky Community Common Stock a form of letter
of transmittal, together with instructions for the exchange of Kentucky
Community stock certificates for the consideration to which they are entitled
in the Merger.
KENTUCKY COMMUNITY SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of one or more certificates for
Kentucky Community Common Stock, together with a properly completed letter of
transmittal, there will be issued and mailed or delivered to the holder thereof
a certificate or certificates representing the number of shares of Trans
Financial Common Stock to which such holder is entitled, together with all
declared but unpaid dividends in respect to such shares and, where applicable,
a check for the amount representing any fractional shares (without interest).
A certificate for Trans Financial Common Stock or any check representing cash
may be issued in a name other than the name in which the surrendered
certificate is registered only if the certificate surrendered is properly
endorsed, accompanied by a guaranteed signature if required by the letter of
transmittal and otherwise in proper form for transfer and the person requesting
the issuance of such certificate either pays to the Exchange Agent any transfer
or other taxes required by reason of the issuance of the certificate for such
shares in a name other than the registered holder of the certificate
surrendered or establishes to the satisfaction of the Exchange Agent that such
tax has been paid or is not applicable. Certificates surrendered for exchange
by any person constituting an affiliate of Kentucky Community for purposes of
Rule 145(c) under the Securities Act will not be exchanged for certificates
representing shares of Trans Financial Common Stock until Trans Financial has
received a written agreement from such person as described under "THE
MERGER-Resales of Trans Financial Common Stock."
All Trans Financial Common Stock issued pursuant to the Merger will be
deemed issued as of the Effective Time of the Merger. After the Effective Time
of the Merger, former holders of record of Kentucky Community Common Stock who
receive shares of Trans Financial Common Stock in the Merger will be entitled
to vote the number of shares of Trans Financial Common Stock into which their
Kentucky Community shares have been converted, regardless of whether they have
surrendered their Kentucky Community certificates. Dividends declared by Trans
Financial after the Effective Time of the Merger will include dividends on all
shares of Trans Financial Common Stock issued in the Merger, but no dividends
or other distributions declared shall be paid to the holder of any
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unsurrendered certificate with respect to which shares of Trans Financial
Common Stock have been issued in the Merger until such certificate has been
surrendered, promptly after which time all such dividends or distributions will
be paid, without interest. After the Effective Time of the Merger, there will
be no transfers on the transfer books of Kentucky Community of the shares of
Kentucky Community Common Stock that were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
certificates representing such shares are presented for transfer to the
Exchange Agent, they will be canceled and exchanged for certificates
representing shares of Trans Financial Common Stock or cash in accordance with
the Merger Agreement.
CONDITIONS TO THE MERGER
The Merger will occur only if the Merger Agreement is approved by the
requisite vote of the shareholders of Kentucky Community. Consummation of the
Merger is subject to the satisfaction of certain other conditions, unless
waived, to the extent waiver is permitted by law. Such conditions include (1)
the receipt of all necessary regulatory approvals on terms and conditions that
are satisfactory to Trans Financial; (2) the effectiveness of the Registration
Statement and the absence of a stop order suspending such effectiveness; (3)
the absence of any action or proceeding before any court or agency of competent
jurisdiction challenging the Merger or seeking to prohibit consummation of the
Merger which, in the opinion of either party's counsel has a reasonable
probability of success; (4) the absence of any material adverse change in the
business, financial condition or operations of Kentucky Community or Trans
Financial since December 31, 1992; (5) the receipt by Trans Financial of a
written release from each of the executive officers and directors of Kentucky
Community; (6) the receipt by Kentucky Community of an opinion of counsel to
the effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "IRC"), and that the Merger will not give rise to the
recognition of gain or loss for federal income tax purposes; (7) the receipt by
Trans Financial of an accountant's letter confirming that the Merger qualifies
for "pooling of interests" accounting treatment; (8) the continued accuracy in
all material respects of representations and warranties made by Trans Financial
and Kentucky Community in the Merger Agreement; and (9) the receipt by Kentucky
Community of an opinion from its financial advisor to the effect that, as of
the date this Proxy Statement/Prospectus is mailed to the shareholders of
Kentucky Community, the Merger is fair to the Kentucky Community shareholders
from a financial viewpoint. See "THE MERGER-Regulatory Approvals," "-Waiver
and Amendment," and "-Termination."
In addition, unless waived, each party's obligation to effect the
Merger is subject to performance by the other party of its
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obligations under the Merger Agreement, the receipt of certain certificates
from the other party and the receipt of certain legal opinions from the other
party's counsel. No assurances can be provided as to when or if all of the
conditions precedent to the Merger can or will be satisfied or waived by the
party permitted to do so.
REGULATORY APPROVALS
The Merger is subject to prior approval of the Federal Reserve Board
under the BHC Act. Trans Financial has submitted an application for approval of
the Merger with The Federal Reserve Bank of St. Louis and the Federal Reserve
has indicated that it will likely act on the application on or before January
16, 1994. Under the BHC Act, the Federal Reserve Board is required, in
approving a transaction such as the Merger, to take into consideration, among
other things, the financial and managerial resources and future prospects for
the existing institutions, the convenience and needs of the communities to be
served and the record of performance of the institutions in meeting the credit
needs of the entire community, including low and moderate income neighborhoods
served by the institutions.
The Merger is also subject to the approval of the Commissioner of the
Kentucky Department of Financial Institutions. Under Kentucky's banking laws,
the Commissioner must approve the Merger if he finds that (i) the terms of the
Merger are in accordance with Kentucky law, (ii) the financial condition, or
the competence, experience and integrity of Trans Financial or its principals
are such as will not jeopardize the financial stability of Kentucky Community,
(iii) the public convenience and advantage will be served by the acquisition,
and (iv) no federal regulatory authority whose approval is required has
disapproved the Merger because it would result in a monopoly or substantially
lessen competition.
Under the BHC Act, the Merger may not be consummated until the 30th
day following the date of Federal Reserve Board approval, during which time the
United States Department of Justice may challenge the Merger on antitrust
grounds. Trans Financial and Kentucky Community believe that the Merger does
not raise any antitrust concerns.
Trans Financial and Kentucky Community have filed all applications,
and have taken or will take other appropriate action with respect to any
requisite approvals or other action of any governmental authority. The Merger
Agreement provides that the obligation of each of Kentucky Community and Trans
Financial to consummate the Merger is conditioned upon the receipt of all
requisite regulatory approvals, and, with respect to Trans Financial, on terms
and subject to conditions satisfactory to Trans Financial. There can be no
assurance that any governmental agency will approve or take any other required
action with respect to the Merger, and, if approvals are received or action is
taken, there can be no assurance as to the date of the such approvals or
action, that such approvals or action will not be conditioned upon matters that
would cause the parties to abandon the Merger or that no
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action will be brought challenging such a privilege or action, including a
challenge by the Department of Justice or, if such a challenge is made, the
result thereof.
Trans Financial and Kentucky Community are not aware of any
governmental approvals or actions that may be required for consummation of the
Merger except as described above. Should any such approval or action be
required, it is presently contemplated that such approval or action will be
sought.
BUSINESS PENDING THE MERGER
The Merger Agreement provides that, during the period from the date of
the Merger Agreement to the Effective Time of the Merger, Kentucky Community
will, and will cause its subsidiaries to, among other things, conduct its
business in the usual, regular and ordinary course, and use its best efforts to
keep available services of its present officers and employees and to preserve
the goodwill of their customers and others having business relations with them.
NO SOLICITATION OF TRANSACTIONS BY KENTUCKY COMMUNITY
Kentucky Community agreed that, prior to the Effective Time, (a)
neither it nor any Kentucky Community subsidiary would, and each of them would
direct and use its best efforts to cause its respective officers, directors,
employees, agents and representatives not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer (including any proposal or offer to its shareholders) with
respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, Kentucky Community or any Kentucky Community
subsidiary (an "Acquisition Proposal") or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
(b) it would immediately cease and cause to be terminated any activities,
discussions or negotiations with any parties conducted prior to November 9,
1993 with respect to any Acquisition Proposal and will take the necessary steps
to inform such parties of its obligations undertaken in the Merger Agreement;
and (c) that it would notify Trans Financial immediately if any such inquiries
or proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued with,
it.
The Board of Directors of Kentucky Community, however, is not
prohibited from (a) furnishing information to or entering into discussions or
negotiations with any person or entity that makes an unsolicited bona fide
proposal to acquire Kentucky Community
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pursuant to a merger, consolidation, share exchange, purchase of a substantial
portion of the assets, business combination or other similar transaction, if,
and only to the extent that, (i) Kentucky Community's Board of Directors
determines in good faith on the advice of counsel that such action is required
for the Board of Directors to comply with its fiduciary duties to shareholders
imposed by law, (ii) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, Kentucky Community
provides written notice to Trans Financial to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity, and (iii) subject to any confidentiality agreement with such person
or entity which the Board of Directors has determined in good faith on the
advice of counsel was required to be executed in order to comply with its
fiduciary duties to shareholders imposed by law, Kentucky Community keeps Trans
Financial informed of the status, but not the terms, of any discussions or
negotiations; and (b) to the extent applicable, complying with Rule 14e-2
promulgated under the Exchange Act, with regard to an Acquisition Proposal.
Kentucky Community may not, however, enter into any agreement with respect to
an Acquisition Proposal during the term of the Merger Agreement or any
agreement with any person that provides for, or in any way facilitates, an
Acquisition Proposal (other than a confidentiality agreement in customary
form).
DIVIDENDS
Prior to the Effective Time, Kentucky Community may pay quarterly
dividends on Kentucky Community Common Stock in an amount not in excess of $.25
per share with usual record and payment dates for such dividends in accordance
with its past dividend practice. If the Effective Time occurs after a
regularly scheduled record date for dividends on Trans Financial Common Stock
but before the regularly scheduled record date for a quarterly dividend on
Kentucky Community Common Stock, Kentucky Community may declare a special
dividend on the Kentucky Community Common Stock to holders of record of such
shares as of the record date established therefore (which shall be prior to the
date of the Effective Time) with a payment date that is the same as the payment
date for dividends on Trans Financial Common Stock. The special dividend may
be in an amount per share equal to a percentage of the regular quarterly cash
dividend per share of Kentucky Community Common Stock based on the number of
days elapsed between the payment date with respect to the most recent regular
dividend paid on Kentucky Community Common Stock and the payment date for
dividends on the Trans Financial Common Stock.
WAIVER AND AMENDMENT
Prior to or at the Effective Time of the Merger, any provision of the
Merger Agreement, including, without limitation, the conditions to consummation
of the Merger and the restrictions
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described under "Business Pending the Merger," may be [i] waived, to the extent
permitted under law, in writing by the party which is entitled to the benefits
thereof, or [ii] amended at any time by written agreement of the parties
approved by their respective Boards of Directors, whether before or after the
Special Meeting. However, upon any approval of the Merger Agreement by
Kentucky Community shareholders, any such amendment thereafter made shall not
be effective without further shareholder approval where such further
shareholder approval is required by law.
TERMINATION
The Merger Agreement provides that, whether before or after the Special
Meeting and notwithstanding the approval by the shareholders of Kentucky
Community, the Merger Agreement may be terminated and the Merger abandoned at
any time prior to the Effective Time of the Merger [i] by mutual consent of the
Boards of Directors of Trans Financial and Kentucky Community; or [ii] by
either the Board of Directors of Trans Financial or the Board of Directors of
Kentucky Community [a] at any time after July 31, 1994, or [b] in the event of
a material breach by the other party of any representation, warranty, covenant
or other agreement contained in the Merger Agreement, which breach is not cured
after 30 days written notice thereof is given to the party committing such
breach, or [iii] by Trans Financial, if Kentucky Community shareholders owning
greater than 9% of the issued and outstanding shares of Kentucky Community
Common Stock dissent from the Merger.
In the event of the termination and abandonment of the Merger
Agreement pursuant to such termination provisions, the Merger Agreement will
become void and have no effect, except that [i] certain provisions of the
Merger Agreement relating to expenses and confidentiality of information
obtained pursuant to the Merger Agreement or in connection with its
negotiation, will survive any such termination and abandonment, and [ii] no
party will be relieved or released from any liability arising out of a breach
of any provision of the Merger Agreement.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Immediately or as soon as practicable following the Merger, Trans
Financial expects to merge Kentucky Community's three subsidiary banks into
Trans Financial's lead bank, Trans Financial Bank, N.A., with the existing
offices of the Kentucky Community banks becoming branches of Trans Financial
Bank, N.A. It is expected that the current presidents of Peoples First Bank
and Farmers Liberty Bank will become presidents of the regions in which those
banks are
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currently located and that Trans Financial will appoint an advisory board of
directors for the resulting branches in Maysville, Morehead and Augusta,
Kentucky.
At the Effective Time, Trans Financial has agreed to cause Thomas R.
Wallingford, President and a director of Kentucky Community, to be elected as a
director of Trans Financial and to nominate, recommend to shareholders and
solicit proxies in favor of the election of Mr. Wallingford for three years.
It is expected that Mr. Wallingford will also be elected as a director of Trans
Financial Bank, N.A.
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF KENTUCKY COMMUNITY
From and after the Effective Time, Trans Financial has agreed to
indemnify the individuals who are or were directors and officers of Kentucky
Community prior to the Effective Time against (i) all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts that are paid in
settlement with the approval of Trans Financial or in connection with any
claim, action, suit, proceeding or investigation based in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director or officer of Kentucky Community or any Kentucky Community subsidiary,
whether pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities") and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to the Merger Agreement or the Merger, in each case to the full
extent Kentucky Community would have been permitted under law and its articles
of incorporation and bylaws to indemnify such person. In addition, Trans
Financial will pay all expenses in advance of the final disposition of any such
action or proceeding to each indemnified party to the full extent permitted by
law upon receipt of any undertaking required by law. Trans Financial has also
agreed that, after the Effective Time, Trans Financial will pay all reasonable
fees and expenses of such counsel for the indemnified parties promptly as
statements therefor are received and will use all reasonable efforts to assist
in the vigorous defense of any such matter, provided that Trans Financial will
not be liable for any settlement of any claim effected without its written
consent.
EMPLOYEE BENEFITS
At or as soon as administratively feasible after the Effective Time,
Trans Financial has agreed to provide the employees and officers of Kentucky
Community and its subsidiaries such employee benefits as Trans Financial from
time to time generally provides to employees and officers of a Trans Financial
subsidiary, including, but not limited to, participation in Trans Financial's
Employee Stock Ownership Plan, Savings Investment Plan, life, medical and
hospitalization and disability insurance, sick pay, vacation,
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personal leave and severance benefits, on a non-discriminatory and
substantially similar basis. For purposes of providing such benefits to
employees and officers of Kentucky Community or any Kentucky Community
subsidiary after the Effective Time, Trans Financial will credit such employees
and officers for years of service at Kentucky Community or any Kentucky
Community subsidiary prior to the Effective Time for purposes of eligibility,
vesting, and benefit amounts paid or privileges provided.
STOCK OPTION AGREEMENT
As a condition to entering into the Merger Agreement, Trans Financial
required Kentucky Community to enter into the Stock Option Agreement pursuant
to which Kentucky Community granted to Trans Financial an Option to purchase
85,840 shares of Kentucky Community Common Stock, representing 24.9% (on a pro
forma basis assuming exercise of the Option) of the issued and outstanding
shares of Kentucky Community Common Stock, at a price of $84.80 per share,
subject to the terms and conditions set forth therein. The option price is
equal to the last sales price reported on the NASDAQ National Market for Trans
Financial Common Stock on November 8, 1993, the last trading day prior to the
execution and delivery of the Merger Agreement and the Stock Option Agreement,
multiplied by the Exchange Ratio. The following summary of the Option
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Stock Option Agreement, which is attached as an exhibit to
Kentucky Community's Current Report on Form 8-K dated November 15, 1993 and is
incorporated herein by reference.
Trans Financial may exercise the Option, in whole or in part, subject
to regulatory approval, at any time within 30 days after a "Purchase Event"
occurs prior to termination of the Option. A "Purchase Event" is defined as
the occurrence of any of the following events:
[1] any person (other than Trans Financial or any subsidiary
of Trans Financial) shall have commenced, or shall have filed a
registration statement under the Securities Act with respect to, a
tender offer or exchange offer to purchase any shares of Kentucky
Community Common Stock such that, upon consummation of the offer, such
person would own or control 10% or more of the outstanding shares of
Kentucky Community Common Stock;
[2] Kentucky Community or any subsidiary of Kentucky
Community, without having received Trans Financial's prior written
consent, shall have authorized, recommended, proposed or entered into
an agreement with any person (other than Trans Financial or any
subsidiary of Trans Financial), or any person shall have filed an
application or notice with the Federal Reserve or any other federal or
state regulatory agency for
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clearance or approval, to [x] merge or consolidate, or enter into any
similar transaction, with Kentucky Community or any of its
subsidiaries, [y] sell, lease or otherwise dispose of all or
substantially all of the assets of Kentucky Community or any of its
subsidiaries, or [z] issue, sell or otherwise dispose (including by
way of merger, consolidation, share exchange or any similar
transaction) securities representing 10% or more of the voting power
of Kentucky Community or any of its subsidiaries (any of the foregoing
an "Acquisition Transaction");
[3] any person (other than Trans Financial or any
subsidiary of Trans Financial) shall have acquired beneficial
ownership, as defined in the Exchange Act and the regulations
thereunder, or the right to acquire beneficial ownership of 10% or
more of the outstanding shares of Kentucky Community Common Stock; or
[4] the holders of Kentucky Community Common Stock shall
not have approved the Merger Agreement at the Special Meeting, the
Special Meeting shall not have been held or shall have been canceled
prior to termination of the Merger Agreement, or Kentucky Community's
Board of Directors shall have not favorably recommended the Merger
Agreement to its stockholders or shall have withdrawn or modified in a
manner adverse to Trans Financial or Acquisition Corp the
recommendation of Kentucky Community's Board of Directors with respect
to the Merger Agreement, in each case after any person (other than
Trans Financial or any subsidiary of Trans Financial) shall have (a)
made a bona fide proposal to Kentucky Community or any of its
subsidiaries by public announcement or written communication to engage
in an Acquisition Transaction or communicated in writing or by public
announcement an intention to make such a proposal to engage in an
Acquisition Transaction, or (b) filed an application or given a
notice, whether in draft or final form, under the BHC Act or the
Change in Bank Control Act of 1978 for approval to engage in an
Acquisition Transaction.
The Option terminates upon the earliest to occur of (i) the Effective
Time, (ii) 12 months after the first occurrence of a Purchase Event, or (iii)
termination of the Merger Agreement prior to the occurrence of a Purchase
Event. Notwithstanding the termination of the Option, Trans Financial will be
entitled to purchase those option shares with respect to which it has exercised
the Option prior to the termination of the Option.
In the event that Kentucky Community enters into an agreement (i) to
consolidate with or merge into any person, other than Trans Financial or a
subsidiary of Trans Financial, and is not the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than Trans Financial or
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one of its subsidiaries, to merge into Kentucky Community or to engage in a
share exchange transaction with Kentucky Community and Kentucky Community is
the continuing or surviving corporation but, in connection with such merger or
share exchange, the then outstanding shares of Kentucky Community Common Stock
shall be changed into or exchanged for stock or other securities of Kentucky
Community or any other person or cash or any other property or then outstanding
shares of Kentucky Community Common Stock shall after such merger or share
exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than Trans
Financial or one of its subsidiaries, then, and in each such case, the Option
Agreement provides that the agreement governing such transaction shall make
proper provisions so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into or exchanged for an option, at the election of Trans Financial, of either
the acquiring corporation, any person that controls the acquiring corporation,
or, in the case of a merger described in (ii) above, Kentucky Community.
The Stock Option Agreement could have the effect of discouraging
persons who now or prior to the Effective Time of the Merger might be
interested in acquiring all of or a significant interest in Kentucky Community
from considering or proposing such an acquisition, even if such persons were
prepared to propose greater consideration per share for Kentucky Community
Common Stock than the consideration per share represented by the Exchange
Ratio.
To the best of Trans Financial's and Kentucky Community's knowledge,
no event giving rise to the exercise of the Option has occurred as of the date
of this Proxy Statement-Prospectus.
ACCOUNTING TREATMENT
Consummation of the Merger is conditioned upon the receipt by Trans
Financial of an opinion from KPMG Peat Marwick, Trans Financial's independent
certified public accountants, to the effect that the Merger qualifies for
pooling of interests accounting treatment if consummated in accordance with the
Merger Agreement. Trans Financial and Kentucky Community have agreed not to
intentionally take or cause to be taken any action that would disqualify the
Merger as a pooling of interests for accounting purposes.
Under the pooling of interests method of accounting, the historical
basis of the assets and liabilities of Trans Financial and Kentucky Community
will be combined at the Effective Time of the Merger and carried forward at
their previously recorded amounts, and the shareholders' equity accounts of
Trans Financial and Kentucky Community will be combined on Trans Financial's
consolidated balance sheet and no goodwill or other intangible
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assets will be created. Financial statements of Trans Financial issued after
the Merger will be restated retroactively to reflect the consolidated
operations of Trans Financial and Kentucky Community as if the Merger had taken
place prior to the periods covered by such financial statements.
The unaudited pro forma financial information contained in the Proxy
Statement-Prospectus has been prepared using the pooling-of-interest accounting
method to account for the Merger. See "SUMMARY-Comparative Unaudited Per Share
Information", "SELECTED CONSOLIDATED FINANCIAL INFORMATION" and "PRO FORMA
FINANCIAL INFORMATION".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary description of the material federal income
tax consequences of the Merger. This summary is not a complete description of
all the consequences of the Merger and, in particular, may not address federal
income tax considerations that may affect the treatment of a shareholder who
holds Kentucky Community Common Stock acquired pursuant to an employee stock
option. Each shareholder's individual circumstances may affect the tax
consequences of the Merger to such shareholder. In addition, no information is
provided herein with respect to the tax consequences of the Merger under
applicable foreign, state or local laws. Consequently, each Kentucky Community
shareholder is advised to consult his or her own tax advisor as to the specific
tax consequences of the Merger.
Kentucky Community has received an opinion from Trans Financial's
counsel, Wyatt, Tarrant & Combs of Louisville, Kentucky, as to the federal
income tax consequences of the Merger, based upon certain customary
representations set forth therein. Based, in part, on such representations,
Wyatt, Tarrant & Combs has expressed its opinion that, among other things:
1. No gain or loss will be recognized by shareholders of Kentucky
Community who receive solely shares of Trans Financial Common Stock as a result
of the Merger.
2. The basis of the shares of Kentucky Community Common Stock
received by shareholders of Kentucky Community (including any fractional share
interests to which they may be entitled) will be the same as their basis in the
shares of Kentucky Community Common Stock surrendered by them in exchange for
Trans Financial Common Stock.
3. The holding period of the shares of Trans Financial Common
Stock received by the shareholders of Kentucky Community will include the
holding period during which they held their shares of Kentucky Community Common
Stock surrendered by them in exchange for Trans Financial Common Stock,
provided the shares of Kentucky
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<PAGE> 61
Community Common Stock were held as capital assets at the Effective Time of the
Merger.
4. A dissenting shareholder of Kentucky Community who receives
cash in exchange for his or her shares of Kentucky Community Common Stock will
be treated as having received such cash in a distribution in redemption of his
or her Kentucky Community Common Stock if the requirements of Section 302(b) of
the IRC are met, taking into account the attribution rules of IRC Section 318
pursuant to IRC Section 302(c). Under IRC Section 1001, gain or loss (subject
to the limitations of IRC Section 267) will be realized and recognized by any
such dissenting shareholder in an amount equal to the difference between the
amount of cash received and the adjusted basis of the shares of Kentucky
Community Common Stock surrendered, as determined under IRC Section 1011.
5. A shareholder of Kentucky Community who receives cash in lieu
of fractional share interests of Trans Financial Common Stock will be treated
for federal income tax purposes as if the fractional shares were distributed as
part of the Merger and then were redeemed by Trans Financial. These cash
payments will be treated as having been received as distributions in full
payment in exchange for the stock redeemed as provided in IRC Section 302(a).
As provided in IRC Section 1001, gain or loss will be realized and recognized
by such shareholder in an amount equal to the difference between the redemption
price and the adjusted basis of Trans Financial Common Stock surrendered
therefor.
6. No gain or loss will be recognized by Kentucky Community or
Trans Financial by reason of the Merger.
7. The Merger will constitute a reorganization under IRC Section
368.
THE FOREGOING IS INTENDED TO BE ONLY A GENERAL OVERVIEW OF CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND SHOULD NOT BE CONSIDERED TO
BE TAX ADVICE. IT DOES NOT ADDRESS THE STATE OR LOCAL TAX ASPECTS OF THE
MERGER, NOR DOES IT ADDRESS FEDERAL TAX ISSUES THAT MAY BE AFFECTED BY THE
SHAREHOLDER'S PARTICULAR TAX CIRCUMSTANCES (E.G. ALTERNATIVE MINIMUM TAX,
FOREIGN TAX, ETC.). THE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS
OF THE INTERNAL REVENUE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS
THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. KENTUCKY
COMMUNITY SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES WITH RESPECT TO THE FOREGOING
MATTERS AND ANY OTHER CONSIDERATIONS THAT MAY BE APPLICABLE TO THEM.
RESALES OF TRANS FINANCIAL COMMON STOCK
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The shares of Trans Financial Common Stock issuable to shareholders of
Kentucky Community upon consummation of the Merger have been registered under
the Securities Act. Such shares may be traded freely and without restriction
by those shareholders not deemed to be affiliates of Kentucky Community as that
term is defined in the rules under the Securities Act. Affiliates are
generally defined as persons who control, are controlled by or are under common
control with Kentucky Community at the time of the Special Meeting.
Accordingly, affiliates generally will include the directors and executive
officers of Kentucky Community. Trans Financial Common Stock received by those
shareholders of Kentucky Community who are deemed to be affiliates of Kentucky
Community may be resold without registration as provided for by Rules 144 and
145, or as otherwise permitted under the Securities Act. This Proxy
Statement-Prospectus does not cover any resales of Trans Financial Common Stock
received by affiliates of Kentucky Community, or by certain of their family
members or related interests.
Kentucky Community has agreed to cause each holder of Kentucky
Community Common Stock deemed to be an affiliate to enter into an agreement
providing, among other things, that such affiliate will not sell, pledge,
transfer or otherwise dispose of the shares of Trans Financial Common Stock to
be received by such person in the Merger except in compliance with the
applicable provisions of the Securities Act and the rules and regulations
thereunder.
EXPENSES
The Merger Agreement provides that Trans Financial and Kentucky
Community will each pay its own expenses in connection with the Merger and the
transactions contemplated thereby, including fees and expenses of its financial
or other consultants, investment bankers, accountants and counsel, except that
Kentucky Community and Trans Financial will divide equally all printing and
mailing costs in connection with this Proxy Statement-Prospectus.
DISSENTERS' RIGHTS
Under Kentucky law, a shareholder entitled to vote on the Merger may
dissent and obtain payment of the fair value of his or her shares of Kentucky
Community Common Stock if the Merger is approved by the shareholders of
Kentucky Community. Generally, dissenters' rights are a shareholder's sole
remedy for objecting to the Merger Agreement. The following summary is not
intended to and does not constitute a complete statement or summary of each
provision of the Kentucky Revised Statutes relating to the rights of dissenting
shareholders and is qualified in its entirety by reference to Subtitle 13 of
the Kentucky Business Corporation Act which is attached as Appendix C to this
Proxy Statement-Prospectus. Accordingly, any holder of Kentucky Community
Common Stock intending to exercise dissenters' rights is urged to review
Appendix C carefully and to consult his or her own legal counsel.
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<PAGE> 63
EACH STEP MUST BE TAKEN IN STRICT COMPLIANCE WITH THE APPLICABLE PROVISIONS OF
SUBTITLE 13 IN ORDER FOR A HOLDER OF KENTUCKY COMMUNITY COMMON STOCK TO PERFECT
DISSENTERS' RIGHTS.
A shareholder wishing to exercise dissenters' rights must deliver to
Kentucky Community, prior to the vote on the Merger at the Special Meeting, a
written notice of intent to demand payment for his or her shares if the Merger
is consummated and must refrain from voting in favor of the Merger. The
written notice of intent must be given in addition to and separate from a vote
against approval of the Merger Agreement (whether in person or by proxy); a
vote against approval of the Merger Agreement (whether in person or by proxy)
will not constitute such a written notice. The written notice of intent should
be sent to Kentucky Community Bancorp, Inc., 33-35 West Second Street,
Maysville, Kentucky 41056, Attention: Secretary. It is recommended that all
required documents to be delivered by mail be sent registered or certified mail
with return receipt requested.
KENTUCKY COMMUNITY SHAREHOLDERS ELECTING TO EXERCISE THEIR DISSENTERS'
RIGHTS UNDER SUBTITLE 13 OF THE KENTUCKY BUSINESS CORPORATION ACT MUST NOT VOTE
FOR APPROVAL OF THE MERGER AGREEMENT. A VOTE BY A SHAREHOLDER AGAINST APPROVAL
OF THE MERGER AGREEMENT IS NOT REQUIRED IN ORDER FOR THAT SHAREHOLDER TO
EXERCISE DISSENTERS' RIGHTS. HOWEVER, IF A SHAREHOLDER RETURNS A SIGNED PROXY
FORM BUT DOES NOT SPECIFY A VOTE AGAINST APPROVAL OF THE MERGER AGREEMENT OR A
DIRECTION TO ABSTAIN, IF NOT REVOKED, THE SHARES REPRESENTED BY THE PROXY FORM
WILL BE VOTED FOR APPROVAL OF THE MERGER AGREEMENT, WHICH WILL HAVE THE EFFECT
OF WAIVING THAT SHAREHOLDER'S DISSENTERS' RIGHTS.
If the Merger is approved, within ten days after the Special Meeting
(or any adjournment thereof), Kentucky Community will send to all shareholders
exercising their dissenters' rights ("Dissenters") written notice (the
"Dissenters' Notice") which will state where the Dissenter must send a demand
for payment and where and when his or her share certificates must be deposited;
encloses a form for demanding payment to be completed by the Dissenter and
returned to Kentucky Community; establishes the date (not less than 30 no more
than 60 days after the delivery of the Dissenters' Notice) by which Kentucky
Community must receive the demand for payment from the Dissenter; and encloses
a copy of Subtitle 13 of the Kentucky Business Corporation Act. After a
Dissenter receives the Dissenters' Notice, he or she must deliver the demand
for payment to Kentucky Community and deposit his or her shares in accordance
with the Dissenters' Notice.
Upon its receipt of the demand for payment, Kentucky Community will
send to each Dissenter a statement containing an estimate by Kentucky Community
of the fair value of the Dissenter's shares as of the day before the date of
the Special Meeting, excluding any appreciation or depreciation in anticipation
of the Merger (unless
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<PAGE> 64
exclusion would be inequitable), and payment based on that estimate plus
accrued interest. The payment will be accompanied by an explanation of how
interest was calculated along with the balance sheet of Kentucky Community as
of the end of the most recent fiscal year, an income statement, a statement of
changes in shareholders' equity and the latest available interim financial
statement. In addition, the Dissenter will be informed of his or her right to
demand payment according to the Dissenter's own estimate of the fair value.
Kentucky Community is not required to send payment with the statement
of its estimate of fair value to a Dissenter who was not a beneficial owner of
Kentucky Community Common Stock at the time of the first public announcement of
the Merger Agreement, but rather may offer to purchase the Dissenter's shares
based on the estimate. Any such Dissenter must either accept that amount in
full satisfaction or proceed with the exercise of his or her dissenters'
rights.
Within 30 days after Kentucky Community has delivered its estimate of
fair value, a Dissenter may notify Kentucky Community of his or her own
estimate of the fair value of the shares and demand payment of the balance due
under such estimate.
If an agreement is not reached as to the fair value of the shares,
then within 60 days after receiving the Dissenter's payment demand, Kentucky
Community must file a petition in the Circuit Court of Mason County requesting
the court to determine the fair value of the shares and the accrued interest.
If Kentucky Community fails to institute such a proceeding, it will be required
to pay each Dissenter whose demand remains unsettled the amount demanded.
Each Dissenter who is a party to the proceeding is entitled to the
amount, if any, by which the court finds the fair value of his or her shares,
plus interest, exceeds the amount paid by Kentucky Community. In an appraisal
proceeding, the Mason Circuit Court will determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers appointed by
the court. The court will assess costs against Kentucky Community, except that
the court may assess costs against all or some of the Dissenters, in amounts
the court finds equitable, to the extent the court finds the Dissenters acted
arbitrarily, vexatiously or not in good faith in demanding payment. The court
may also assess the fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable as follows: (i) against Kentucky
Community and in favor of any or all Dissenters if the court finds Kentucky
Community did not substantially comply with the requirements set forth in
Subtitle 13, or (ii) against either Kentucky Community or a Dissenter, in favor
of any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
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respect to the rights provided by Subtitle 13. If the court finds that the
services of counsel for any Dissenter were of substantial benefit to other
Dissenters similarly situated, and that the fees for those services should not
be assessed against Kentucky Community, the court may award to these counsel
reasonable fees to be paid out of the amounts awarded the Dissenters who
benefited.
If Kentucky Community does not consummate the Merger within 60 days
after the deadline for demanding payment and depositing certificates, it must
return all deposited shares. If Kentucky Community fails to do so, the
Dissenter may nevertheless proceed with the exercise of his or her Dissenters'
rights, and Kentucky Community will have no further right to terminate the
Dissenters' rights by returning deposited shares.
A record shareholder may dissent as to less than all of the Kentucky
Community Common Stock registered in his or her name only if he or she dissents
with respect to all of the shares beneficially owned by any one person and
notifies Kentucky Community in writing of the name and address of each person
on whose behalf the record shareholder is asserting dissenters' rights. In
that event, the rights of each party shall be determined as if the shares as to
which the shareholder has dissented and the shareholder's other shares were
registered in the names of different shareholders.
A beneficial shareholder may assert dissenters' rights as to shares
held on his or her behalf only if he or she submits to Kentucky Community the
record shareholder's written consent to the dissent no later than the time such
beneficial shareholder asserts his or her dissenters' rights, and he or she
dissents as to all shares of which he or she is the beneficial owner or over
which he or she has the power to direct the vote.
SHAREHOLDERS OF KENTUCKY COMMUNITY SHOULD BE AWARE THAT FAILURE TO
PROCEED IN ACCORDANCE WITH THE PROVISIONS OF SUBCHAPTER 13 OF THE KENTUCKY
BUSINESS CORPORATION ACT WILL RESULT IN A LOSS OF ALL DISSENTERS' RIGHTS AND IN
THEIR BEING BOUND BY THE MERGER AGREEMENT AND THE MERGER.
RECENT DEVELOPMENTS
On December 27, 1993, Trans Financial entered into a definitive
Agreement and Plan of Reorganization with Peoples Financial Services, Inc.
("Peoples Financial"), a bank and thrift holding company headquartered in
Cookeville, Tennessee, pursuant to which Peoples Financial will merge into
Trans Financial and each outstanding share of Peoples Financial will be
exchanged for 5.5 shares of Trans Financial, or an aggregate of approximately
1.3 million shares of Trans Financial Common Stock. As of September 30, 1993,
Peoples Financial had total assets of approximately $120 million. The
consolidated historical financial statements of Peoples Financial, and the
historical financial statements of Citizens Federal Savings Bank, Peoples
Financial's wholly-owned subsidiary, and the related notes, are incorporated
herein by reference to Trans Financial's Current Report on Form 8-K dated
January 10, 1993. See "PRO FORMA FINANCIAL INFORMATION."
DESCRIPTION OF TRANS FINANCIAL COMMON STOCK AND RIGHTS
Shares of Trans Financial Common Stock issued in the Merger will be
fully paid and nonassessable. Each share of Trans Financial Common Stock is
entitled to one vote on all matters on which holders of common stock are
entitled to vote, except in the election of directors. In the election of
directors, cumulative voting rules apply and each stockholder is entitled to
cast a number of votes equal to the number of such shareholder's shares
multiplied by the number of directors to be elected and to distribute such
votes among one or more of the nominees to be elected. Holders of Trans
Financial Common Stock are entitled to
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receive such dividends as may be declared by the Board of Directors, subject to
the preferential rights of holders of shares of any class or series of stock
ranking prior to the Trans Financial Common Stock as to payment of dividends.
Holders of Trans Financial Common Stock are entitled to receive distributions
upon liquidation of Trans Financial after satisfaction of all liquidation
preferences of shares of classes or series of stock ranking prior to the Trans
Financial Common Stock upon liquidation. Holders of Trans Financial Common
Stock are not entitled to preemptive or other subscription rights. See
"CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS".
On January 20, 1992, the Board of Directors of Trans Financial
declared a dividend of one Right for each outstanding share of Trans Financial
Common Stock, payable to the holders of record on January 30, 1992. In
addition, Trans Financial has issued and will issue one Right with respect to
each share of Common Stock that becomes outstanding between the record date and
the earliest of the Distribution Date, the Redemption Date and the Expiration
Date, as defined below. Each Right, when and if it becomes exercisable, will
entitle the registered holder to purchase from Trans Financial 1/100 of a share
of Series 1992 Preferred Stock, subject to adjustment as described below. The
exercise price with respect to each whole right is $45 (the "Exercise Price").
The description and terms of the Rights are set forth in a Rights Agreement,
dated as of January 20, 1992 (the "Rights Agreement"), between Trans Financial
and Chemical Bank (formerly Manufacturers Hanover Trust Company), as Rights
Agent.
Until the Distribution Date, the Rights will be transferred with and
only with the Common Stock. The "Distribution Date" is the earlier of (i) the
tenth business day after the first public disclosure that a person or group
(including any affiliate or associate of such person or group) acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Trans Financial Common Stock (such person or group being called an
"Acquiring Person"), (ii) the tenth business day after the Disinterested
Directors of Trans Financial (as defined in the Rights Agreement) determine
that a shareholder's beneficial ownership, such beneficial ownership being at
least greater than 10% of the outstanding Trans Financial Common Stock, has a
detrimental effect on Trans Financial or its shareholders (such person or group
being called an "Adverse Person") (such dates provided in (i) or (ii) above
being called the "Share Acquisition Date"), or (iii) the tenth business day
after the commencement of, or first public disclosure of an intention to
commence, a tender or exchange offer for 25% or more of the outstanding Trans
Financial Common Stock.
The Rights are not exercisable until the Distribution Date and will
expire on January 20, 2002 (the "Expiration Date"), unless earlier redeemed.
The number of shares of Preferred Stock issuable
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upon exercise of the Rights, and the number of Rights associated with each
share of Trans Financial Common Stock, is subject to adjustment from time to
time. The number and kind of stock issuable upon exercise of the Rights is
also subject to adjustment as provided in the Rights Agreement. If at any time
following the Distribution Date, a person becomes the beneficial owner of more
than 15% of the then outstanding Trans Financial Common Stock without the prior
approval of two-thirds of the Disinterested Directors or a person who is
beneficial owner of more than 10% of the then outstanding Trans Financial
Common Stock is deemed by the Disinterested Directors to be an Adverse Person
(such events being called "Triggering Events"), then the Rights will entitle
each holder of a Right to purchase, for the Exercise Price, that number of
shares of Preferred Stock which at the time of the transaction would have a
market value twice the Exercise Price.
At any time prior to the earliest of [i] the close of Business on the
tenth business day following the Share Acquisition Date or [ii] the Expiration
Date, the Board of Directors of Trans Financial may redeem the Rights in whole,
but not in part, at a price of $.01 per whole Right; however, immediately upon
the date that an Acquiring Person becomes an Acquiring Person or an Adverse
Person becomes an Adverse Person, and thereafter the earliest of [1] the close
of business on the tenth business day following the Share Acquisition Date or
[2] the Expiration Date, the Rights may be redeemed only if a majority of the
Disinterested Directors then in office determine that such redemption is, in
their judgment, in the best interest of Trans Financial and its shareholders.
At any time after any person or group becomes an Acquiring Person or
Adverse Person and prior to the acquisition by such person or group of 50% or
more of the outstanding Trans Financial Common Stock, the Board of Directors of
Trans Financial may exchange the Rights (other than Rights owned by such person
or group, which will have become null and void under the terms of the Rights
Agreement), in whole or in part, at an exchange ratio of 1/100 share of
Preferred Stock per Right, subject to adjustment.
A copy of the Rights Agreement has been filed by Trans Financial with
the Commission as an exhibit to a current report on Form 8-K dated January 24,
1992. The foregoing description of the material terms of the Rights does not
purport to be a complete description of all of the terms of the Rights, and is
qualified in its entirety by reference to the terms of such Rights, which are
set forth in full in the Rights Agreement.
COMPARATIVE STOCK PRICES AND DIVIDENDS
Trans Financial Common Stock is traded in the over-the-counter market
and quoted on the NASDAQ National Market under the symbol TRFI. The
following table sets out the high and low sale
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prices in the Trans Financial Common Stock and cash dividends declared
during the years 1992 and 1993. The sales price information reflects the range
of sales prices for Trans Financial Common Stock as reported by NASDAQ. Price
and dividends per common share have been adjusted for the effect of the
4-for-3 stock split effected December 18, 1992.
<TABLE>
<CAPTION>
Price Per Quarterly
Common Share Dividends
------------ Per Common
High Low Share
---- --- ----------
<S> <C> <C> <C>
1992
1st Quarter $12.375 $10.875 $.1050
2nd Quarter 14.125 11.25 .1125
3rd Quarter 14.25 12.125 .1125
4th Quarter 15.125 12.00 .1125
1993
1st Quarter $24.00 $16.75 $ .1275
2nd Quarter 23.75 19.25 .1275
3rd Quarter 20.25 17.00 .1275
4th Quarter 18.75 14.875 .1275
----- ------
</TABLE>
At September 30, 1993, Trans Financial Common Stock was held of record
by 1,209 stockholders.
Trans Financial's policy is to declare regular quarterly dividends
based upon its earnings, financial position, capital requirements and such
other factors deemed relevant by the Board of Directors. This dividend policy
is subject to change, however, and the payment of dividends by Trans Financial
is necessarily dependent upon the availability of earnings and Trans
Financial's financial condition in the future. The payment of dividends on
Trans Financial Common Stock is also subject to applicable regulatory capital
requirements.
The market for Kentucky Community Common Stock has historically been
one local to the Maysville, Kentucky area. Management believes a small volume
of shares is purchased or sold through J.J.B. Hilliard, W.L. Lyons, Inc., a
regional investment banking firm headquartered in Louisville, Kentucky.
Transactions in
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Kentucky Community Common Stock have traditionally occurred infrequently, often
through privately negotiated transactions.
The following table sets forth, to the best knowledge of Kentucky
Community's management, the range of high and low sales prices for Kentucky
Community Common Stock, as reported to Kentucky Community, and cash dividends
declared since January 1, 1992. There can be no assurance that the information
furnished to Kentucky Community represents trading prices for Kentucky
Community Common Stock generally. Of all the shares traded in 1992 and 1993,
Kentucky Community is aware of the sales prices for less than 20% of such
trades.
<TABLE>
<CAPTION>
Price Per Quarterly
Common Share Dividends
------------ Per Common
High Low Share
---- --- ----------
<S> <C> <C> <C>
1992
1st Quarter 36.875 34.00 .125
2nd Quarter 37.00 35.00 .125
3rd Quarter 37.00 37.00 .125
4th Quarter 39.00 37.00 .15
1993
1st Quarter 45.50 39.00 .15
2nd Quarter 47.50 44.50 .25
3rd Quarter 48.50 47.50 .25
4th Quarter * * .25
</TABLE>
* To the knowledge of Kentucky Community, no trades occurred during the
4th quarter of 1993.
At September 30, 1993, Kentucky Community Common Stock was held of
record by 358 stockholders.
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
Trans Financial and Kentucky Community are both Kentucky corporations
subject to the provisions of the Kentucky Business Corporation Act.
Shareholders of Kentucky Community, whose rights
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are governed by Kentucky Community's articles of incorporation and bylaws and
by the Kentucky Business Corporation Act, will, upon consummation of the
Merger, become shareholders of Trans Financial. The rights of such
shareholders as shareholders of Trans Financial will then be governed by the
articles of incorporation and bylaws of Trans Financial and by the Kentucky
Business Corporation Act.
Except as set forth below, there are no material differences between
the rights of a Kentucky Community shareholder under Kentucky Community's
articles of incorporation and bylaws, on the one hand, and the rights of a
Trans Financial shareholder under the articles of incorporation and bylaws of
Trans Financial, on the other hand. This summary does not purport to be a
complete discussion of and is qualified in its entirety by reference to the
governing law and the articles of incorporation and bylaws of each corporation.
Business Combinations. Trans Financial's articles of incorporation
require the affirmative vote of the holders of 80% of the outstanding shares of
Trans Financial Common Stock to approve certain Business Combinations (as
defined therein, which term includes a merger with a "Control Person" (a person
or entity owning 10% or more of the outstanding common stock), a sale of all or
a substantial part of the assets of Trans Financial to a Control Person, a
liquidation or dissolution proposed by or on behalf of a Control Person and
similar extraordinary transactions), unless (a) the transaction is approved by
at least two-thirds of the Continuing Directors (members of the Board of
Directors who are unaffiliated with the Control Person and who were Directors
prior to the time when the Control Person became a Control Person) or (b) all
stockholders receive for their shares of Common Stock the greater of the market
price for the shares or the highest price per share paid by the Control Person
in the Business Combination. This provision may be amended, altered or
repealed only by two-thirds of the Continuing Directors adopting a resolution
approving such amendment and the affirmative vote of the holders of 80% of the
outstanding Trans Financial Common Stock. Such provisions may make Trans
Financial a less attractive acquisition target by making a Business Combination
more difficult or costly for a potential acquiror. Kentucky Community's
articles of incorporation and bylaws do not contain any similar provisions.
Special Meetings of Shareholders. Trans Financial's articles of
incorporation provide that special meetings of the shareholders may be called
only by resolution of the directors in writing or by the holders of not less
than 50% of all shares entitled to cast votes at the meeting. Trans
Financial's articles of incorporation would limit the power of shareholders to
call a special meeting and, to that extent, may discourage potential acquirors
from unsolicited offers for control of Trans Financial and strengthen the
ability of the Board of Directors in dealing with potential acquirors. Under
the Kentucky Business Corporation Act, Kentucky
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<PAGE> 71
Community must hold a specific meeting of shareholders on call of its board of
directors or if the holders of at least 33-1/3% of all the votes entitled to be
cast on any issue proposed to be considered at the special meeting sign, date
and deliver to the secretary of Kentucky Community one or more written demands
for the meeting describing the purpose or purposes for which it is to be held.
Removal of Directors. Under Trans Financial's articles of
incorporation, directors of Trans Financial may be removed from office before
the expiration of their term only with the approval of the holders of 80% of
the outstanding Trans Financial Common Stock entitled to vote thereon. This
provision of the articles of incorporation of Trans Financial can be amended,
altered or repealed only with the approval of 80% of the outstanding Trans
Financial stock entitled to vote thereon. These provisions regarding removal
limit the right of shareholders to remove directors with or without cause and
would make it more difficult for potential unwanted acquirors to replace such
directors. Under the Kentucky Business Corporation Act, Kentucky Community's
shareholders may remove one or more directors with or without cause upon the
affirmative vote of a majority of the shares entitled to vote; provided that a
Kentucky Community director may not be removed if the number of votes
sufficient to elect him under cumulative voting is voted against his or her
removal.
Shareholder Nominations. Shareholders of Trans Financial may nominate
one or more persons for election as a director at a meeting by written notice
to the secretary of Trans Financial not later than the close of business on the
10th day following the day on which notice of the date of the meeting is
mailed. Kentucky Community's articles of incorporation and bylaws do not
contain provisions for the nomination of directors by shareholders.
EXPERTS
The consolidated financial statements of Trans Financial and its
subsidiaries as of December 31, 1992 and 1991, and for each of the years in the
three-year period ended December 31, 1992, incorporated by reference herein and
elsewhere in the Registration Statement, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of Kentucky Community and its
subsidiaries as of December 31, 1992 and 1991, and for each of the years in the
three-year period ended December 31, 1992, incorporated by reference herein and
elsewhere in the Registration Statement, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat
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<PAGE> 72
Marwick, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of Peoples Financial Services,
Inc. and subsidiary as of December 31, 1992 and 1991 and for each of the
years in the three-year period ended December 31, 1992, incorporated by
reference herein and elsewhere in the Registration Statement have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report of KPMG Peat Marwick, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of Citizens Federal Savings Bank
and subsidiaries, as of December 31, 1992 and 1991, and for each of the years
in the three-year period ended December 31,1992, incorporated by reference
herein and elsewhere in the Registration Statement have been incorporated by
reference herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The report of KPMG Peat Marwick covering the December 31, 1992
consolidated financial statements of Citizens Federal Savings Bank and
subsidiaries contains an emphasis paragraph which states that Citizens Federal
entered into a supervisory agreement with the Office of Thrift Supervision in
1991. To comply with the agreement's requirement to increase regulatory
capital ratios, Citizens Federal entered into an acquisition agreement under
which Citizens Federal would convert from mutual to stock form and be acquired
by Peoples Financial Services, Inc., as discussed in note 15 to the
consolidated financial statements of Citizens Federal. The conversion
and acquisition was consummated on February 1, 1993, and resulted in an
increase of capital above the requirement set forth in the supervisory
agreement.
LEGAL OPINION
The validity of the shares of Trans Financial Common Stock to be
issued to the shareholders of Kentucky Community pursuant to the Merger will be
passed upon by Wyatt, Tarrant & Combs, Louisville, Kentucky.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the directors and executive officers,
executive compensation, various benefit plans (including stock option plans),
voting securities and the principal holders thereof, certain relationships and
related transactions and other related matters as to Trans Financial and
Kentucky Community is incorporated by reference or set forth in Trans
Financial's Annual Report on Form 10-K for the year ended December 31, 1992 and
Kentucky Community's Annual Report on Form 10-K for the year ended December 31,
1992, each of which is incorporated herein by reference. Shareholders of
Kentucky Community desiring copies of such documents may contact Trans
Financial or Kentucky Community, as the case may be, at its address or phone
number indicated under "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE".
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Appendix A-1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is
made and entered into as of this 9th day of November, 1993 between TRANS
FINANCIAL BANCORP, INC., a Kentucky corporation ("Corporation"), TRANS
FINANCIAL ACQUISITION CORP, a Kentucky corporation ("Acquisition Corp"), and
KENTUCKY COMMUNITY BANCORP, INC., a Kentucky corporation ("KCB").
W I T N E S S E T H :
The Boards of Directors of Corporation, Acquisition Corp and
KCB have approved, and deem it advisable and in their respective shareholders'
best interests to consummate, the business combination transaction (the
"Merger") provided for herein and in the Plan of Merger between Corporation,
Acquisition Corp and KCB executed of even date herewith and incorporated by
reference herein as if fully set out herein (the "Plan of Merger");
Corporation, Acquisition Corp and KCB are willing to make
certain representations, warranties and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
For federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises and of the
respective representations, warranties, agreements and undertakings herein
contained, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
"Act" shall mean the Kentucky Business Corporation Act.
"BHCA" shall mean the Bank Holding Company Act of 1956, as
amended.
"Closing" shall mean the closing of the transactions
contemplated herein and in the Plan of Merger, and "Closing Date" shall mean
the date and time specified pursuant to Section 2.2 hereof as the date of the
Closing.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commission" shall mean the Securities and Exchange Commission.
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"Corporation Common Stock" shall mean the common stock, no
par value, of Corporation.
"Corporation Financial Statements" shall mean (i) the audited
consolidated balance sheets (including related notes) of Corporation as of
December 31, 1992, 1991 and 1990 and the related audited consolidated
statements of income, changes in shareholders' equity and cash flows (including
related notes) for the years ended December 31, 1992, 1991 and 1990, and the
unaudited consolidated balance sheet as of September 30, 1993 and the related
unaudited consolidated statements of income, changes in shareholders' equity
and cash flows (including related notes) of Corporation for the nine months
ended September 30, 1993, and (ii) the consolidated balance sheets and related
consolidated statements of income, changes in shareholders' equity and cash
flows (including related notes) of Corporation with respect to periods ending
subsequent to September 30, 1993.
"Corporation Subsidiary" shall mean each company or other
organization of which at least a majority of the securities or other interests
is directly or indirectly owned or controlled by Corporation.
"Effective Time" is defined at Section 2.1.
"Federal Reserve" shall mean the Board of Governors of the
Federal Reserve System.
"KDFI" shall mean the Kentucky Department of Financial
Institutions.
"KCB Common Stock" is defined at Section 4.1.B.
"KCB Financial Statements" shall mean (i) the audited
consolidated balance sheets (including related notes) of KCB as of December 31,
1992, 1991 and 1990, the related audited consolidated statements of income,
changes in shareholders' equity, and statements of cash flows (including
related notes) for the years ended December 31, 1992, 1991 and 1990, and the
unaudited balance sheet as of September 30, 1993 and the consolidated
statements of income, changes in shareholders' equity and cash flows (including
related notes) of KCB for the nine months ended September 30, 1993, and (ii)
the consolidated balance sheet and related consolidated statements of income,
changes in shareholders' equity and cash flows (including related notes) of KCB
with respect to periods ending subsequent to September 30, 1993.
"KCB Subsidiary" is defined at Section 4.1C.
"Previously Disclosed" shall mean disclosed prior to the
execution hereof in the letter dated of even date herewith from the
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party making such disclosure and delivered to the other party contemporaneously
with the execution hereof.
"Proxy Statement/Prospectus" shall mean the proxy
statement/prospectus together with any supplements thereto sent to the
shareholders of KCB to solicit their votes in connection with this Agreement
and the Plan of Merger.
"Registration Statement" shall mean the registration statement
with respect to the Corporation Common Stock to be issued in connection with
the Merger as declared effective by the Commission under the Securities Act of
1933, as amended.
"Securities Laws" shall mean [i] the Securities Act of 1933,
as amended (the "Securities Act"); the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); the Investment Company Act of 1940, as amended;
the Trust Indenture Act of 1939, as amended; and the rules and regulations of
the Commission promulgated thereunder, and [ii] all applicable state securities
laws.
"Stock Option Agreement" shall mean that certain Stock Option
Agreement dated of even date between Corporation and KCB pursuant to which KCB
has granted to Corporation the option to purchase shares of KCB Common Stock on
the terms and conditions set forth therein.
ARTICLE 2
The Merger
2.1 Effective Time of Merger. Upon the terms and conditions set
forth in this Agreement and the Plan of Merger, Articles of Merger (the
"Articles of Merger") shall be duly prepared and executed by Acquisition Corp
and KCB, and thereafter delivered to the Secretary of State of the Commonwealth
of Kentucky for filing, as provided in the Act, on the Closing Date. The
Merger shall become effective upon the filing with the Kentucky Secretary of
State or at such time and date thereafter as is provided in the Articles of
Merger (the "Effective Time").
2.2 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by Corporation (the "Closing
Date"), which shall be no later than the fifth business day following the last
to occur of [i] the effective date of the last order, approval, or exemption of
any federal or state regulatory agency approving or exempting the Merger if
such action is required, and [ii] the expiration of all required waiting
periods after the filing of all notices to all federal or state regulatory
agencies required for consummation of the Merger, at the offices of Wyatt,
Tarrant & Combs, 2800 Citizens Plaza, Louisville,
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Kentucky, or at such other date and time, and at such other place, as may be
mutually agreed upon by Corporation and KCB.
ARTICLE 3
COVENANTS
3.1 Shareholders' Meeting. This Agreement and the Plan of Merger
shall be submitted for approval to the shareholders of KCB at a meeting to be
called and held in accordance with the applicable provisions of law and the
Articles of Incorporation and Bylaws of KCB (the "Meeting"). KCB shall cause
the Meeting to be held as promptly as practicable and shall disseminate to its
shareholders all materials required of it under law to be disseminated in
connection with the consideration by the shareholders of this Agreement and the
Plan. This Section 3.1 shall not prohibit accurate disclosure by KCB in any
KCB SEC Document (including the Proxy Statement/Prospectus and the Registration
Statement) or otherwise under applicable law of the opinion of the KCB Board of
Directors as of the date of such SEC Document or such other required disclosure
as to the transactions contemplated hereby or as to any takeover proposal. The
Board of Directors of KCB shall, unless in violation of its fiduciary duties as
advised in writing by counsel, recommend that its shareholders adopt and
approve this Agreement and the Plan of Merger at the Meeting and shall take all
action necessary or helpful to secure a vote of shareholders in favor of the
Merger; provided, however, that such recommendation and any solicitation of
proxies in connection with the Agreement and the Plan is subject to any action
taken by, or upon authority of, the Board of Directors of KCB in the exercise
of its good faith judgment as to its fiduciary duties to its shareholders
imposed by law. Immediately after the Meeting, KCB shall notify Corporation of
the results of the Meeting.
3.2 Proxy Statement/Prospectus. As promptly as practicable after
the date hereof, Corporation and KCB shall prepare the Proxy
Statement/Prospectus to be mailed to the shareholders of KCB in connection with
the Merger and to be filed by Corporation as part of the Registration
Statement. Corporation and KCB shall cooperate with each other in order to
facilitate the preparation, filing and clearance of the Registration Statement
and the Proxy Statement/Prospectus under the Securities Laws. Each of
Corporation and KCB will promptly advise the other if it determines that any
information furnished by it to the other specifically for use in the
Registration Statement, including the Proxy Statement/Prospectus included
therein, is or becomes false or misleading in any material respect. In no
event shall either party hereto be liable for, and each party shall indemnify
and hold the other harmless from, any untrue statement of a material fact or
omission to state a material fact in the Registration Statement made in
reliance upon, and in conformity with, written information
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concerning the other party furnished by such other party specifically for use
in the Registration Statement. Corporation will advise KCB, promptly after it
receives notice thereof, of the time when the Registration Statement or any
post-effective amendment thereto has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the suspension
of the qualification of the Corporation Common Stock issuable in connection
with the Merger or offering or sale in any jurisdiction, or the initiation or
threat of any proceeding for any such purpose, or of any request by the
Commission for the amendment or supplement of the Registration Statement or for
any additional information. Corporation shall take all actions necessary to
register or qualify the shares of Corporation Common Stock to be issued in the
Merger pursuant to all applicable state "blue sky" or securities laws and shall
maintain such registrations or qualifications in effect for all purposes
hereof.
3.3 Cooperation. KCB and Corporation shall proceed expeditiously
and cooperate fully in making application for all necessary regulatory
approvals, in the procurement of any other consents and approvals, and in the
taking of any other action and the satisfaction of all other requirements
prescribed by law or otherwise, necessary for consummation of the Merger on the
terms provided herein and in the Plan of Merger. Corporation shall, and KCB
shall, and shall cause each KCB Subsidiary to, use all reasonable efforts (i)
to take, or cause to be taken, all actions necessary to comply promptly with
all legal requirements which may be imposed on such party with respect to the
Merger and to consummate the transactions contemplated by this Agreement and
the Plan of Merger, and [ii] to obtain (and to cooperate with the other party
to obtain) any consent, authorization, order or approval of, or any exemption
by, any governmental entity or any other public or private third party which is
required to be obtained or made by such party in connection with the Merger and
the transactions contemplated by this Agreement and the Plan of Merger. Each of
KCB and Corporation shall cooperate fully with, and provide true, complete and
accurate information to, the other in connection with their requests and
applications for consents and governmental clearance, approvals, licenses or
permits, if any, which are necessary for the Merger and Corporation's ownership
and operation of KCB's business following the Merger.
3.4 Conduct of Business Prior to Closing. Except with the prior
written consent of Corporation or as expressly contemplated or permitted by
this Agreement, during the period from the date of this Agreement and
continuing until the Effective Time, neither KCB nor any KCB Subsidiary shall:
A. conduct its business other than in the usual, regular
and ordinary course or fail to use its best efforts to preserve its business
organization intact or to keep available to Corporation the services of its
present officers and employees or
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to preserve the good will of its customers and others having business relations
with it;
B. fail to comply in all material respects with all
applicable laws and regulations which relate to the conduct of its business;
C. amend its articles of incorporation or association or
bylaws;
D. issue any shares of authorized capital stock or
securities convertible into such shares, or purchase, redeem, retire or
otherwise acquire any of its outstanding shares, or sell or give any option or
right to purchase, hypothecate, pledge or otherwise encumber or dispose of any
such shares or any shares held in treasury, if any, make or effect any other
change in the structure or composition of its capital stock or agree to do any
of the foregoing;
E. enter into, adopt, amend or terminate any employee
benefit plan, except as required by law, or enter into any employment agreement
with any person or, except in a manner consistent with past practices, grant
any increase in the compensation (including bonus and benefit plans and all
other non-cash compensation) of any of its employees;
F. borrow or agree to borrow any amount of funds or
incur any obligation or liability except in the ordinary course of business
consistent with prior practice, or guarantee or agree to guarantee any material
obligations of others except for letters of credit and guaranties of signatures
in the ordinary course of business;
G. except in the ordinary course of business, cancel any
indebtedness owing to it or any claims that it might have possessed, waive any
material rights of substantial value or sell, lease, encumber, otherwise
dispose of, or agree to sell, lease, encumber or otherwise dispose of any of
its assets;
H. amend, modify or terminate any material agreement or
contract other than in the ordinary course of business or commit any act or
omit to do any act that would cause a breach of any lease, contract or
commitment to which it is a party or by which its property or business is bound
or affected, or which would have a material adverse effect on its financial
condition, operations or assets; or
I. enter into or agree to enter into any agreement or
contract that would have been required to be Previously Disclosed pursuant to
this Agreement, other than such contracts and agreements entered into in the
ordinary course of business.
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3.5 Access to Information. Upon reasonable notice, Corporation
and KCB shall each (and shall cause each of their respective subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of Corporation and KCB
shall (and shall cause each of their respective subsidiaries to) make available
to the other (i) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of the Securities Laws or federal or state banking laws (other
than reports or documents that such party is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as such other party may reasonably request. The
parties will hold any such information that is nonpublic in confidence to the
extent required by, and in accordance with, the provisions of the
Confidentiality Agreements dated October 8, 1993 and October 18, 1993,
respectively between Corporation and KCB (the "Confidentiality Agreement"). No
investigation by either Corporation or KCB shall affect the representations and
warranties to the other except to the extent such representations and
warranties are by their terms qualified by disclosures made to the other party.
The undertakings in this Section 3.5 shall survive any termination of this
Agreement.
3.6 Press Releases. All parties to this Agreement agree that any
press release or other public announcement by either party pertaining to the
Merger shall be coordinated with the other parties hereto; provided, however,
that nothing contained herein shall prohibit either party from making any
disclosure required by law which its counsel deems necessary, provided the
other party is given written notice thereof.
3.7 Updating of Information by KCB. KCB will furnish Corporation
with all reports and statements filed by it or any KCB Subsidiary with any
regulatory authority and the KCB Financial Statements, such reports and
statements to be furnished promptly after their filing or the preparation
thereof. Each such report and statement shall have been prepared in accordance
with and shall comply in all material respects with applicable law and the
regulations governing its preparation.
3.8 Accounting Treatment. Neither Corporation nor KCB shall
intentionally take or cause to be taken any action, whether before or after the
Effective Time, that would disqualify the Merger as a "pooling of interests"
for accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code; provided, however, that nothing hereunder shall limit the
ability of Corporation to exercise its rights under the Stock Option Agreement.
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3.9 KCB Affiliates. KCB shall, prior to the Closing Date, cause
to be delivered to Corporation a list, reviewed by KCB's counsel, identifying
all affiliates of KCB (as such term is used in Rules 144 and 145 promulgated by
the Commission under the Securities Laws). KCB shall furnish such information
and documents as Corporation may reasonably request for the purpose of
reviewing such list. KCB shall cause each person who is identified as an
"affiliate" in the list furnished pursuant to this Section and who is to
receive any shares of Corporation Common Stock pursuant to the Merger to
execute a written agreement on or before the Closing Date, in substantially the
form attached hereto as Exhibit 3.9 (collectively, the "Affiliate Agreements"),
that such person will not dispose of any shares of Corporation Common Stock
received in the Merger until such time as financial results covering at least
30 days of combined operations of Corporation and KCB shall be published and
that such person, for a period of two years (or three years if that person
becomes an affiliate of Corporation) following the Effective Time, (i) will not
offer to sell or otherwise dispose of any of the shares of Corporation Common
Stock received pursuant to the Merger in violation of the Securities Laws, (ii)
will consent to the placement of a legend on the certificate(s) representing
the "affiliate's" shares of Corporation Common Stock referring to the issuance
of such shares in a transaction to which said Rule 145 is applicable, and (iii)
will consent to the giving of stop-transfer instructions to Corporation's
transfer agent with respect to the "affiliate's" certificates evidencing
Corporation Common Stock received in the Merger, which shall be effective
absent evidence of compliance with said Rule 145. Corporation shall during the
period any "affiliates" hold shares of Corporation Common Stock so restricted
comply with the requirements of Rule 144(c) under the Securities Act of 1933 to
allow such shares of Corporation Common Stock held by such "affiliates" to be
transferrable by the "affiliates" in compliance with paragraphs (c), (e), (f)
and (g) of Rule 144.
3.10 Acquisition Proposals. Prior to the Effective Time,
KCB agrees (a) that neither it nor any KCB Subsidiary shall, and each of them
shall direct and use its best efforts to cause its respective officers,
directors, employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by it) not
to, initiate, solicit or encourage, directly or indirectly, any inquiries or
the making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its shareholders) with respect to a
merger, acquisition, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of, KCB or any KCB Subsidiary (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement
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an Acquisition Proposal; (b) that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing and will take
the necessary steps to inform the individuals or entities referred to above of
the obligations undertaken in this Section 3.10; and (c) that it will notify
the Corporation immediately if any such inquiries or proposals are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, it; provided, however, that
nothing contained in this Section 3.10 shall prohibit the Board of Directors of
KCB from (i) furnishing information to or entering into discussions or
negotiations with, any person or entity that makes an unsolicited bona fide
proposal to acquire KCB pursuant to a merger, consolidation, share exchange,
purchase of a substantial portion of the assets, business combination or other
similar transaction, if, and only to the extent that, (A) the Board of
Directors determines in good faith on the advice of counsel that such action is
required for the Board of Directors to comply with its fiduciary duties to
shareholders imposed by law, (B) prior to furnishing such information to, or
entering into discussions or negotiations with, such person or entity, KCB
provides written notice to the Corporation to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity, and (C) subject to any confidentiality agreement with such person or
entity (which the Board of Directors determined in good faith on the advice of
counsel was required to be executed in order to comply with its fiduciary
duties to shareholders imposed by law), KCB keeps the Corporation informed of
the status (not the terms) of any discussions or negotiations; and (ii) to the
extent applicable, complying with Rule 14e-2 promulgated under the Exchange
Act, with regard to an Acquisition Proposal. Nothing in this Section 3.10
shall (x) permit KCB to terminate this Agreement, (y) permit KCB to enter into
any agreement with respect to an Acquisition Proposal during the term of this
Agreement (it being agreed that during the term of this Agreement KCB shall not
enter into any agreement with any person that provides for, or in any way
facilitates, an Acquisition Proposal (other than a confidentiality agreement in
customary form)), or (z) affect any other obligation of KCB under this
Agreement.
3.11 KCB Dividends.
A. KCB may continue the declaration and payment of
regular quarterly dividends not in excess of $0.25 per share of KCB Common
Stock, with usual record and payments dates for such dividends in accordance
with past dividend practice.
B. If the Effective Time occurs after a regularly
scheduled record date for dividends on Corporation Common Stock for a calendar
quarter dividend and before the regularly scheduled record date for dividends
on KCB Common Stock for such calendar
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quarter dividend that next succeeds such Corporation record date, then KCB may
declare a special dividend on the KCB Common Stock to holders of record of such
shares as of the record date established therefore (which record date shall be
prior to the date of the Effective Time) with a payment date that is the same
as the payment date for dividends on Corporation Common Stock to which such
Corporation record date relates. Such a special dividend may be in an amount
per share not greater than the product of (i) a fraction, (A) the numerator of
which equals the number of days between the payment date with respect to the
most recent regular dividend paid on KCB Common Stock and such payment date for
the Corporation Common Stock and (B) the denominator of which equals 91, and
(ii) the amount of the regular quarterly cash dividend per share of KCB Common
Stock most recently paid by KCB prior to the date of the Effective Time. It is
the intention of the parties that, to the extent the shareholders of KCB do not
receive the regular quarterly dividend paid by Corporation for the calendar
quarter in which the Effective Time occurs, that the shareholders of KCB shall
receive a special dividend on the KCB Common Stock in an amount per share as
calculated in the immediately preceding sentence.
3.12 Indemnification.
A. From and after the Effective Time, the Corporation
shall indemnify, defend and hold harmless each person who is now, or has been
at any time prior to the date hereof or who becomes prior to the Effective
Time, an officer or director of KCB or any KCB Subsidiary (the "Indemnified
Parties") against (i) all losses, claims, damages, costs, expenses, liabilities
or judgments or amounts that are paid in settlement with the approval of the
Corporation (which approval shall not be unreasonably withheld) of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of KCB or any KCB Subsidiary, whether
pertaining to any matter existing or occurring at or prior to the Effective
Time and whether asserted or claimed prior to, or at or after, the Effective
Time ("Indemnified Liabilities") and (ii) all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby, in each case to the
full extent KCB would have been permitted under law and its Articles of
Incorporation and Bylaws to indemnify such person (and the Corporation shall
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by law upon
receipt of any undertaking required by law). Without limiting the foregoing,
in the event any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Party (whether arising before or after the
Effective Time), (i) any counsel retained by the Indemnified Parties for any
period after the Effective Time shall be reasonably satisfactory to the
Corporation; (ii) after the Effective Time, the Corporation shall
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pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; and (iii) after the
Effective Time, the Corporation will use all reasonable efforts to assist in
the vigorous defense of any such matter, provided that the Corporation shall
not be liable for any settlement of any claim effected without its written
consent, which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 3.12,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify the Corporation in writing (but the failure so to notify the
Corporation shall not relieve it from any liability that it may have under this
Section 3.12 except to the extent such failure materially prejudices the
Corporation), and shall deliver to the Corporation the undertaking, if any,
required by law. The Indemnified Parties as a group may retain only one law
firm to represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
B. The provisions of this Section 3.12 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party, his
heirs and his representatives.
3.13 Employee Benefits. At, or as soon as administratively
feasible after, the Effective Time, employees and officers of KCB and each KCB
Subsidiary shall be provided with such employee benefits as Corporation from
time to time generally provides to employees and officers of a Corporation
Subsidiary, including, but not limited to, participation in Corporation's
Employee Stock Ownership Plan, Savings Investment Plan, life, medical and
hospitalization and disability insurance, and sick pay, vacation, personal
leave and severance benefits, on a non-discriminatory and substantially similar
basis. For purposes of providing such benefits to employees and officers of
KCB or any KCB Subsidiary after the Effective Time, the Corporation shall
credit such employees and officers for years of service at KCB or any KCB
Subsidiary prior to the Effective Time for purposes of eligibility, vesting,
and benefit amounts paid or privileges provided.
3.14 Board Representation. The Corporation's Board of Directors
shall take action to cause its membership to include at the Effective Time
Thomas R. Wallingford (the "Designated Director"). The Corporation agrees, in
connection with the holding of regular annual meetings during which an election
of directors is to occur, to nominate, recommend to shareholders and solicit
proxies in favor of the election of the Designated Director until the earlier
of the third annual meeting of shareholders of the Corporation following the
Effective Time or the Designated Director's death or disability.
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3.15 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement and the Plan of Merger, each party to this Agreement
shall take all such necessary action.
3.16 NASDAQ Listing. Corporation shall use all reasonable efforts
to cause the shares of Corporation Common Stock to be issued in the Merger to
be eligible for quotation on the NASDAQ National Market System, prior to the
Closing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO KCB, CORPORATION AND ACQUISITION CORP
4.1 KCB's Representations and Warranties. Except as Previously
Disclosed, KCB hereby represents and warrants to Corporation and Acquisition
Corp as follows:
A. Corporate Standing; Authorization.
[i] KCB is a bank holding company registered
under the BHCA. KCB and each KCB Subsidiary is a Kentucky corporation
or banking corporation, duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Kentucky, or national
banking association, duly organized, validly existing and in good
standing under the laws of the United States of America. KCB and each
KCB Subsidiary organized under the laws of the Commonwealth of
Kentucky has paid all fees due and owing to the Office of the Kentucky
Secretary of State, has delivered to that office its most recent
annual report as required by the Act, and has never filed articles of
dissolution with the Kentucky Secretary of State or the KDFI. KCB has
delivered to Corporation true and correct copies of the Articles of
Incorporation and Bylaws of KCB and all amendments thereto through the
date hereof. KCB and each KCB Subsidiary has all requisite power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary.
[ii] The execution and delivery of this Agreement
and the Plan of Merger do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with,
or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge, security
interest, charge or
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other encumbrance on assets (any such conflict, violation, default,
right of termination, cancellation or acceleration, loss or creation,
shall be deemed hereunder a "Violation") pursuant to, any provision of
the articles of incorporation or bylaws of KCB or any KCB Subsidiary,
or, subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declaration and filings referred to in
paragraph [iii] below, or result in any Violation of any loan or
credit agreement, note, mortgage, indenture, lease, Benefit Plan (as
defined in Section 4.1K) or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to KCB or any
KCB Subsidiary or their respective properties or assets.
[iii] Except (a) for consents, approvals, orders, and
authorizations from the Federal Reserve and the KDFI, and (b) for the
filing of Articles of Merger with the Kentucky Secretary of State, no
consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, is required by or with respect to KCB or any KCB
Subsidiary in connection with the execution and delivery of this
Agreement and the Plan of Merger, or the consummation by KCB of the
transactions contemplated hereby and thereby.
[iv] KCB has all requisite corporate power and
authority to enter into and, subject to the approval of its
shareholders, to consummate the transactions contemplated by this
Agreement and the Plan of Merger. The execution and delivery of this
Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of KCB, subject to the
approval of this Agreement and the Plan of Merger by the shareholders
of KCB. This Agreement and the Plan of Merger have been duly executed
and delivered by KCB, and constitute the legal, valid and binding
obligations of KCB enforceable against it in accordance with their
terms.
B. Capital Structure of KCB. The authorized capital
stock of KCB consists of 600,000 shares of common stock without par value ("KCB
Common Stock") and 200,000 shares of Class A Preferred Shares without par value
("KCB Preferred Stock"). At the date hereof, 258,901 shares of KCB Common
Stock are validly issued and outstanding and fully paid and nonassessable,
2,055 shares are held by KCB in treasury, and 530 shares are reserved for
issuance upon the exercise of outstanding options. There are no shares of KCB
Preferred Stock issued or outstanding. There is outstanding no subscription,
option, warrant, call or commitment of any character relating to shares of
KCB's capital stock or any instruments that
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can be converted into shares of KCB's capital stock. None of the shares of KCB
Common Stock have been issued in violation of any preemptive right. There are
no outstanding contractual obligations of KCB or any KCB Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of KCB. No
bonds, debentures, notes or other indebtedness having the right to vote (or
convertible into or exercisable for securities having the right to vote) on any
matters on which stockholders of KCB may vote are issued or outstanding.
C. Subsidiaries. KCB has Previously Disclosed each
company or other organization, whether incorporated or unincorporated, of which
KCB is a general partner or at least a majority of the securities or other
interests is directly or indirectly owned or controlled by KCB (each such
company or other organization Previously Disclosed by KCB is referred to in
this Agreement as a "KCB Subsidiary"). KCB has delivered to Corporation true
and correct copies of the Articles of Incorporation or Association and Bylaws
of each KCB Subsidiary, as amended through the date hereof, and has Previously
Disclosed the authorized, issued and outstanding capital stock of each KCB
Subsidiary. No shares of capital stock of any KCB Subsidiary are held in
treasury. All of the outstanding shares of capital stock of each KCB
Subsidiary are validly issued and outstanding and are fully paid and
nonassessable and such shares are wholly owned by KCB directly, free and clear
of all liens, claims and encumbrances. There is outstanding no subscription,
option, warrant, call or commitment of any character relating to or any
instruments that can be converted into shares of the capital stock of any KCB
Subsidiary. No bonds, debentures, notes or other indebtedness having the right
to vote (or convertible into or exercisable for securities having the right to
vote) of any KCB Subsidiary are issued or outstanding.
D. SEC Documents. KCB has made available to Corporation
a true and complete copy of each report, schedule, and registration statement
filed by KCB with the Commission since January 1, 1991 through the date hereof
(as such documents have since the time of their filing been amended, the "KCB
SEC Documents"), which are all the documents that KCB was or will be required
to file with the Commission since such date. As of their respective dates, the
KCB SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission thereunder applicable to such KCB SEC Documents,
and none of the KCB SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of KCB included
in the KCB SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto, have been
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prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Form 10-Q of the Commission) and fairly present the consolidated financial
position of KCB and its consolidated subsidiaries as at the dates thereof and
the consolidated results of their operations and cash flows for the periods
then ended. All material agreements, contracts or other documents required to
be filed as exhibits to any of the KCB SEC Documents have been or will be so
filed. All reports, schedules and statements hereafter filed by KCB with the
Commission which KCB shall deliver to Corporation pursuant to Section 3.5
hereof will comply in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission thereunder, and none of such reports, schedules
or statements will contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of KCB included in such reports,
schedules and statements will comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto, will be prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or, in
the case of the unaudited statements, as permitted by Form 10-Q of the
Commission) and will fairly present the consolidated financial position of KCB
and its consolidated subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
E. Information Supplied. None of the information
supplied or to be supplied by KCB for inclusion in (i) the Registration
Statement to be filed with the Commission by the Corporation in connection with
the issuance of shares of Corporation Common Stock in the Merger will, at the
time the Registration Statement is filed with the Commission and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement/Prospectus will, at the date of mailing to shareholders of KCB and at
the time of the meeting of such shareholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement/Prospectus (except for such portions thereof
that relate only to the Corporation) will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
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F. Absence of Undisclosed Liabilities. Except as
disclosed in any KCB SEC Documents filed since January 1, 1991, neither KCB nor
any KCB Subsidiary has any obligations or liabilities (contingent or otherwise)
that might reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the business, assets, results of operations or
financial condition of KCB and the KCB Subsidiaries taken as a whole, except
obligations or liabilities incurred after the date of this Agreement in the
ordinary course of business consistent with prior practice. The business of
KCB and each KCB Subsidiary has been conducted only in the ordinary course of
business since December 31, 1992.
G. Loans and Allowance for Credit Losses. All loans
reflected on the books and records of each KCB Subsidiary have been [i] made
for good, valuable and adequate consideration in the ordinary course of
business and [ii] evidenced by notes or other evidences of indebtedness that
are true and genuine. The allowance for credit losses ("Allowance") shown on
the consolidated balance sheet of KCB as of September 30, 1993 included in the
KCB Financial Statements was, and the Allowance shown on the consolidated
balance sheets of KCB as of dates subsequent to the execution of this Agreement
included in the KCB Financial Statements will be, in each case as of the dates
thereof, adequate to provide for losses relating to or inherent in the loan and
lease portfolios of, and other extensions of credit (including letters of
credit and commitments to make loans or extend credit) made by, KCB and each
KCB Subsidiary.
H. Legal Proceedings. There are no claims of any kind
or any actions, suits, proceedings, arbitrations or investigations pending or,
to the best knowledge of KCB, threatened against KCB or any KCB Subsidiary or
against any asset, interest or right of any such company that might,
individually or in the aggregate, have a material adverse effect on the
financial condition, results of operation or business of KCB or any KCB
Subsidiary, nor is there any judgment, decree, injunction, rule or order of any
governmental entity or arbitrator outstanding against KCB or any KCB Subsidiary
having or which, insofar as reasonably can be foreseen, in the future could
have any such effect.
I. Agreements with Regulators. Neither KCB, any KCB
Subsidiary, nor any officer or director of KCB or any KCB Subsidiary, is a
party to any written agreement or memorandum of understanding with, or a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary supervisory letters
from, any banking regulator, nor has KCB or any KCB Subsidiary been advised by
any banking regulator that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or
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similar submission. No investigation by any governmental entity with respect
to KCB or any KCB Subsidiary is pending or, to the best knowledge of KCB,
threatened and neither KCB nor any KCB Subsidiary has knowledge of any basis
for the commencement of any regulatory or enforcement action against KCB or any
KCB Subsidiary by any governmental or regulatory authority.
J. Compliance with Laws. KCB and each KCB Subsidiary
holds all permits, licenses, variances, exemptions, orders and approvals of all
governmental entities which are material to the operation of the businesses of
KCB and each KCB Subsidiary and is in compliance in all material respects with
the terms thereof. KCB and each KCB Subsidiary has complied with in all
material respects and is not in any default under (and has not been charged
with or received notice with respect to [except for routine bank examinations
by Federal and state agencies], nor are threatened with or under investigation
with respect to, any charge concerning any violation of any provision of) any
federal, state or local law, regulation, ordinance, rule or order (whether
executive, judicial, legislative or administrative) or any order, writ,
injunction or decree of any court, agency or instrumentality, except for
possible violations or defaults that, individually or in the aggregate, would
not have a material adverse effect on KCB and its Subsidiaries taken as a
whole. There are no uncured violations or violations with respect to which
refunds or restitution may be required cited in any report concerning KCB or
any KCB Subsidiary as a result of examination by any regulatory authority and
neither KCB nor any KCB Subsidiary has knowledge of any basis on which refunds
or restitution may be required by any regulatory authority.
K. Employee Benefit Plans.
[i] Since the date of the most recent KCB Financial
Statements, there has not been any adoption or amendment in any
material respect by KCB or any KCB Subsidiary of any collective
bargaining agreement, or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding)
providing benefits to any current or former employee or director of
KCB or any KCB Subsidiary (collectively, "Benefit Plans"). There
exist no employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between KCB
or any KCB Subsidiary and any officer, director or key employee of KCB
or any KCB Subsidiary.
[ii] KCB has Previously Disclosed a list and brief
description of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (sometimes
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referred to herein as "Pension Plans"), all "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) and all other Benefit
Plans maintained, or contributed to, by KCB or any KCB Subsidiary for
the benefit of any officers or employees of KCB or any KCB Subsidiary.
KCB has delivered to Corporation true, complete and correct copies of
(1) each Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (2) the most recent annual report on Form 5500
filed with the Internal Revenue Service with respect to each Benefit
Plan, (if any such report was required), (3) the most recent summary
plan description for each Benefit Plan for which such summary plan
description is required, and (4) each trust agreement and group
annuity contract relating to any Benefit Plan. No Benefit Plan
provides medical or hospitalization benefits to retirees or other
former employees, other than medical benefits required to be provided
to qualified beneficiaries under the provisions of Section 4980B(f) of
the Code and paid for entirely by the individual electing such
coverage under Section 4980B(f) of the Code.
[iii] Each Benefit Plan has been administered in all
material respects in accordance with its terms. KCB, each KCB
Subsidiary and all the Benefit Plans are in compliance with the
applicable provisions of ERISA and the Code. All reports, returns and
similar documents with respect to the Benefit Plans required to be
filed with any governmental agency or distributed to any Benefit Plan
participant have been duly and timely filed or distributed. There are
no investigations by any governmental agency, termination proceedings
or other claims (except claims for benefits payable in the normal
operation of the Benefit Plans), suits or proceedings against or
involving any Benefit Plan or asserting any rights or claims to
benefits under any Benefit Plan that could give rise to any liability,
and, to the best knowledge of KCB, there are not any facts that could
give rise to any liability in the event of any such investigation,
claim, suit or proceeding.
[iv] All Pension Plans have been the subject of
determination letters from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code. No
such determination letter has been revoked nor, to the best knowledge
of KCB, has revocation been threatened, nor has any such Pension Plan
been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
[v] No Pension Plan that KCB, any KCB Subsidiary
or any other company under common control with KCB (within the meaning
of Section 4001(a)(14) of ERISA) maintains, or to
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which KCB, any KCB Subsidiary or any other company under common
control with KCB (within the meaning of Section 4001(a)(14) of ERISA)
is obligated to contribute, other than any Pension Plan that is a
"multiemployer plan" (as such term is defined in Section 4001(a)(3) of
ERISA) (collectively, the "Multiemployer Pension Plans"), had, as of
the respective last annual valuation date for each such Pension Plan,
an "unfunded benefit liability" (as such term is defined in Section
4001(a)(18) of ERISA). KCB is not aware of any facts or circumstances
that would change the funded status of any such Pension Plan. None of
the Pension Plans has an "accumulated funding deficiency" (as such
term is defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived. All contributions to, and payments from, the
Benefit Plans required to be made in accordance with the Benefit Plans
and, when applicable, Section 302 of ERISA or Section 412 of the Code,
have been timely made, and there has been no application for or waiver
of the minimum funding standards imposed by Section 412 of the Code
with respect to any Pension Plan. All such contributions to, and
payments from, the Benefit Plans (except those payments to be made
from a trust qualified under Section 401(a) of the Code), for any
period ending before the Effective Time that are not yet, but will be,
required to be made, will be properly accrued and reflected in the
proper books and records of KCB at the Effective Time. None of KCB,
any KCB Subsidiary or any officer of KCB or any KCB Subsidiary or any
of the employee benefit plans of KCB and any KCB Subsidiary which are
subject to ERISA, including the Pension Plans, or any trusts created
thereunder, any administrator or, to the best knowledge of KCB, any
trustee thereof, has engaged in a "prohibited transaction" (as such
term is defined in Section 406 of ERISA or Section 4975 of the Code)
or any other breach of fiduciary responsibility under Part 4, Subtitle
B, Title I of ERISA that could subject KCB, any KCB Subsidiary or any
officer of KCB or any KCB Subsidiary to the tax or penalty on
prohibited transactions imposed by such Section 4975 or to any
liability under Section 502(i) or (1) of ERISA. Neither any of such
plans nor any of such trusts have been terminated, nor has there been
any "reportable event" (as that term is defined in Section 4043 of
ERISA) with respect thereto during the last five years. Neither KCB,
any KCB Subsidiary, any administrator, nor, to the best knowledge of
KCB, any trustee or other fiduciary, of any Benefit Plan nor any agent
of any of the foregoing has engaged in any transaction or acted or
failed to act in a manner that could subject KCB or any KCB Subsidiary
to any material liability for breach of fiduciary duty under ERISA or
any other applicable law. Neither KCB nor any KCB Subsidiary (or any
other employer that since September 2, 1974 has ever been treated as a
"single employer" under Section 414(b)(c) or (m) of the Code with KCB
or any KCB Subsidiary) has ever been required to contribute to any
Multiemployer Pension Plans.
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[vi] With respect to any Pension Plan subject to
Title IV of ERISA (including for purposes of clause (1) below, any
Pension Plan maintained or contributed to by KCB or any other company
under common control with KCB within the meaning of Section 414 of the
Code and, for purposes of clause (2) below, any Pension Plan
maintained or contributed to by KCB or any other company under common
control with KCB within the meaning of Section 4001(a)(14) of ERISA):
KCB has not incurred any material liability on or prior to the date
hereof (1) to such Pension Plan or (2) to the Pension Benefit Guaranty
Corporation other than for the payment of premiums, all of which have
been paid when due. KCB has furnished to Corporation the most recent
actuarial report or valuation with respect to each Pension Plan that
is a "defined benefit pension plan" (as defined in Section 3(35) of
ERISA). The information supplied to the actuary by KCB for use in
preparing those reports or valuations was complete and accurate and
KCB has no reason to believe that the conclusions expressed in those
reports or valuations are incorrect.
[vii] With respect to any Benefit Plan that is an
employee welfare benefit plan: (1) no such Benefit Plan is unfunded or
funded through a welfare benefits fund, as such term is defined in
Section 419(e) of the Code, (2) each such Benefit Plan that is a group
health plan, as such term is defined in Section 5000(b)(1) of the
Code, complies with the applicable requirements of Section 4980B(f) of
the Code and (3) each such Benefit Plan (including any such Plan
covering retirees or other former employees) may be prospectively
amended or terminated without material liability to KCB or any KCB
Subsidiary on or at any time after the Effective Time.
[viii] Each employee bonus or profit sharing plan
providing benefits to any current or former officer, director or
employee of KCB or any KCB Subsidiary is terminable by KCB or such KCB
Subsidiary without notice at any time.
L. Labor Matters.
[i] KCB and each KCB Subsidiary is in compliance in
all material respects with all applicable laws respecting employment
and employment practices, terms and conditions of employment and wages
and hours and occupational safety and health;
[ii] There is no unfair labor practice charge or
complaint or any other matter against or involving KCB or any KCB
Subsidiary pending or, to the knowledge of KCB, threatened before the
National Labor Relations Board or any court of law;
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[iii] Neither KCB nor any KCB Subsidiary is a party
to or bound by any collective bargaining agreement or any similar
labor union arrangement;
[iv] There are no charges, investigations,
administrative proceedings or formal complaints of discrimination
(including discrimination based upon sex, age, marital status, race,
color, religion, national origin, sexual preference, disability,
handicap or veteran status) pending or, to the knowledge of KCB
threatened, before the Equal Employment Opportunity Commission or any
federal, state or local agency or court against KCB or any KCB
Subsidiary;
[v] There have been no governmental audits of the
equal employment opportunity practices of KCB or any KCB Subsidiary
and, to the knowledge of KCB, no basis for any such claim exists; and
[vi] KCB and each KCB Subsidiary is in compliance in
all material respects with the requirements of the Americans With
Disabilities Act.
M. Brokers. Neither KCB, any KCB Subsidiary, nor any of
their respective officers, directors or employees, has employed any broker,
finder or financial advisor or incurred any liability for fees or commissions
payable to any broker, finder or financial advisor in connection with the
negotiations relating to or the transactions contemplated by this Agreement.
N. Assets. KCB and each KCB Subsidiary has good and
marketable title to all of the properties and assets, real and personal,
tangible and intangible, reflected on the KCB Financial Statements or acquired
after the dates thereof, free and clear of all liens, charges, security
interests, encumbrances and claims, except for [i] liens for current taxes not
yet due and payable, [ii] pledges to secure deposits and other liens incurred
in the ordinary course of its business, and [iii] such imperfections or
irregularities of title, easements, claims, liens, charges, security interests
and encumbrances, if any, as do not materially affect the use of the properties
or assets subject thereto or affected thereby or otherwise materially impair
business operations at such properties. All leases by which either of KCB or
any KCB Subsidiary leases real or personal property as lessee (other than
leases that are the equivalent of extensions of credit) are valid without
default in any material respect thereunder by the lessee or, to the best
knowledge of KCB, the lessor, and are in full force and effect in accordance
with their respective terms.
O. Material Contracts. Except as disclosed in any KCB
SEC Document, neither KCB nor any KCB Subsidiary is a party to any:
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[i] agreement, arrangement or commitment not made
in the ordinary course of business consistent with past practices;
[ii] employment agreement or any bonus, incentive,
deferred compensation, severance pay, profit sharing, retirement,
stock purchase, stock option agreement or arrangement or employee
benefit plan for or in respect of any employee or former employee;
[iii] collective bargaining agreement or other
agreement with any labor union or labor organization;
[iv] material agreement, indenture or other
instrument relating to the borrowing of money, or the guaranty of any
obligation for the borrowing of money or any agreement that involves a
potential material liability (other than in the ordinary course of its
business);
[v] any agreement, contract or commitment
containing any covenant materially limiting the freedom of KCB or any
KCB Subsidiary to engage in any line of business in any geographic
area or to compete with any person; or
[vi] agreement for loans or the provision,
purchase or sale of goods, services or property, or other contract or
commitment with any director or officer.
P. Good Standing of Contracts. No event or condition has
occurred or exists, or, to the best knowledge of KCB, is alleged by any of the
other parties thereto to have occurred or existed, which constitutes, or with
lapse of time or giving of notice or both might constitute, a default or breach
under any of the leases, contracts or agreements to which KCB or any KCB
Subsidiary is a party, which default is reasonably likely to result in a
material adverse change in the financial condition, results of operation or
business of KCB or any KCB Subsidiary.
Q. Insurance. KCB has made available to Corporation
true and complete copies of all policies of fire, theft, liability and other
insurance and bonds maintained with respect to the assets or businesses of KCB
and each KCB Subsidiary, the effective dates thereof and the premiums payable
with respect thereto. All such policies and bonds are valid and enforceable
and in full force and effect and neither KCB nor any KCB Subsidiary has
received any notice of premium increases or cancellations with respect to any
of such policies and bonds. To the best knowledge of KCB, neither KCB nor any
KCB Subsidiary is liable for any material retroactive premium adjustments with
respect to any of its insurance policies or bonds.
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R. Tax Matters. Each member of the consolidated group
of which KCB is a member or has ever been a member (the "Group") has timely
filed or caused to be filed all federal, state, foreign and local income,
franchise, gross receipts, payroll, sales, use, withholding, occupancy, excise,
real and personal property, employment and other tax returns, tax information
returns and reports required to be filed, and has paid, or made adequate
provisions for the payment of, all taxes, duties or assessments of any nature
whatsoever, interest payments, penalties and additions (whether or not
reflected in its returns as filed) due and payable (and/or properly accruable
for all periods ending on or before the date of this Agreement) to any city,
county, state, foreign country, the United States or any other taxing
authority. The most recent KCB Financial Statements reflect an adequate
reserve for all taxes payable by KCB and each KCB Subsidiary accrued through
the date of such Financial Statements. No material deficiencies for any taxes
have been proposed, asserted or assessed against KCB or any KCB Subsidiary that
are not adequately reserved for. Except with respect to claims for refund, the
federal income tax returns of KCB and each KCB Subsidiary consolidated in such
returns have been examined by and settled with the United States Internal
Revenue Service (the "IRS"), or the statue of limitations with respect to such
years has expired (and no waiver extending the statute of limitations has been
requested or granted) for all years through 1988. The consolidated federal
income tax returns of the Group have not been audited during the last five (5)
fiscal years of KCB. No audit, examination or investigation is presently being
conducted or, to the best knowledge of KCB, threatened by any taxing authority;
no unpaid tax deficiencies or additional liabilities of any sort have been
proposed by any governmental representative; and no agreements for the
extension of time for the assessment of any amounts of tax have been entered
into by or on behalf of any member of the Group.
S. Fiduciary Activities. Each KCB Subsidiary's
fiduciary and custodial activities have been and are being conducted in all
material respects in accordance with all applicable law.
T. Environmental Matters. To the best knowledge of KCB:
[i] KCB and each KCB Subsidiary is in substantial compliance
with all applicable federal, state and local laws, rules, regulations,
ordinances and requirements relating to the environment
("Environmental Laws");
[ii] No "Hazardous Wastes" (as hereinafter defined) have ever
been generated, transported, treated, stored, released or disposed of
on any real property owned or leased by KCB or KCB Subsidiary;
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[iii] Neither KCB nor any KCB Subsidiary has transported or
disposed or caused or permitted any person to transport or dispose of
any Hazardous Wastes other than in accordance with all Environmental
Laws;
[iv] Neither KCB nor any KCB Subsidiary has ever violated any
of the Environmental Laws;
[v] No asbestos, PCBs or other Hazardous Wastes or any
petroleum product or constituents thereof is present on, in or under
any of the property owned by KCB or any KCB Subsidiary, whether owned
or leased or held as OREO (as such term is customarily used) or in
which KCB or any KCB Subsidiary has any legal or equitable interest;
[vi] There are no loans or other credits included in the loan
portfolio of any KCB Subsididary with respect to which KCB or any KCB
Subsidiary is or could incur or become responsible liability under the
Environmental Laws, except where such liability would not have a
material adverse effect on KCB and its subsidiaries taken as a whole;
and
[v] No Hazardous Wastes have ever been utilized on any of the
property now held or previously held by KCB or any KCB Subsidiary as
collateral or otherwise securing any loan made by KCB or any KCB
Subsidiary. Hazardous Wastes" for purposes of this Agreement shall
include, without limitation: [i] hazardous substances or hazardous
wastes, as those terms are defined by the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq., and any other applicable federal, state or local law,
rule, regulation, ordinance or requirement, all as amended or
hereafter amended; [ii] petroleum, including without limitation crude
oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per
square inch absolute); [iii] any radioactive material , including
without limitation any source, special nuclear, or by-product material
as defined in 42 U.S.C. Section 2011 et seq.; and [iv] asbestos or any
asbestiform minerals in any form or condition.
U. Insider Loans. All loans, loan commitments and any
other extensions of credit and commitments to extend credit that are currently
outstanding by KCB or any KCB Subsidiary to directors, officers, or principal
shareholders of KCB or any KCB Subsidiary or any of their related interests,
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and substantially comply with all applicable provisions of
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federal and state law. Such loans, extensions and commitments do not involve
more than a normal risk of collectability.
V. Adjustable Rate Mortgages. Each KCB Subsidiary has
properly calculated, in accordance with the contractual terms thereof and all
applicable law, all adjustments required in its portfolio of adjustable rate
mortgage notes, except for possible violations or errors that individually or
in the aggregate would not have a material adverse effect on KCB and its
subsidiaries taken as a whole.
W. Regulatory Matters. Neither KCB nor any KCB
Subsidiary has, through the date hereof, taken or agreed to take any action or
has knowledge of any fact or circumstance that would materially impede or delay
receipt of any approval referred to in Section 5.2E hereof.
X. Absence of Certain Changes or Events. Except as
disclosed in the KCB SEC Documents or Previously Disclosed, since December 31,
1992, KCB and the KCB Subsidiaries have not incurred any material liability,
except in the ordinary course of their business consistent with their past
practices, nor has there been any change, or any event involving a prospective
change, in the business, assets, financial condition or results of operations
of KCB or any of its KCB Subsidiaries that has had, or is reasonably likely to
have, a material adverse effect on KCB and KCB's Subsidiaries taken as a whole.
Y. Full Disclosure. No representation or warranty of
KCB contained in this Agreement and no statement contained in this Agreement or
in any certificate or other instrument furnished to Corporation or Acquisition
Corp hereunder contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary to make the
statements contained herein or therein not misleading.
4.2 Corporation's and Acquisition Corp's Representations and
Warranties. Except as Previously Disclosed, Corporation and Acquisition Corp
hereby represent and warrant to KCB that:
A. Corporate Standing; Authorization.
[i] Corporation is a bank holding company
registered under the BHCA and a savings and loan holding company
registered under the Savings and Loan Holding Company Act.
Corporation, Acquisition Corp and each Corporation Subsidiary is a
Kentucky corporation or national bank or savings association duly
organized, validly existing, and in good standing under applicable
laws. Corporation, Acquisition Corp and each Corporation Subsidiary
has all requisite power and authority to own, lease and operate its
properties and to carry on its
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<PAGE> 98
business as now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary.
[ii] The execution and delivery of this Agreement
and the Plan of Merger do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with,
or result in any Violation pursuant to, any provision of the articles
of incorporation or association or bylaws of Corporation, Acquisition
Corp or any Corporation Subsidiary or, subject to obtaining or making
the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph [iii] below, result
in any Violation of any loan or credit agreement, note, mortgage,
indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Corporation, Acquisition Corp or any Corporation Subsidiary or their
respective properties or assets.
[iii] Except (a) for consents, approvals, orders,
and authorizations from the Federal Reserve and the KDFI, (b) for the
filing of Articles of Merger with the Kentucky Secretary of State, and
(c) in connection with compliance with the provisions of the
Securities Laws and applicable state corporate and securities laws, no
consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, is required by or with respect to Corporation,
Acquisition Corp or any Corporation Subsidiary in connection with the
execution and delivery of this Agreement and the Plan of Merger, or
the consummation by Corporation or Acquisition Corp of the
transactions contemplated hereby and thereby.
[iv] Corporation and Acquisition Corp have all
requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement and the
Plan of Merger. The execution and delivery of this Agreement and the
Plan of Merger and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
corporate action on the part of Corporation and Acquisition Corp. All
shares of Corporation Common Stock to be issued pursuant to or as
specifically contemplated by this Agreement and the Plan of Exchange
will be validly issued, fully paid and nonassessable and not subject
to preemptive rights. This Agreement and the Plan of Merger have
been duly executed and delivered by Corporation and Acquisition Corp
and constitute the legal, valid and binding obligations of Corporation
and Acquisition Corp enforceable against them in accordance with their
terms.
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<PAGE> 99
B. SEC Documents. Corporation has made available to KCB
a true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by Corporation with the Commission since
January 1, 1991 (as such documents have since the time of their filing been
amended, the "Corporation SEC Documents"), which are all the documents that
Corporation was required to file with the Commission since such date. As of
their respective dates, the Corporation SEC documents complied in all material
respects with the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the Commission thereunder applicable to such
Corporation SEC Documents, and none of the Corporation SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Corporation included in the Corporation SEC Documents
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission
with respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the Commission) and fairly
present the consolidated financial position of Corporation and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended. All material agreements,
contracts and other documents required to be filed as exhibits to any of the
Corporation SEC Documents have been so filed. All reports, schedules and
statements hereafter filed by Corporation with the Commission which Corporation
shall deliver to Corporation pursuant to Section 3.5 hereof will comply in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the Commission
thereunder, and none of such reports, schedules or statements will contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of Corporation included in such reports, schedules and statements
will comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission
with respect thereto, will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the Commission) and will
fairly present the consolidated financial position of Corporation and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
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<PAGE> 100
C. Information Supplied. None of the information
supplied or to be supplied by Corporation for inclusion or incorporation by
reference in (i) the Registration Statement will, at the time the Registration
Statement is filed with the Commission and at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) the Proxy Statement/
Prospectus will, at the date of mailing to shareholders of KCB and at the time
of the meeting of such shareholders to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement/Prospectus (except for such portions thereof
that relate only to KCB) will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder.
D. Absence of Undisclosed Liabilities. Except as
disclosed in any Corporation SEC Documents filed since January 1, 1991, neither
Corporation nor any Corporation Subsidiary has any obligations or liabilities
(contingent or otherwise) that might reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the business,
assets, results of operations or financial condition of Corporation and its
Corporation Subsidiaries taken as a whole, except obligations or liabilities
incurred after the date of this Agreement in the ordinary course of business
consistent with prior practice.
E. Absence of Certain Changes or Events. Except as
disclosed in the Corporation SEC Documents, since December 31, 1992,
Corporation and the Corporation Subsidiaries have not incurred any material
liability, except in the ordinary course of their business consistent with
their past practices, nor has there been any change, or any event involving a
prospective change, in the business, assets, financial condition or results of
operations of Corporation or any of its Corporation Subsidiaries that has had,
or is reasonably likely to have, a material adverse effect on Corporation and
the Corporation Subsidiaries taken as a whole.
F. Brokers. Neither Corporation nor any Corporation
Subsidiary, nor any of their respective officers, directors or employees, has
employed any broker, finder or financial advisor or incurred any liability for
fees or commissions in connection with the negotiations relating to or the
transactions contemplated by this Agreement.
4.3 Non-Survival of Representations and Warranties. All
representations and warranties contained in this Agreement by any party hereto
or set forth in any certificate or other instrument
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<PAGE> 101
delivered by or on behalf of the parties pursuant to this Agreement shall
expire at the Effective Time.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 Conditions to Obligations of KCB. The obligation of KCB to
consummate the transactions contemplated by this Agreement and the Plan of
Merger, including the Merger, is subject to the satisfaction of the following
conditions precedent on or before the Closing Date, any of which may be waived
by KCB:
A. Approval of this Agreement and the Plan of Merger by
the shareholders of KCB at the Meeting.
B. There shall not be threatened, instituted or pending
any action or proceeding before any domestic or foreign court or governmental
agency or other regulatory or administrative agency or commission, or by any
other person [i] challenging the Merger or the other transactions contemplated
by this Agreement or the terms thereof, or [ii] seeking to prohibit the Merger
or the other transactions contemplated by this Agreement, which, in the opinion
of KCB's counsel, has a reasonable probability of success.
C. The representations and warranties of Corporation and
Acquisition Corp set forth in Section 4.2 of this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date as if made on the Closing Date, and Corporation and Acquisition
Corp shall have furnished to KCB a certificate of an executive officer of
Corporation and Acquisition Corp to that effect.
D. Corporation and Acquisition Corp in all material
respects shall have performed and observed its obligations and covenants as set
forth in this Agreement prior to or on the Closing Date and shall have
delivered to KCB a certificate of an executive officer of Corporation and
Acquisition Corp to that effect and evidence, in form and substance
satisfactory to counsel for KCB, that the transactions contemplated by this
Agreement and the Plan of Merger were duly authorized by all necessary
corporate action of Corporation and Acquisition Corp.
E. There shall not have been any material adverse change
in the business, financial condition, prospects or operations of Corporation
since December 31, 1992.
F. Receipt of all permits, consents, approvals and
authorizations from federal and state governmental authorities and regulatory
agencies necessary to effect the Merger (including the expiration of all
applicable waiting periods) and the other
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<PAGE> 102
transactions contemplated herein, and the satisfaction of all other
requirements prescribed by law which are necessary to the carrying out of the
Merger.
G. KCB shall have received an opinion of counsel of
Corporation and Acquisition Corp dated as of the Closing Date, in substantially
the form attached hereto as Exhibit 5.1G.
H. KCB shall have received the opinion of Corporation's
counsel, Wyatt, Tarrant & Combs, in form and substance satisfactory to KCB and
its counsel, Hirn, Reed & Harper, dated the Closing Date, to the effect that
the Merger will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368 of the Code and that, except with respect to
the payment of cash for fractional shares or in connection with the exercise of
appraisal rights, the conversion of KCB Common Stock into Corporation Common
Stock will not give rise to the recognition of gain or loss for federal income
tax purposes to the shareholders of KCB.
I. KCB shall have received an opinion from its financial
advisor to the effect that, as of the date the Proxy Statement/Prospectus was
mailed to shareholders of KCB, the Merger is fair to the shareholders of KCB
from a financial viewpoint.
J. The Registration Statement (including any post
effective amendments thereto) shall be effective under the Securities Act of
1933, as amended, and no proceedings shall be pending or to the knowledge of
KCB threatened by the Commission to suspend the effectiveness of such
Registration Statement.
K. The shares of Corporation Common Stock issuable to
KCB shareholders pursuant to this Agreement shall be eligible for quotation on
the NASDAQ National Market System.
5.2 Conditions to Obligations of Corporation. The obligation of
Corporation and Acquisition Corp to consummate the transactions contemplated by
this Agreement and the Plan of Merger, including the Merger, is subject to the
satisfaction of the following conditions precedent on or before the Closing
Date, any of which may be waived by Corporation:
A. Approval of this Agreement and the Plan of Merger by
the shareholders of KCB at the Meeting.
B. There shall not be threatened, instituted or pending
any action or proceeding before any domestic or foreign court or governmental
agency or other regulatory or administrative agency or commission, or by any
other person [i] challenging the Merger or the other
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<PAGE> 103
transactions contemplated by this Agreement or the terms thereof, or [ii]
seeking to prohibit the Merger or the other transactions contemplated by this
Agreement, which, in the opinion of Corporation's counsel, has a reasonable
probability of success.
C. The representations and warranties of KCB set forth
in Section 4.1 of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as if made
on the Closing Date, and KCB shall have furnished to Corporation and
Acquisition Corp a certificate executed by the Chief Executive Officer of KCB
to that effect.
D. KCB in all material respects shall have performed and
observed its obligations and covenants as set forth in this Agreement prior to
or on the Closing Date and shall have delivered to Corporation and Acquisition
Corp a certificate of the Chief Executive Officer of KCB to that effect and
evidence, in form and substance satisfactory to counsel for Corporation, that
the transactions contemplated by this Agreement and the Plan of Merger were
duly authorized by all necessary corporate action of KCB.
E. Receipt of all permits, consents, approvals and
authorizations from federal and state governmental authorities and regulatory
agencies necessary to effect the Merger (including the expiration of all
applicable waiting periods) and the other transactions contemplated herein, on
terms and conditions satisfactory to Corporation (other than standard terms and
conditions), and the satisfaction of all other requirements prescribed by law
which are necessary to the carrying out of the Merger.
F. There shall not have been any material adverse change
in the business, financial condition, prospects or operations of KCB or any KCB
Subsidiary since December 31, 1992.
G. Corporation shall have received an opinion of counsel
for KCB dated as of the Closing Date, in substantially the form attached hereto
as Exhibit 5.2G.
H. Corporation shall have received a written release
from each of the executive officers and directors of KCB and each KCB
Subsidiary which releases Corporation, KCB and each KCB Subsidiary from any and
all claims, known or unknown, contingent or direct, which he or she may have
against Corporation, KCB or any KCB Subsidiary as of the Closing Date, other
than [i] claims arising under this Agreement and the transactions contemplated
hereby, or [ii] claims arising out of moneys on deposit or property held in
trust or as a custodian by a KCB Subsidiary or compensation accrued but not yet
payable or in payment for services rendered to KCB or any KCB Subsidiary as
reflected on the books and records of KCB or any KCB Subsidiary.
I. Corporation shall have received a letter from KPMG
Peat Marwick to the effect that the Merger qualifies for "pooling
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<PAGE> 104
of interests" accounting treatment if consummated in accordance with this
Agreement and the Plan of Merger.
J. The Registration Statement (including any post
effective amendments thereto) shall be effective under the Securities Act of
1933, as amended, and no proceedings shall be pending or to the knowledge of
Corporation threatened by the Commission to suspend the effectiveness of such
Registration Statement.
K. Corporation shall have received all state securities
or "blue sky" permits and other authorizations necessary to consummate the
Merger.
L. The "affiliates" of KCB shall have executed and
delivered the Affiliate Agreements.
M. The representations and warranties made by KCB in
Section 4.1T (Environmental Matters) shall be true and correct in all material
respects without giving effect to the knowledge qualification thereof.
ARTICLE 6
TERMINATION
6.1 Dissenting Shares. Prior to the Effective Time, this
Agreement and the Plan of Merger may be declared void and of no effect by
Corporation if the number of Dissenting Shares is greater than 9% of the issued
and outstanding shares of KCB.
6.2 Termination. This Agreement and the Plan of Merger may be
terminated: (i) by the mutual agreement of Corporation, Acquisition Corp and
KCB; (ii) by Corporation or Acquisition Corp, upon prior written notice, if KCB
materially breaches any representation or warranty set out in Section 4.1 of
this Agreement or materially breaches any covenant in this Agreement, or upon
the failure and nonwaiver of any condition precedent set out in Section 5.2
unless, in the case of a material breach of a covenant or failure of a
condition, within thirty (30) days after written notice from Corporation or
Acquisition Corp, KCB shall have cured such breach or failure; (iii) by KCB,
upon prior written notice, if Corporation or Acquisition Corp materially
breaches any representation or warranty set out in Section 4.2 of this
Agreement or materially breaches any covenant in this Agreement or upon the
failure and nonwaiver of any condition precedent set out in Section 5.1 unless,
in the case of a material breach of a covenant or failure of a condition,
within thirty (30) days after written notice from KCB, Corporation shall have
cured such breach or failure; or (iv) by KCB or Corporation if the Effective
Time shall not have occurred on or before July 31, 1994.
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<PAGE> 105
6.3 Declaration. Any declaration of termination under this
Article 6 by Corporation, Acquisition Corp or KCB shall be pursuant to
resolution of its Board of Directors or by executive officers thereof duly
authorized by its Board of Directors to make such a declaration; shall be made
by written notice given to the other parties setting forth the grounds for the
termination, including, if applicable, the alleged material misrepresentation,
breach or failure, and, unless, in the case of a material breach of a covenant
or a failure of a condition, such material breach or failure is timely cured,
shall have the effect of terminating this Agreement and the Plan of Merger
effective upon the delivery of such written notice or the expiration of any
applicable cure period, whichever is later, whereupon the same shall have no
further effect and the Merger provided for herein and therein shall not be
effected. Notwithstanding the foregoing, no termination of this Agreement
shall affect the covenants set forth in Section 3.5 relating to confidentiality
or the provisions set forth in Section 8.5 relating to expenses, which shall
survive any such termination. Except as otherwise expressly provided herein, no
termination of this Agreement on the grounds of a material misrepresentation or
uncured material breach of any covenant contained herein shall relieve the
breaching party from any liability for such uncured material misrepresentation
or uncured material breach of any covenant or agreement contained herein giving
rise to such termination.
ARTICLE 7
INDEMNIFICATION
KCB shall indemnify, defend and hold Corporation and
Acquisition Corp harmless, and Corporation and Acquisition Corp shall
indemnify, defend and hold KCB harmless, against and in respect of any material
nonfulfillment of any covenant or agreement or the material breach of any
representation or warranty on the part of the indemnifying party under this
Agreement and any claim, action, suit, proceeding, demand, judgment,
assessment, cost and expense, including reasonable counsel fees, incident to
the foregoing. Except with respect to a party's intentional breach of any
covenant, agreement, representation or warranty under this Agreement, the
liability of either party hereto under this Article 7 shall be limited to the
actual costs and expenses incurred by the party to be indemnified in connection
with its investigation of the other party and the transactions contemplated by
this Agreement. A party seeking indemnification hereunder shall use its best
efforts to minimize any liabilities, damages, deficiencies, claims, judgments,
assessments, cost and expenses in respect of which indemnity is sought
hereunder.
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<PAGE> 106
ARTICLE 8
GENERAL PROVISIONS
8.1 Law and Section Headings. This Agreement shall be construed
and interpreted in accordance with the laws of the Commonwealth of Kentucky.
Section headings are used in this Agreement for convenience only and are to be
ignored in the construction of the terms of this Agreement.
8.2 Modifications. The parties hereto may amend, modify or
supplement this Agreement, before or after approval thereof by the shareholders
of KCB, in such manner as may be agreed by them in writing.
8.3 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
the remaining provisions.
8.4 Notices. All notices hereunder shall be in writing and shall
be deemed to have been given or made when delivered or mailed, first class,
registered or certified mail, postage prepaid, addressed as follows, until
notice of another address or additional addresses have been received by the
other parties:
If to Corporation or Acquisition Corp to:
Trans Financial Bancorp, Inc.
500 East Main Street
Bowling Green, Kentucky 42101
Attention: Douglas M. Lester, President and Chief
Executive Officer
With a copy to:
Stewart E. Conner, Esq.
WYATT, TARRANT & COMBS
2800 Citizens Plaza
Louisville, Kentucky 40202
If to KCB, to:
Kentucky Community Bancorp, Inc.
33-35 West Second Street
Maysville, Kentucky 41056
Attention: Thomas R. Wallingford, President and Chief
Executive Officer
With a copy to:
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<PAGE> 107
David W. Harper, Esq.
Hirn, Reed & Harper
2000 Meidinger Tower
Louisville, Kentucky 40202
8.5 Expenses; Risk of Loss. Whether or not the Merger is
consummated, each of the parties hereto will pay its own fees and expenses
incurred in connection with the Merger and the other transactions contemplated
by this Agreement and the Plan of Merger; provided, however, that if the
transactions contemplated hereby are consummated, then the out-of-pocket fees
and expenses incurred or paid by or on behalf of KCB in connection with the
Merger or the consummation of any of the transactions contemplated by this
Agreement and the Plan of Merger, including all fees and expenses of investment
banking firms, financial advisors, attorneys, accountants, experts and
consultants, shall not exceed the amount Previously Disclosed. Corporation and
KCB shall share equally the cost incurred in printing and mailing to
shareholders of KCB the Proxy Statement/Prospectus. Until the Effective Time,
the risk of loss to the assets of KCB shall remain with KCB.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
8.7 Time of Essence; Best Efforts. Time is of the essence to the
performance of the obligations set forth in this Agreement. KCB and
Corporation each agree to use their respective best efforts to obtain the
satisfaction of the conditions to their respective obligations specified
herein, and to advise the other parties hereto in writing, as to any unusual
delays or impediments in obtaining the same.
8.8 Closing. At the Closing, each party shall execute and deliver
all documents required by this Agreement, and such further documents as the
other party shall reasonably request in order to satisfy the fulfillment of
each party's agreements and undertakings hereunder.
8.9 Records and Further Assurances. After the Closing, each party
shall make available to the other on reasonable request such books and records
of that party as may be appropriate for use in connection with their respective
tax returns, including any review thereof, and for any other reasonable
purpose.
8.10 Parties in Interest; Third Party Rights. All covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of their respective successors and
permitted assigns. No party to this Agreement may however, assign its rights
hereunder or delegate its
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<PAGE> 108
obligations hereunder to any other person or entity without the express prior
written consent of the other parties hereto. It is the intention of the
parties that nothing in this Agreement or the Plan of Merger shall be deemed to
create any right with respect to any person or entity not a party to this
Agreement or the Plan of Merger.
8.11 Entire Agreement; Waiver. This Agreement, including all
information Previously Disclosed, the Exhibits hereto, the Plan of Merger, the
Stock Option Agreement and the Confidentiality Agreements, constitute and
contain the entire agreement of KCB, Corporation and Acquisition Corp with
respect to the Merger and supersede any prior agreement by the parties, whether
written or oral. The waiver of a breach of any term or condition of this
Agreement must be in writing signed by the party sought to be charged with such
waiver and such waiver shall not be deemed to constitute the waiver of any
other breach of the same or of any other term or condition of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
TRANS FINANCIAL BANCORP, INC.
By /s/ Douglas M. Lester
-------------------------------
Douglas M. Lester, President and
Chief Executive Officer
TRANS FINANCIAL ACQUISITION CORP
By /s/ Douglas M. Lester
-------------------------------
Douglas M. Lester, President
KENTUCKY COMMUNITY BANCORP, INC.
By /s/ Thomas R. Wallingford
---------------------------------
Thomas R. Wallingford, President
and Chief Executive Officer
36
<PAGE> 109
AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (the
"Amendment") is made and entered into as of this 6th day of January, 1994
between TRANS FINANCIAL BANCORP, INC., a Kentucky corporation ("Corporation"),
TRANS FINANCIAL ACQUISITION CORP, a Kentucky corporation ("Acquisition Corp"),
and KENTUCKY COMMUNITY BANCORP, INC., a Kentucky corporation ("KCB").
W I T N E S S E T H :
The respective Boards of Directors of Corporation, Trans Financial
Acquisition Corp and KCB approved and adopted an Agreement and Plan of
Reorganization (the "Agreement") and a Plan of Merger (the "Plan of Merger"),
each dated November 9, 1993, under which plan Trans Financial Acquisition Corp,
a Kentucky corporation, would be merged into KCB, in accordance with the terms
of the Agreement and the Plan of Merger.
The respective Boards of Directors of KCB, Corporation and Trans
Financial Acquisition Corp have determined it is desirable to effect this
Amendment and an Amended and Restated Plan of Merger (the "Amended Plan"),
which Amended Plan amends and restates the Plan of Merger in its entirety, and
under which plan KCB would be merged into Corporation, in accordance with the
Agreement, this Amendment, and the Amended Plan.
The respective Boards of Directors of KCB, Corporation and Trans
Financial Acquisition Corp have approved and adopted this Amendment and have
authorized the execution hereof, and the respective Boards of Directors of KCB
and Corporation have approved and adopted the Amended Plan.
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, agreements and undertakings herein contained, the
parties hereby agree as follows:
1. Section 2.1 of the Agreement is hereby amended to read in its entirety
as follows:
2.1 Effective Time of Merger. Upon the terms and conditions set
forth in this Agreement and the Amended and Restated Plan of Merger,
Articles of Merger (the "Articles of Merger") shall be duly prepared and
executed by Corporation and KCB, and thereafter delivered to the Secretary
of State of the Commonwealth of Kentucky for filing, as provided in the
Act, on the Closing Date. The Merger shall become effective upon the
filing with the Kentucky Secretary of State or at such time and date
thereafter as is provided in the Articles of Merger (the "Effective Time").
<PAGE> 110
2. Each reference in the Agreement to the "Plan of Merger" and the "Plan"
is hereby deleted and replaced with the "Amended and Restated Plan of Merger"
executed of even date herewith, a copy of which is attached hereto as Exhibit A
and incorporated by reference herein as if fully set out herein.
3. Each reference in the Agreement to "Trans Financial Acquisition Corp"
and "Acquisition Corp" is hereby deleted.
4. This Amendment may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute one
and the same instrument.
5. Except as expressly modified by this Amendment, all other terms,
provisions and conditions of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers as of the date first above written.
TRANS FINANCIAL BANCORP, INC.
By /s/ Douglas M. Lester
--------------------------------
Douglas M. Lester, President and
Chief Executive Officer
TRANS FINANCIAL ACQUISITION CORP
By /s/ Douglas M. Lester
----------------------------
Douglas M. Lester, President
KENTUCKY COMMUNITY BANCORP, INC.
By /s/ Thomas R. Wallingford
-------------------------------
Thomas R. Wallingford, President
and Chief Executive Officer
2
<PAGE> 111
AMENDED AND RESTATED PLAN OF MERGER
THIS AMENDED AND RESTATED PLAN OF MERGER (the "Amended Plan")
is made and entered into as of this 6th day of January, 1994, by and between
TRANS FINANCIAL BANCORP, INC., a Kentucky corporation ("Corporation"), and
KENTUCKY COMMUNITY BANCORP, INC., a Kentucky corporation ("KCB").
W I T N E S S E T H :
KCB is a corporation organized and existing under the laws of
the Commonwealth of Kentucky, the authorized capital stock of which consists of
[i] 600,000 shares of common stock with no par value per share ("KCB Common
Stock"), of which at the date hereof 258,901 shares of KCB Common Stock are
validly issued and outstanding and fully paid and nonassessable, 2,055 shares
are held by KCB in treasury, and 530 shares are reserved for issuance upon the
exercise of outstanding options, and [ii] 200,000 shares of Class A preferred
stock with no par value per share, of which no shares are issued or
outstanding.
The respective Boards of Directors of Corporation, Trans
Financial Acquisition Corp and KCB have approved and adopted an Agreement and
Plan of Reorganization (the "Agreement") and a Plan of Merger (the "Plan of
Merger"), each dated November 9, 1993, for the general welfare and advantage of
Corporation and KCB and their respective shareholders, under which plan Trans
Financial Acquisition Corp, a Kentucky corporation, would be merged into KCB,
in accordance with the terms of the Agreement and the Plan of Merger.
The respective Boards of Directors of KCB, Corporation and
Trans Financial Acquisition Corp have determined it is desirable to effect an
Amendment to the Agreement (the "Amendment"), and this Amended Plan, which
Amended Plan amends and restates the Plan of Merger in its entirety, and under
which plan KCB would be merged into Corporation, in accordance with the
Agreement, the Amendment, and the Amended Plan. The respective Boards of
Directors of KCB, Corporation and Trans Financial Acquisition Corp have
approved and adopted the Amendment, and the respective Boards of Directors of
KCB and Corporation have approved and adopted this Amended Plan and have
authorized the execution hereof.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and undertakings herein contained, the parties hereby agree
as follows:
<PAGE> 112
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and conditions set forth in this Amended
Plan, the Agreement and the Amendment, at the Effective Time (as hereinafter
defined), KCB shall be merged with and into Corporation (the "Merger") in
accordance with the provisions of Section 271B.11-010 and with the effect
provided in Section 271B.11-060 of the Kentucky Business Corporation Act (the
"Act"). The terms of the Merger shall be as set forth in the Agreement, the
Amendment and in this Amended Plan.
1.2 Articles of Merger. Upon the terms and conditions set forth in the
Agreement, the Amendment and this Amended Plan, Articles of Merger (the
"Articles of Merger") shall be duly prepared and executed by Corporation and
KCB, and thereafter delivered to the Secretary of State of the Commonwealth of
Kentucky for filing, as provided in the Act, on the Closing Date, as defined in
the Agreement. The Merger shall become effective upon the filing with the
Kentucky Secretary of State or at such time and date thereafter as are provided
in the Articles of Merger (the "Effective Time").
1.3 Effect of Filing.
A. At the Effective Time, [i] the separate existence of KCB shall
cease and KCB shall be merged with and into Corporation (sometimes herein
referred to as the "Surviving Corporation"), [ii] the Articles of Incorporation
of Corporation as in effect immediately prior to the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation, and [iii] the
Bylaws of Corporation as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation.
B. At the Effective Time, the officers and Board of Directors of the
Surviving Corporation shall consist of those persons serving as the officers
and directors of Corporation immediately prior to the Effective Time.
C. At and after the Effective Time, the Merger will have the effects
set forth in Section 271B.11-060 of the Kentucky Business Corporation Act and
as otherwise provided by law.
ARTICLE 2
CONVERSION OF SHARES
2.1 Conversion of KCB Capital Stock.
A. Conversion of KCB Common Stock. Each share of KCB Common Stock
issued and outstanding immediately prior to the Effective Time shall,
automatically, by virtue of the Merger and at
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the Effective Time, be exchanged for and converted, without any further notice
to or on the part of the holder thereof, into 5.3 shares of Corporation Common
Stock, subject to Sections 2.1.C and 2.1.D hereof (the "Exchange Ratio"). All
shares of KCB Common Stock shall automatically be canceled and shall cease to
exist and each certificate previously representing any such shares shall
thereafter represent the right to receive the Corporation Common Stock into
which such KCB Common Stock has been converted. Certificates previously
representing shares of KCB Common Stock shall be exchanged for Corporation
Common Stock issued in consideration therefor upon the surrender of such
certificates in accordance with Section 2.2.
B. Treasury Stock. All shares of KCB Common Stock that are owned by
KCB as treasury stock, immediately prior to the Effective Time, shall be
canceled and no cash, stock or other property shall be delivered in exchange
therefor.
C. Reclassifications. If prior to the Effective Time the outstanding
shares of Corporation Common Stock shall have been increased, decreased or
changed into or exchanged for a different number or kind of shares or
securities by reorganization, recapitalization, reclassification, stock
dividend, stock split or other like changes in Corporation's capitalization,
all without Corporation receiving consideration therefor, then an appropriate
and proportionate adjustment shall be made in the number and kind of shares of
Corporation Common Stock to be thereafter delivered pursuant to this Amended
Plan.
D. No Fractional Shares. No certificate or scrip of any kind will be
issued by Corporation to any shareholder of KCB in respect of any fractional
interest in Corporation Common Stock arising out of the conversion of KCB
Common Stock into Corporation Common Stock in the Merger and such fractional
share interests will not entitle the owner thereof to vote or to any rights of
a shareholder of the Corporation. No holder of KCB Common Stock will have any
rights in respect of a fractional interest in Corporation Common Stock arising
out of the Merger except the right to receive in lieu thereof a cash payment in
a dollar amount equal to such fractional interest multiplied by the average of
the bid and asked price per share, as quoted by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), for Corporation
Common Stock on the trading day which occurs immediately prior to the Closing
Date. For purposes of this Amended Plan, "trading day" shall mean any day on
which securities are traded on the New York Stock Exchange.
2.2 Exchange of Certificates.
A. As of the Effective Time, the Corporation shall deposit, or cause
to be deposited, with The State National Bank,
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<PAGE> 114
Maysville, Kentucky (the "Exchange Agent"), for the benefit of the holders of
KCB Common Stock, for exchange in accordance with this Section 2.2, through the
Exchange Agent, certificates representing the shares of Corporation Common
Stock (such certificates for shares of Corporation Common Stock, together with
any dividends or distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund") issuable pursuant to Section 2.1 in exchange for
outstanding shares of KCB Common Stock.
B. At and after the Effective Time, each person (other than
Corporation) who immediately prior to the Effective Time held of record shares
of KCB Common Stock shall be entitled to receive, upon the surrender of the
certificate(s) which represented such shares (individually a "Certificate" and
collectively the "Certificates") to Corporation, together with a letter of
transmittal (in the form contemplated by Section 2.2.C) duly executed, the
consideration specified in Section 2.1.
C. On, or within seven (7) days after the Effective Time, the Exchange
Agent shall mail or deliver to each holder (other than Corporation), who
immediately prior to the Effective Time held of record shares of KCB Common
Stock, a form letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent) and instructions for
use in effecting the surrender of the Certificates or payment therefor. No
interest will be paid or accrue on any consideration payable on the surrender
of such Certificate. If delivery of certificates of Corporation Common Stock
is to be made to a person other than the person in whose name the Certificate
surrendered is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of Corporation that such tax has been paid or is not applicable.
D. At and after the Effective Time, holders of Certificates shall
cease to have any rights as shareholders of KCB except for the right to receive
upon such surrender the consideration specified in Section 2.1.
E. No dividends or other distributions declared or made after the
Effective Time with respect to Corporation Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Corporation Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.1.D until the holder of such Certificate
shall surrender such Certificate. Subject to the effect of applicable laws,
following the surrender of any such Certificate,
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<PAGE> 115
there shall be paid to the holder of such Certificate(s) representing whole
shares of Corporation Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender the amount of any cash payable with
respect to a fractional share of Corporation Common Stock to which such holder
is entitled pursuant to Section 2.1.D and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Corporation Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of
Corporation Common Stock.
F. After the Effective Time, except to the extent necessary to issue
replacement Certificates for any Certificates which may have been lost or
stolen or to comply with the payment instructions contained in a letter of
transmittal contemplated by Section 2.2.C., there shall be no further
registration of transfers on the stock transfer books of KCB of any
Certificates formerly evidencing the shares of KCB Common Stock which were
outstanding immediately prior to the Effective Time.
G. Any portion of the Exchange Fund that remains undistributed to the
shareholders of KCB for six months after the Effective Time shall be delivered
to the Corporation, upon demand, and any shareholders of KCB who have not
theretofore complied with this Article 2 shall thereafter look only to the
Corporation for payment of their claim for Corporation Common Stock, any cash
in lieu of fractional shares of Corporation Common Stock and any dividends or
distributions with respect to Corporation Common Stock.
H. Neither KCB nor the Corporation shall be liable to any holder of
shares of KCB Common Stock for such shares or Corporation Common Stock into
which they are converted (or dividends or distributions with respect thereto)
or cash in lieu of fractional shares delivered to a public official pursuant to
any abandoned property, escheat or similar law.
2.3 Dissenting Shareholders. If any holder of shares of KCB Common Stock
shall, in accordance with the provisions of applicable law, seek appraisal and
perfect dissenting shareholder rights to be paid the fair value of his or her
shares ("Dissenting Shares"), then such holder shall be entitled to receive
such value as may be established pursuant to such provisions. KCB shall give
Corporation prompt notice of any written objections or demands received from
any shareholder pursuant to such provisions, and shall give Corporation the
opportunity to participate in all proceedings with respect to any such
objections or demands. KCB will pay its dissenting shareholders the value of
their stock out of its own funds. No funds will be supplied for that purchase,
directly or
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<PAGE> 116
indirectly, by Corporation, nor will Corporation directly or indirectly
reimburse KCB for any payments to dissenters.
ARTICLE 3
TERMINATION
Anything contained in this Amended Plan notwithstanding and
notwithstanding adoption hereof by the shareholders of KCB, this Amended Plan
may be terminated and the Merger abandoned as provided in the Agreement and the
Amendment.
ARTICLE 4
CONDITIONS PRECEDENT
The obligations of Corporation and KCB to effect the Merger as herein
provided shall be subject to satisfaction, unless duly waived, of the
conditions set forth in the Agreement and the Amendment.
ARTICLE 5
GENERAL PROVISIONS
5.1 Law and Section Headings. This Amended Plan shall be construed and
interpreted in accordance with the laws of the Commonwealth of Kentucky.
Section headings are used in this Amended Plan for convenience only and are to
be ignored in the construction of the terms of this Amended Plan.
5.2 Modifications. The parties hereto may amend, modify or supplement
this Amended Plan, before or after approval thereof by the shareholders of KCB,
in such manner as may be agreed by them in writing.
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<PAGE> 117
IN WITNESS WHEREOF, the parties hereto have caused this Amended Plan to
be executed by their duly authorized officers as of the date first above
written.
TRANS FINANCIAL BANCORP, INC.
By /s/ Douglas M. Lester
--------------------------------
Douglas M. Lester, President
KENTUCKY COMMUNITY BANCORP, INC.
By /s/ Thomas R. Wallingford
-------------------------------
Thomas R. Wallingford, President
7
<PAGE> 118
APPENDIX B
January 14,1994
Members of the Board of Directors
Kentucky Community Bancorp, Inc.
33 West 2nd Street
Maysville, KY 41056
Gentlemen:
We understand that Kentucky Community Bancorp, Inc. (the "Company"),
and Trans Financial Bancorp, Inc. ("TRFI") have entered into a Merger
Agreement and Plan of Reorganization, dated November 9, 1993 ("The
Merger Agreement"), pursuant to which the Company will be merged with
and into TRFI, which will be the surviving entity (the "Merger"). We
understand that TRFI will issue to the shareholders of the Company
5.30 shares of its common stock in exchange for each outstanding share
of the Company's common stock, with cash in lien of fractional shares
(the "Consideration").
You have asked for our opinion as to whether the Consideration to be
received by the stockholders of the Company pursuant to the Merger is
fair to the Company's stockholders from a financial point of view, as
of the date of the Merger Agreement. As you are aware, we were not
retained to nor did we advise the Company with respect to alternatives
to the Merger or the Company's decision to proceed with or effect the
Merger.
In connection with our opinion, we have, among other things:
(i) reviewed certain publicly available financial and other data
with respect to the Company and TRFI including the
consolidated financial statements for recent years and
interim periods to date and certain other relevant financial
and operating data relating to the Company and TRFI made
available to us from published sources and from the internal
records of the Company;
(ii) reviewed the Merger Agreement;
(iii) reviewed certain historical market prices and trading
volumes of the Company's common stock and TRFI common stock
as reported by the National Association of Securities
Dealers Automated Quotation System;
(iv) compared the Company and TRFI from a financial point of view
with certain other companies in the financial services
industry that we deemed to be relevant;
(v) considered the financial terms, to the extent publicly
available, of selected recent acquisitions of financial
institutions that we deemed to be comparable, in whole or in
part, to the Merger and the Comapny;
(vi) reviewed certain information of a business and financial
nature regarding the Company and TRFI, furnished to us by
the Company and TRFI, including financial forecasts and
related assumptions of the Company;
<PAGE> 119
KENTUCKY COMMUNITY BANCORP, INC.
January 14, 1994
Page 2
(vii) made inquiries regarding and discussed the Merger and the
Merger Agreement and other matters related thereto with the
Company's counsel; and
(viii) performed such other analyses and examinations as we have
deemed appropriate.
In connection with our review, we have not independently verified any
of the foregoing information, have relied on all such information and
assumed that all such information is complete and accurate in all
material respects. With respect to the financial information for the
Company provided to us by the Company's management, we have assumed
for purposes of our opinion that they have been reasonably prepared on
bases reflecting the best available estimates and judgements of the
Company's management at the time of preparation as to the future
financial performance of the Company and that they provide a
reasonable basis upon which we can form our opinion. We have also
assumed that there have been no material changes in the Company's or
TRFI's assets, financial condition, results of operations, business or
prospects since the date of the last financial statements made
available to us. We have relied on advice of counsel to the Company
as to all legal matters with respect to the Company, the Merger and
the Merger Agreement. In addition, we have not made an independent
evaluation, appraisal or physical inspection of the assets or
individual properties of the Company or TRFI, nor have we been
furnished with any such appraisals. Further, our opinion is based on
economic, monetary and market conditions existing as of the date of
the Merger Agreement.
In the ordinary course of its business, Keefe Managers has in the past
and may in the furure from time to time trade equity securities in
TRFI for its own account and the accounts of its discrationary
clients. Neither Keefe Managers nor any of its discretionary clients
currently holds any securities of KCB or TRFI in any account managed
by Keefe Managers.
Based upon the foregoing, and in reliance thereon, it is our opinion
that, as of the date hereof, the Consideration to be received by the
stockholders of the Company pursuant to the Merger is fair to such
stockholders from a financial point of view.
This opinion is furnished pursuant to our engagement letter, dated
November 8, 1993 and is solely for the benefit of the Board of
Directors of the Company. Except as provide in such engagement
letter, this opinion may not be used or referred to by the Company, or
quoted or disclosed to any person in any manner without our prior
written consent.
Very truly yours,
Keefe Managers
<PAGE> 120
Appendix C
SUBTITLE 13. DISSENTERS' RIGHTS
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
271B.13-010. Definitions. -- As used in this subtitle:
(1) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent
from corporate action under KRS 271B.13-020 and who excercises that
right when and in the manner required by KRS 271B.13-200 to
271B.13-280.
(3) "Fair value," with respect to a dissenter's shares, means
the value of the shares immediately before the effectuation of the
corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate action
unless exclusion would be inequitable. In any transaction subject to
the requirements of KRS 271B.12-210 or exempted by KRS 271B.12-220(2)
in order to be exempt from the requirements of KRS 271B.12-210.
(4) "Interest" means from the effective date of the corporate
action until the date of payment, at the average rate currently paid
by the corporation on its principal bank loans or, if none, at a rate
that is fair and equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares
are registered in the records of a corporation or the beneficial owner
of shares
<PAGE> 121
271B.13-020 PRIVATE CORPORATIONS AND ASSOCIATIONS 96
to the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial shareholder.
271B.13-020. Right to dissent. -- (1) A shareholder shall be entitled to
dissent from, and obtain payment of the fair value of his shares in the event
of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If shareholder approval is required for the merger by KRS 271B.11-040 or
the articles of incorporation and the shareholder is entitle to vote on the
merger; or
2. If the corporation is a subsidiary that is merged with its parent under
KRS 271B.11-040;
(b) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
(1) year after their date of sale;
(d) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
1. Alters or abolishes a preferential right of the shares to a distribution
or in dissolution;
2. Creates, alters, or abolishes a right in respect of redemption, including
a provision respecting a sinking fund for the redemption or repurchase, of the
shares;
3. Excludes or limits the right of the shares to vote on any matter other
than a limitation by dilution through issuance of shares or other securities
with similar voting rights; or
4. Reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under KRS
271B.6-040;
(e) Any transaction subject to the requirements of KRS 271B.12-210 or exempted
by KRS 271B.12-220(2); or
(f) Any corporate action taken pursuant to a shareholder vote to the extent
the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for his shares under
this chapter shall not challenge the corporate action creating his
<PAGE> 122
97 BUSINESS CORPORATIONS 271B.13-030
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
271B.13-030. Dissent by nominee and beneficial owners. -- (1) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he shall dissent with respect to all shares
beneficially owned by any one (1) person and notify the corporation in writing
of the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter, under this subsection shall be
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares held
on his behalf only if:
<PAGE> 123
271B.13-200 PRIVATE CORPORATIONS AND ASSOCIATIONS
(a) He submits to the corporation the record shareholder's written consent to
the dissent not later than the time the beneficial shareholder asserts
dissenters' rights; and
(b) He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
PROCEDURES FOR EXERCISE OF DISSENTERS' RIGHTS
271B.13-200. Notice of dissenters' rights. -- (1) If proposed corporate
action creating dissenters' rights under KRS 271B.13-020 is submitted to a
vote at a shareholders' meeting, the meeting notice must state that
shareholders are or may be entitled to assert dissenters' rights under this
subtitle and the corporation shall undertake to provide a copy of this subtitle
to any shareholder entitled to vote at the shareholders' meeting upon request
of that shareholder.
(2) If corporate action creating dissenters' rights under KRS 271B.13-020 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in KRS 271B.13-220.
271B.13-210. Notie of intent to demand payment. -- (1) If proposed
corporate action creating dissenters' rights under KRS 271B.13-020 is
submitted to a vote at a shareholders' meeting, a shareholder who wishes to
assert dissenters' rights:
(a) Shall deliver to the corporation before the vote is taken written notice
of his intent to demand payment for his shares if the proposed action is
effectuated; and
(b) Shall not vote his shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1) of
this section shall not be entitled to payment for his shares under this
chapter.
271B.13-220. Dissenters' notice. -- (1) If proposed corporate action
creating dissenters' rights under KRS 271B.13-020 is authorized at a
shareholders' meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satified the requirements of KRS 271B.13-210.
(2) The dissenters' notice shall be sent no later than ten (10) days after
the date the proposed corporation action was authorized by the shareholders,
or, if no shareholder authorization was obtained, by the board of directors,
and shall:
(a) State where the payment demand must be sent and where and when
certificates for certified shares must be deposited;
(b) Inform holders of uncertified shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the
<PAGE> 124
99 BUSINESS CORPORATIONS 271B.13-250
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not he acquired beneficial ownership of the shares
before that date;
(d) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty (30), nor more than sixty (60) days
after the date the notice provided in subsection (1) of this section is
delivered; and
(e) Be accompanied by a copy of this subtitle.
271B.13-230. Duty to demand payment. --(1) A shareholder who
is sent a dissenters' notice described in KRS 271B.13-220 shall demand payment,
certify whether he acquired beneficial ownership of the shares before the date
required to be set forth in the dissenters' notice pursuant to subsection
(2)(c) of KRS 271B.13-220, and deposit his certificates in accordance with the
terms of the notice.
(2) The shareholder who demands payment and deposits his share
certificates under subsection (1) of this section shall retain all other rights
of a shareholder until these rights are cancelled or modified by the taking of
the proposed corporate action.
(3) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice,
shall not be entitled to payment for his shares under this subtitle.
271B.13-240. Share restrictions. -- (1) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment
is received until the proposed corporate action is taken or the restrictions
released under KRS 271B.13-260.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares shall retain all other rights of a shareholder until
these rights are cancelled or modified by the taking of the proposed corporate
action.
271B.13-250. Payment. -- (1) Except as provided in KRS 271B.13-270, as soon
as the proposed corporate action is taken, or upon receipt of a payment demand,
the corporation shall pay each dissenter who complied with KRS 271B.13-230 the
amount the corporation estimates to be the fair value of his shares, plus
accrued interest.
(2) The payment shall be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year ending
not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated; and
<PAGE> 125
271B.13-260 PRIVATE CORPORATIONS AND ASSOCIATIONS 100
(d) A statement of the dissenter's right to demand payment under KRS
271B.13-280.
271B.13-260. Failure to take action. - (1) If the corporation does not
take the proposed action within sixty (60) days after the date set for demanding
payment and depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under KRS 271B.13-220 and repeat the payment demand
procedure.
271B.13-270. After-acquired shares.- (1) A corporation may elect to
withhold payment required by KRS 271B.13-250 from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders
of the terms of the proposed corporate action.
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under
KRS 271B.13-280.
271B.13-280. Procedure if shareholder dissatisfied with paymnent or offer. -
(1) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate (less any payment under KRS 271B.13-250), or reject the
corporation's offer under KRS 271B.13-270 and demand payment of the fair value
of his shares and interest due, if:
(a) The dissenter believes that the amount paid under KRS 271B.13-250 or
offered under KRS 271B.13-270 is less than the fair value of his shares or that
the interest due is incorrectly calculated;
(b) The corporation fails to make payment under KRS 271B.13-250 within
sixty (60) days after the date set for demanding payment; or
(c) The corporation, having failed to take the proposed action, does not
return the deposited cerfificates or release the transfer restrictions imposed
on uncertificated shares within sixty (60) days after the date set for
demanding payment.
(2) A dissenter waives his right to demand payment under this section
unless he shall notify the corporation of his demand in writing under
subsection (1) of this section within thirty (30) days after the corporation
made or offered payment for his shares.
<PAGE> 126
101 BUSINESS CORPORATIONS 271B.13-310
JUDICIAL APPRAISAL OF SHARES
271B.13-300. Court action. -- (1) If a demand for payment under KRS
271B.13-280 remains unsettled, the corporation shall commence a proceeding
within sixty (60) days after receiving the payment demand and petition the
court to determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the sixty (60) day period,
it shall pay each dissenter whose demand remains unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the circuit court of the
county where a corporation's principal office (or, if none in this state, its
registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic
corporation was located.
(3) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties shall be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section shall be plenary and exclusive. The court may
appoint one (1) or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the power
described in the order appointing them, or in any amendment to it. The
dissenters shall be entitled to the same discovery rights as parties in other
civil proceedings.
(5) Each dissenter made a party to the proceeding shall be entitled to
judgment:
(a) For the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation; or
(b) For the fair value, plus accrued interest, of his after-aquired shares
for which the corporation elected to withhold payment under KRS 271B.13-270.
271B.13-310. Court costs and counsel fees. -- (1) The court in an appraisal
proceeding commenced under KRS 271B.13-300 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under KRS 271B.13-280.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
<PAGE> 127
271B.14-010 PRIVATE CORPORATIONS AND ASSOCIATIONS 102
(a) Against the corporation and in favor of any or all dissenters, if the
court finds the corporation did not substantially comply with the requirements
of KRS 271B.13-200 to 271B.13-280; or
(b) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this subtitle.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
<PAGE> 128
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article XI of the registrant's Amended and Restated Articles of
Incorporation limits the liability of directors of the registrant pursuant to
the Kentucky Business Corporation Act. Under this Article, directors generally
will be personally liable to the registrant or its shareholders for monetary
damages only for transactions involving conflicts of interest or from which a
director derives an improper personal benefit, intentional misconduct or
violations of law, and unlawful distributions. The Articles of Incorporation
further provide that the Bylaws of the registrant may set forth indemnification
requirements.
The Bylaws of the registrant require the registrant to indemnify each
person who was or is made a party or is threatened to be made a party to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), by reason of the fact that he or she is or was a
director or officer of the registrant, or is or was serving in such capacity
with another entity at the request of the registrant, for the costs of such
Proceeding to the fullest extent authorized by Kentucky law. If the Proceeding
was initiated by the officer or director, however, indemnification is permitted
only if the Proceeding was authorized by the Board of Directors. The costs
indemnified include all expenses, liability and loss reasonably incurred or
suffered by the director or officer in connection with his or her action on
behalf of the registrant.
The Bylaws of the registrant further provide for the advancement of
expenses incurred by an officer or director, and reimbursable under the Bylaws,
prior to the registrant of an agreement, by or on behalf of such director or
officer, to repay all amounts advanced if it is ultimately determined that such
director or officer is not entitled to indemnification.
If a claim is not paid in full by the registrant within ninety days
after a written claim has been received, the director or officer making the
claim may bring suit against the registrant to recover any unpaid amount. If
the director or officer is successful, in whole or in part, he or she will be
entitled to be paid the expense of prosecuting such claim. Although it is a
defense to an action against the registrant by a director or officer that he or
she has not met the standards of conduct which make it permissible under
Kentucky law for the registrant to indemnify, the registrant has the burden of
proving this defense.
II-1
<PAGE> 129
The circumstances under which Kentucky law requires or permits a
corporation to indemnify its directors, officers, employees and/or agents are
set forth at KRS 271B.8-500 et seq.
Generally, under KRS 271B8-500 et seq., a corporation may indemnify an
individual made a party to a proceeding because he is or was a director against
liability incurred in the proceeding if (a) he conducted himself in good faith,
and (b) he reasonably believed: in the case of conduct in his official capacity
with the corporation, that his conduct was in its best interests best
interests; and, in all other cases, that his conduct was at least not opposed
to its best interests; and (c) in the case of any criminal proceeding, he had
no reasonable cause to believe his conduct was unlawful.
A corporation may not indemnify a director: (a) in connection with a
proceeding by or in the right of the corporation in which the director was
adjudged liable to the corporation; or (b) in connection with any other
proceeding charging improper personal benefit to him, whether or not involving
action in his official capacity, in which he was adjudged liable on the basis
that personal benefit was improperly received by him.
Indemnification permitted in connection with a proceeding by or in the
right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding.
In addition, the registrant maintains directors' and officers'
liability insurance covering certain liabilities which may be incurred by the
directors and officers of the registrant in connection with the performance of
their duties.
ITEM 21. EXHIBITS
The following exhibits are filed herewith or incorporated herein by
reference:
(2) Plan and Agreement of Reorganization dated November
9, 1993, among Trans Financial Bancorp, Inc., Trans
Financial Acquisition Corp and Kentucky Community
Bancorp, Inc. is incorporated by reference to Exhibit
10(m) of the Registrant's Report on Form 10-Q for the
quarter ended September 30, 1993 and is included as
Appendix A to the Proxy Statement-Prospectus.
(4) (a) Restated Articles of Incorporation of the
Registrant incorporated by reference to
Exhibit 3 of the Registrant's report on Form
10-Q for the quarter ended March 31, 1992.
II-2
<PAGE> 130
(b) Bylaws of the Registrant as amended are
incorporated by reference to Exhibit 3 of the
Registrant's report on Form 10-Q for the
quarter ended March 31, 1992.
(c) Specimen Stock Certificate is incorporated by
reference to Exhibit 4(c) to the Registrant's
report on Form 10-K for the year ended
December 31, 1987.
(d) Rights Agreement dated January 20, 1992
between Manufacturers Hanover Trust Company
and Trans Financial Bancorp, Inc. is
incorporated by reference to Exhibit 1 to the
Registration's report on Form 8-K dated
January 24, 1992.
*(5) Opinion of Wyatt, Tarrant & Combs regarding the
validity of the Common Stock being registered.
*(8) Opinion of Wyatt, Tarrant & Combs as to certain
federal income tax consequences.
(10) (a) Trans Financial Bancorp, Inc. 1987 Stock
Option Plan is incorporated by reference to
Exhibit 10 of the Registrant's report on Form
10-Q for the quarter ended March 31, 1988.
(b) Trans Financial Bancorp, Inc. 1990 Stock
Option Plan is incorporated by reference to
Exhibit 10(d) of Registrant's Report on Form
10-K for the year ended December 31, 1990.
(c) Trans Financial Bancorp, Inc. 1992 Stock
Option Plan is incorporated by reference to
Exhibit 28 of Registrant's Report on From
10-Q for the quarter ended March 31, 1992.
(d) Employment Agreement between Douglas M.
Lester and Trans Financial Bancorp, Inc. is
incorporated by reference to Exhibit 10(c) of
the Registrant's report on Form 10-K for the
year ended December 31, 1990.
(e) Employment Agreement between Harold T.
Matthews and Trans Financial Bank, N.A. is
incorporated by reference to Exhibit 10(e) of
Registrant's Report on Form 10-K for the year
ended December 31, 1992.
(f) Description of Registrant's Performance
Incentive Plan is incorporated by reference
to
II-3
<PAGE> 131
Exhibit 10(e) of Registrant's Report on Form
10-K for the year ended December 31, 1992.
(g) Form of Deferred Compensation Agreement
between Registrant and certain officers of
Registrant is incorporated by reference to
Exhibit 10(e) of Registrant's Report on Form
10-K for the year ended December 31, 1992.
(h) Trans Financial Bancorp, Inc. Dividend
Reinvestment and Stock Purchase Plan is
incorporated by reference to the Registration
Statement on Form S-3 of Registrant (File No.
33-40606).
(i) Plan and Agreement of Reorganization dated
September 14, 1992 among Trans Financial
Bancorp, Inc., Dawson Springs Bancorp, Inc.
and the shareholders of Dawson Springs
Bancorp, Inc. is incorporated by reference to
Exhibit 1 of Registrant's Report on Form 8-K
dated January 15, 1993.
(j) Share Exchange Agreement dated March 25, 1993
between Trans Financial Bancorp, Inc. and
Trans Kentucky Bancorp is incorporated by
reference to Exhibit 1 of Registrant's Report
on Form 8-K dated April 8, 1993.
(k) Warrant dated as of February 13, 1992 between
Morgan Keegan & Company, Inc. and Trans
Financial Bancorp, Inc. is incorporated by
reference to Exhibit 10(m) of Registration
Statement on Form S-2 of Registrant (File No.
33-45483).
(l) Underwriting Agreement dated as of September
9, 1993 between Morgan Keegan & Company, Inc.
and Trans Financial Bancorp, Inc. is
incorporated by reference to Exhibit (1) to
Registration Statement on Form S-2 of
Registrant (File No. 33-67686).
(m) Underwriting Agreement dated as of March 3,
1992 between Morgan Keegan & Company, Inc.
and Trans Financial Bancorp, Inc. is
incorporated by reference to Exhibit (1) to
Registration Statement on From S-2 of
Registrant (File No. 33-45483).
(n) Loan Agreement dated as of July 6, 1993
between First Tennessee Bank National
Associa-
II-4
<PAGE> 132
tion and Trans Financial Bancorp, Inc.
incorporated by reference to Exhibit 10(p) to
the Registration Statement on Form S-2 of
Registrant (File No. 33-67686).
(o) Subordinated Note dated as of September 16,
1993 by Trans Financial Bancorp, Inc.
incorporated by reference to Exhibit 1 to
Registration Statement on Form S-2 of
Registrant (File No. 33-67686).
(p) Form of Indenture dated as of September 1,
1993 between Trans Financial Bancorp, Inc.
and First Tennessee Bank National Association
is incorporated by reference to Exhibit 4 to
Registration Statement on Form S-2 of
Registrant (File No 33-67686).
(q) Plan and Agreement of Reorganization and
Plan of Merger dated December 27, 1993 between
Trans Financial Bancorp, Inc. and Peoples
Financial Services Inc. is incorporated by
reference to Exhibit 2 of Registrant's
Current Report of Form 8-K dated January 10,
1994.
(23) (a) Consent of KPMG Peat Marwick, independent
auditors for the Registrant.
(b) Consent of KPMG Peat Marwick, independent
auditors for Kentucky Community.
(c) Consent of KPMG Peat Marwick,independent
auditors for Peoples Financial Services, Inc.
(d) Consent of KPMG Peat Marwick, independent
auditors for Citizens Federal Savings Bank.
(e) Consent of Wyatt, Tarrant & Combs, contained
in the opinion filed as Exhibit 5 hereto.
(f) Consent of Wyatt, Tarrant & Combs, contained
in the opinion filed as Exhibit 8 hereto.
*(g) Consent of Keefe Managers, Inc.
*(24) Powers of Attorney.
(99) (a) Opinion of Keefe Managers, Inc. (included in
the Proxy Statement-Prospectus as Appendix
B).
(b) Stock Option Agreement dated November 9, 1993
between Trans Financial Bancorp, Inc. and
Kentucky Community Bancorp, Inc. is
incorporated by reference to Exhibit 10(m) of
Registrant's Report on Form 10-Q for the
quarter ended September 30, 1993.
(c) Form of Proxy
* Previously filed.
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arises under the
Securities Act of 1933 may be permitted to directors or officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised
II-5
<PAGE> 133
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, 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 the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act(
and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
II-6
<PAGE> 134
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.
(d) The undersigned registrant hereby undertakes 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.
(e) The undersigned registrant hereby undertakes that every prospectus
(i) that is filed pursuant to paragraph (d) immediately preceding, or (ii) that
purports to meet the requirements of Sections 10(a)(3) of the Securities Act
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, 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.
(f) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding the request.
(g) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-7
<PAGE> 135
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Post-Effective Amendment No. 1 to Registration
Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Bowling Green, Commonwealth of Kentucky, on
January 13, 1994.
TRANS FINANCIAL BANCORP, INC.
By /s/ Douglas M. Lester
------------------------------
Douglas M. Lester, Chairman of
the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to Registration Statement on Form S-4 has been
signed below by the following persons on the 13th day of January, 1994 in the
capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Douglas M. Lester Chairman of the Board, President, Chief
- ------------------------ Executive Officer and Director (Principal
Douglas M. Lester Executive Officer)
</TABLE>
II-8
<PAGE> 136
/s/ Vince Berta Treasurer and Chief Financial
- -------------------------- Officer (Principal Financial and
Vince Berta Accounting Officer)
*
- --------------------------
Barry D. Bray Director
*
- --------------------------
Mary D. Cohron Director
*
- --------------------------
Floyd H. Ellis Director
*
- --------------------------
Noel Ennis Director
*
- --------------------------
J. David Francis Director
*
- --------------------------
Roy E. Gaddie Director
- --------------------------
John B. Gaines Director
*
- --------------------------
David B. Garvin Director
- -------------------------
Wayne Gaunce Director
- -------------------------
C.C. Howard Gray Director
*
- --------------------------
Charles A. Hardcastle Director
*
- -------------------------
Douglas M. Lester Director
II-9
<PAGE> 137
*
- -------------------------
C. Cecil Martin Director
- -------------------------
Frank Mastrapasqua Director
*
- -------------------------
Joseph I. Medalie Director
*
- -------------------------
Charles M. Stewart Director
- -------------------------
William B. Van Meter Director
*
- -------------------------
Roland D. Willock Director
*By /s/ Douglas M. Lester
- --------------------------
Douglas M. Lester,
Attorney-in-fact pursuant to
powers of attorney preiously
filed as part of this
Registration Statement
II-10
<PAGE> 138
EXHIBIT INDEX
(2) Plan and Agreement of Reorganization dated November
9, 1993, among Trans Financial Bancorp, Inc., Trans
Financial Acquisition Corp and Kentucky Community
Bancorp, Inc. is incorporated by reference to Exhibit
10(m) of the Registrant's Report on Form 10-Q for the
quarter ended September 30, 1993 and is included as
Appendix A to the Proxy Statement-Prospectus.
(4) (a) Restated Articles of Incorporation of the
Registrant incorporated by reference to
Exhibit 3 of the Registrant's report on Form
10-Q for the quarter ended March 31, 1992.
(b) Bylaws of the Registrant as amended are
incorporated by reference to Exhibit 3 of the
Registrant's report on Form 10-Q for the
quarter ended March 31, 1992.
(c) Specimen Stock Certificate is incorporated by
reference to Exhibit 4(c) to the Registrant's
report on Form 10-K for the year ended
December 31, 1987.
(d) Rights Agreement dated January 20, 1992
between Manufacturers Hanover Trust Company
and Trans Financial Bancorp, Inc. is
incorporated by reference to Exhibit 1 to the
Registration's report on Form 8-K dated
January 24, 1992.
*(5) Opinion of Wyatt, Tarrant & Combs regarding the
validity of the Common Stock being registered.
*(8) Opinion of Wyatt, Tarrant & Combs as to certain
federal income tax consequences.
(10) (a) Trans Financial Bancorp, Inc. 1987 Stock
Option Plan is incorporated by reference to
Exhibit 10 of the Registrant's report on Form
10-Q for the quarter ended March 31, 1988.
(b) Trans Financial Bancorp, Inc. 1990 Stock
Option Plan is incorporated by reference to
Exhibit 10(d) of Registrant's Report on Form
10-K for the year ended December 31, 1990.
(c) Trans Financial Bancorp, Inc. 1992 Stock
Option Plan is incorporated by reference to
Exhibit 28 of Registrant's Report on From
10-Q for the quarter ended March 31, 1992.
(d) Employment Agreement between Douglas M.
Lester and Trans Financial Bancorp, Inc. is
incorporated by reference to Exhibit 10(c) of
the Registrant's report on Form 10-K for the
year ended December 31, 1990.
(e) Employment Agreement between Harold T.
Matthews and Trans Financial Bank, N.A. is
incorporated by reference to Exhibit 10(e) of
Registrant's Report on Form 10-K for the year
ended December 31, 1992.
(f) Description of Registrant's Performance
Incentive Plan is incorporated by reference
to Exhibit 10(e) of Registrant's Report on
Form 10-K for the year ended December 31,
1992.
(g) Form of Deferred Compensation Agreement
between Registrant and certain officers of
Registrant is incorporated by reference to
Exhibit 10(e) of Registrant's Report on Form
10-K for the year ended December 31, 1992.
(h) Trans Financial Bancorp, Inc. Dividend
Reinvestment and Stock Purchase Plan is
incorporated by reference to the Registration
Statement on Form S-3 of Registrant (File No.
33-40606).
(i) Plan and Agreement of Reorganization dated
September 14, 1992 among Trans Financial
Bancorp, Inc., Dawson Springs Bancorp, Inc.
and the shareholders of Dawson Springs
Bancorp, Inc. is incorporated by reference to
Exhibit 1 of Registrant's Report on Form 8-K
dated January 15, 1993.
<PAGE> 139
(j) Share Exchange Agreement dated March 25, 1993
between Trans Financial Bancorp, Inc. and
Trans Kentucky Bancorp is incorporated by
reference to Exhibit 1 of Registrant's Report
on Form 8-K dated April 8, 1993.
(k) Warrant dated as of February 13, 1992 between
Morgan Keegan & Company, Inc. and Trans
Financial Bancorp, Inc. is incorporated by
reference to Exhibit 10(m) of Registration
Statement on Form S-2 of Registrant (File No.
33-45483).
(l) Underwriting Agreement dated as of September
9, 1993 between Morgan Keegan & Company, Inc.
and Trans Financial Bancorp, Inc. is
incorporated by reference to Exhibit (1) to
Registration Statement on Form S-2 of
Registrant (File No. 33-67686).
(m) Underwriting Agreement dated as of March 3,
1992 between Morgan Keegan & Company, Inc.
and Trans Financial Bancorp, Inc. is
incorporated by reference to Exhibit (1) to
Registration Statement on From S-2 of
Registrant (File No. 33-45483).
(n) Loan Agreement dated as of July 6, 1993
between First Tennessee Bank National
Association and Trans Financial Bancorp, Inc.
incorporated by reference to Exhibit 10(p) to
the Registration Statement on Form S-2 of
Registrant (File No. 33-67686).
(o) Subordinated Note dated as of September 16,
1993 by Trans Financial Bancorp, Inc.
incorporated by reference to Exhibit 1 to
Registration Statement on Form S-2 of
Registrant (File No. 33-67686).
(p) Form of Indenture dated as of September 1,
1993 between Trans Financial Bancorp, Inc.
and First Tennessee Bank National Association
is incorporated by reference to Exhibit 4 to
Registration Statement on Form S-2 of
Registrant (File No 33-67686).
(q) Plan and Agreement of Reorganization
and Plan of Merger dated December 27, 1993
between Trans Financial Bancorp, Inc. and
Peoples Financial Services, Inc. is
incorporated by reference to Exhibit 2 of
Registrant's Current Report of Form 8-K dated
January 10, 1994.
(23) (a) Consent of KPMG Peat Marwick, independent
auditors for the Registrant.
(b) Consent of KPMG Peat Marwick, independent
auditors for Kentucky Community.
(c) Consent of KPMG Peat Marwick, independent
auditors for Peoples Financial Services, Inc.
(d) Consent of KPMG Peat Marwick, independent
auditors for Citizens Federal Savings Bank.
(e) Consent of Wyatt, Tarrant & Combs, contained
in the opinion filed as Exhibit 5 hereto.
(f) Consent of Wyatt, Tarrant & Combs, contained
in the opinion filed as Exhibit 8 hereto.
*(g) Consent of Keefe Managers, Inc.
* (24) Powers of Attorney.
(99) (a) Opinion of Keefe Managers, Inc. (included in
the Proxy Statement-Prospectus as Appendix
B).
(b) Stock Option Agreement dated November 9, 1993
between Trans Financial Bancorp, Inc. and
Kentucky Community Bancorp, Inc. is
incorporated by reference to Exhibit 10(m) of
Registrant's Report on Form 10-Q for the
quarter ended September 30, 1993.
(c) Form of Proxy.
* Previously filed.
EXHIBIT NUMBERS MAY NOT IN ALL CASES CORRESPOND TO THOSE IN
ITEM 601 OF REGULATION S-K BECAUSE OF SPECIAL REQUIREMENTS
APPLICABLE TO EDGAR FILERS
<PAGE> 1
Exhibit 23(a)
CONSENT OF KPMG PEAT MARWICK
INDEPENDENT AUDITORS
The Board of Directors
Trans Financial Bancorp, Inc.:
We consent to the use of our report dated February 28, 1993 on the consolidated
financial statements of Trans Financial Bancorp, Inc. and subsidiaries as of
December 31, 1992 and 1991, and for each of the years in the three-year period
ended December 31, 1992, incorporated herein by reference and to the reference
to our firm under the heading "Experts" in the prospectus.
Louisville, Kentucky
January 13, 1994
<PAGE> 1
Exhibit 23(b)
CONSENT OF KPMG PEAT MARWICK
INDEPENDENT AUDITORS
The Board of Directors
Kentucky Community Bancorp, Inc.:
We consent to the use of our report dated February 5, 1993 on the consolidated
financial statements of Kentucky Community Bancorp, Inc. and subsidiaries as of
December 31, 1992 and 1991, and for each of the years in the three-year period
ended December 31, 1992, incorporated herein by reference and to the reference
to our firm under the heading "Experts" in the prospectus.
Louisville, Kentucky
January 13, 1994
<PAGE> 1
Exhibit 23(c)
CONSENT OF KPMG PEAT MARWICK
INDEPENDENT AUDITORS
The Board of Directors
Peoples Financial Services, Inc.:
We consent to incorporation by reference in the registration statement
(No. 33-51575) on Form S-4, as amended, of Trans Financial Bancorp, Inc. of
our report dated February 4, 1993, relating to the consolidated balance sheets
of Peoples Financial Services, Inc. and subsidiary as of December 31, 1992 and
1991, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the years in the three-year period ended December
31, 1992, which report appears in the Current Report on Form 8-K dated January
10, 1994, of Trans Financial Bancorp, Inc., and to the reference to our firm
under the heading "Experts" in the prospectus.
Nashville, Tennessee
January 13, 1994
<PAGE> 1
Exhibit 23(d)
CONSENT OF KPMG PEAT MARWICK
INDEPENDENT AUDITORS
The Board of Directors
Citizens Federal Savings Bank:
We consent to incorporation by reference in the registration statement (No.
33-51575) on Form S-4, as amended, of Trans Financial Bancorp, Inc. of our
report dated February 26, 1993, relating to the consolidated balance sheets
of Citizens Federal Savings Bank and subsidiaries as of December 31, 1992
and 1991, and the related consolidated statements of operations, retained
earnings, and cash flows for each of the years in the three-year period
ended December 31, 1992, which report appears in the Current Report on Form 8-K
dated January 10, 1994, of Trans Financial Bancorp, Inc., and to the reference
to our firm under the heading "Experts" in the prospectus.
Our report dated February 26, 1993 contains an emphasis paragraph which
states that Citizens Federal entered into a supervisory agreement with the
Office of Thrift Supervision in 1991. To comply with the agreement's
requirement to increase regulatory capital ratios, Citizens Federal entered
into an acquisition agreement under which Citizens Federal would convert from
mutual to stock form and be acquired by Peoples Financial Services, Inc., as
discussed in note 15 to the consolidated financial statements of Citizens
Federal. The conversion and acquisition was consummated on February 1, 1993,
and resulted in an increase of capital above the requirement set forth in the
supervisory agreement. Failure to comply with the remaining provisions of the
agreement could expose Citizens Federal to possible further regulatory
sanctions and enforcement actions.
Nashville, Tennessee
January 13, 1994
<PAGE> 1
REVOCABLE PROXY
KENTUCKY COMMUNITY BANCORP, INC.
SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bill B. Hendrickson, Thomas R. Wallingford
and Charles E. Woodward, and each of them, as attorneys and proxies, with full
power of substitution, and authorizes them, and each of them, to vote and act
with respect to all shares of Common Stock of Kentucky Community Bancorp, Inc.
(the "Company") which the undersigned is entitled to vote at the Special Meeting
of Shareholders to be held on February 15, 1994, at 9:30 a.m., at the principal
office of the Company (also the offices of The State National Bank of
Maysville), 33-35 West Second Street, Maysville, Kentucky, and at any and all
adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
1. PROPOSAL to APPROVE the Agreement and Plan of Reorganization dated
November 9, 1993, as amended, and the related Amended and Restated Plan of
Merger.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
matters incident to the conduct of the meeting.
The proxies shall vote such shares as specified herein. If a choice is not
specified, they shall vote FOR the proposal to approve the Agreement and Plan of
Reorganization, as amended, and the related Amended and Restated Plan of Merger.
Dated: , 1994
PRINT NAME OF SHAREHOLDER
SIGNATURE OF SHAREHOLDER
Name(s) should be signed exactly
as shown on the stock
certificate(s). Title should be
added if signing as attorney,
executor, administrator, trustee
or guardian.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
