Item 1.01. Entry into a Material Definitive Agreement.
On January 27, 2021, Kentucky Bancshares, Inc., a Kentucky corporation
("Kentucky Bancshares") and Stock Yards Bancorp, Inc., a Kentucky corporation
("Stock Yards Bancorp"), H. Meyer Merger Subsidiary, Inc., a Kentucky
corporation and a direct, wholly owned subsidiary of Stock Yards Bancorp
("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which, on the terms and subject to the conditions set
forth therein, Merger Sub will merge with and into Kentucky Bancshares, with
Kentucky Bancshares continuing as the surviving corporation (the "Merger").
Immediately following the Merger, it is currently intended that Kentucky
Bancshares will merge with and into Stock Yards Bancorp, with Stock Yards
Bancorp continuing as the surviving corporation (the "Upstream Merger").
Immediately following the Upstream Merger, or at a later time as Stock Yards
Bancorp may determine, Kentucky Bank, a Kentucky state-chartered bank and a
wholly owned subsidiary of Kentucky Bancshares ("Kentucky Bank"), will merge
with and into Stock Yards Bank & Trust Company, a Kentucky state-chartered bank
and a wholly owned subsidiary of Stock Yards Bancorp ("Stock Yards Bank"), with
Stock Yards Bank continuing as the surviving bank (the "Bank Merger," and,
together with the Merger and the Upstream Merger, the "Mergers"). The Merger
Agreement was unanimously approved by the Board of Directors of each of Stock
Yards Bancorp and Kentucky Bancshares.
Under the terms and subject to the conditions of the Merger Agreement, at the
effective time of the Merger (the "Effective Time"), each share of the common
stock, no par value (the "Kentucky Bancshares Common Stock") issued and
outstanding immediately prior to the Effective Time (except for shares of
Kentucky Bancshares Common Stock (A) owned by Kentucky Bancshares or Stock Yards
Bancorp (other than shares (x) held in trust accounts, managed accounts, mutual
funds or similar accounts, or otherwise held in a fiduciary or agency capacity
that are beneficially owned by third parties, or (y) held, directly or
indirectly, as a result of debts previously contracted) or (B) that are
Dissenting Shares, (as provided in the Merger Agreement) will be converted, in
accordance with the procedures set forth in the Merger Agreement, into (1) 0.64
shares (the "Exchange Ratio") of common stock, no par value, of Stock Yards
Bancorp ("Stock Yards Bancorp Common Stock") and (2) the right to receive,
without interest, $4.75 in cash (the "Per Share Cash Consideration" and,
together with the Stock Yards Bancorp Common Stock to be issued pursuant to the
preceding clause (1), the "Merger Consideration").
Under the terms and subject to the conditions of the Merger Agreement, at the
Effective Time, each award of a share of Kentucky Bancshares Common Stock
subject to vesting, repurchase or other lapse restriction (a "Kentucky
Bancshares Restricted Stock Award"), whether vested or unvested, that is
outstanding as of January 27, 2021, and remains outstanding as of immediately
prior to the Effective Time will fully vest and be cancelled and converted
automatically into the right to receive the Merger Consideration in respect of
each share of Kentucky Bancshares Common Stock underlying the applicable
Kentucky Bancshares Restricted Stock Award.
Under the terms and subject to the conditions of the Merger Agreement, Stock
Yards Bancorp agreed to expand its board of directors and the board of directors
of Stock Yards Bank by two directors and fill the resulting vacancies at the
Effective Time with two then-current Kentucky Bancshares directors.
The Merger Agreement contains customary representations and warranties from both
Kentucky Bancshares and Stock Yards Bancorp, each with respect to its and its
subsidiaries' businesses, and each party has agreed to customary covenants,
including, among others, covenants relating to the conduct of its business
during the interim period between the execution of the Merger Agreement and the
Effective Time. Kentucky Bancshares agreed to call a meeting of its shareholders
to approve the Merger Agreement and the transactions contemplated thereby (the
"Kentucky Bancshares Shareholder Approval") and, subject to certain customary
exceptions, for the Board of Directors of Kentucky Bancshares to recommend that
its shareholders vote in favor of such approvals. Kentucky Bancshares has also
agreed to customary non-solicitation covenants relating to alternative
acquisition proposals that prohibit Kentucky Bancshares from soliciting
proposals relating to certain alternative acquisition proposals or, subject to
certain customary exceptions, entering into discussions or negotiations or
providing confidential information in connection with certain proposals for an
alternative acquisition.
The Mergers are anticipated to be completed in the second quarter of 2021 and
are subject to the satisfaction of customary conditions, including (i) receipt
of the Kentucky Bancshares Shareholder Approval, (ii) authorization for listing
on the
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Nasdaq of the shares of Stock Yards Bancorp Common Stock to be issued in the
Merger, (iii) the receipt of required regulatory approvals, including the
approval of the Federal Reserve Board, the Federal Deposit Insurance Corporation
and the Kentucky Department of Financial Institutions, (iv) effectiveness of the
registration statement on Form S-4 for the Stock Yards Bancorp Common Stock to
be issued in the Merger, and (v) the absence of any order, injunction or other
legal restraint preventing or making illegal the completion of the Merger or any
of the other transactions contemplated by the Merger Agreement. Each party's
obligation to complete the Merger is also subject to certain additional
customary conditions, including (a) subject to certain qualifications, the
accuracy of the representations and warranties of Kentucky Bancshares, in the
case of Stock Yards Bancorp, and of Stock Yards Bancorp, in the case of Kentucky
Bancshares, (b) performance in all material respects by Kentucky Bancshares, in
the case of Stock Yards Bancorp, and by Stock Yards Bancorp, in the case of
Kentucky Bancshares, of its obligations under the Merger Agreement, and
(c) receipt by Stock Yards Bancorp and Kentucky Bancshares of an opinion from
counsel to Stock Yards Bancorp to the effect that the Merger and the Upstream
Merger, taken together, will qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended.
The Merger Agreement provides certain termination rights for both Stock Yards
Bancorp and Kentucky Bancshares and further provides that a termination fee of
$7,250,000 will be payable by Kentucky Bancshares to Stock Yards Bancorp upon
termination of the Merger Agreement under certain circumstances, including a
termination as a result of Kentucky Bancshares's board of directors withdrawing
or adversely modifying its recommendation that its shareholders vote in favor of
the Merger Agreement.
In connection with entering into the Merger Agreement, Stock Yards Bancorp
entered into customary support agreements in the form attached hereto as Exhibit
10.1 (the "Kentucky Bancshares Support Agreements") with the members of Kentucky
Bancshares's board of directors in their capacities as shareholders of Kentucky
Bancshares. Subject to the terms and conditions, and non-termination, of the
Kentucky Bancshares Support Agreements, each such shareholder agreed, among
other things, to vote his or her respective shares of Kentucky Bancshares Common
Stock in favor of the approval of the Merger Agreement and the transactions
contemplated thereby, and against alternative acquisition proposals.
The foregoing descriptions of the Merger Agreement and the form of Kentucky
Bancshares Support Agreement do not purport to be complete and each is qualified
in its entirety by reference to the full text of the Merger Agreement and the
form of Kentucky Bancshares Support Agreement, which are filed herewith as
Exhibits 2.1 and 10.1, and are incorporated herein by reference. The
representations, warranties and covenants of each party set forth in the Merger
Agreement have been made only for purposes of, and were and are solely for the
benefit of the parties to, the Merger Agreement, may be subject to limitations
agreed upon by the contracting parties, including being qualified by
confidential disclosures made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of establishing these
matters as facts, and may be subject to standards of materiality applicable to
the contracting parties that differ from those applicable to investors.
Accordingly, the representations and warranties may not describe the actual
state of affairs at the date they were made or at any other time, and investors
should not rely on them as statements of fact. In addition, such representations
and warranties (i) will not survive consummation of the Mergers, and (ii) were
made only as of the date of the Merger Agreement or such other date as is
specified in the Merger Agreement. Moreover, information concerning the subject
matter of the representations and warranties may change after the date of the
Merger Agreement, which subsequent information may or may not be fully reflected
in the parties' public disclosures. Accordingly, the Merger Agreement is
included with this filing only to provide investors with information regarding
the terms of the Merger Agreement, and not to provide investors with any other
factual information regarding Stock Yards Bancorp or Kentucky Bancshares, their
respective affiliates or their respective businesses.
The Merger Agreement should not be read alone, but should instead be read in
conjunction with the other information regarding Stock Yards Bancorp, Kentucky
Bancshares, their respective affiliates or their respective businesses, the
Merger Agreement and the Mergers that will be contained in, or incorporated by
reference into, the registration statement on Form S-4 that will include a proxy
statement of Kentucky Bancshares and a prospectus of Stock Yards Bancorp, as
well as in the Forms 10-K, Forms 10-Q, Forms 8-K and other filings that each of
Stock Yards Bancorp and Kentucky Bancshares make with the Securities and
Exchange Commission ("SEC").
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Item 9.01. Financial Statements and Exhibits.
Exhibit Number Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of January 27, 2021,
by and among Stock Yards Bancorp, Inc., Kentucky Bancshares,
Inc. and H. Meyer Merger Subsidiary, Inc.*
10.1 Form of Support Agreements, dated January 27, 2021, by and
between Stock Yards Bancorp, Inc. and certain holders of
Kentucky Bancshares Common Stock
104 Cover Page Interactive Data File (embedded within the Inline
XBRL document)
* The registrant has omitted schedules and similar attachments to the subject
agreement pursuant to Item 601(a)(5) of Regulation S-K. The registrant will
furnish a copy of any omitted schedule or similar attachment to the SEC upon
request.
Forward-Looking Statements
Certain statements contained in this communication, which are not statements of
historical fact, constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include, but
are not limited to, certain plans, expectations, goals, projections and benefits
relating to the proposed merger transaction between Stock Yards and Kentucky
Bancshares, which are subject to numerous assumptions, risks and uncertainties.
Words or phrases such as "anticipate," "believe," "aim," "can," "conclude,"
"continue," "could," "estimate," "expect," "foresee," "goal," "intend," "may,"
"might," "outlook," "possible," "plan," "predict," "project," "potential,"
"seek," "should," "target," "will," "will likely," "would," or the negative of
these terms or other comparable terminology, as well as similar expressions, are
intended to identify forward-looking statements but are not the exclusive means
of identifying such statements. Please refer to each of Stock Yards' and
Kentucky Bancshares' Annual Report on Form 10-K for the year ended December 31,
2019, and, in the case of Stock Yards, its Quarterly Report on Form 10-Q for the
three months ended September 30, 2020, as well as their other filings with the
SEC for a more detailed discussion of risks, uncertainties and factors that
could cause actual results to differ from those discussed in the forward-looking
statements.
Forward-looking statements are not historical facts but instead express only
management's beliefs regarding future results or events, many of which, by their
nature, are inherently uncertain and outside of the management's control. It is
possible that actual results and outcomes may differ, possibly materially, from
the anticipated results or outcomes indicated in these forward-looking
statements. In addition to factors disclosed in reports filed by Stock Yards and
Kentucky Bancshares with the SEC, risks and uncertainties for Stock Yards,
Kentucky Bancshares and the combined company include, but are not limited to:
the possibility that any of the anticipated benefits of the proposed merger will
not be realized or will not be realized within the expected time period; the
risk that integration of Kentucky Bancshares' operations with those of Stock
Yards will be materially delayed or will be more costly or difficult than
expected; the parties' inability to meet expectations regarding the timing,
completion and accounting and tax treatments of the merger; the inability to
complete the merger due to the failure of Kentucky Bancshares' shareholders to
adopt the merger agreement; the failure to satisfy other conditions to
completion of the merger, including receipt of required regulatory and other
approvals; the failure of the proposed transaction to close for any other
reason; diversion of management's attention from ongoing business operations and
opportunities due to the merger; the challenges of integrating and retaining key
employees; the effect of the announcement of the merger on Stock Yards',
Kentucky Bancshares' or the combined company's respective customer and employee
relationships and operating results; the possibility that the merger may be more
expensive to complete than anticipated, including as a result of unexpected
factors or events; dilution caused by Stock Yards' issuance of additional shares
of Stock Yards common stock in connection with the merger; the magnitude and
duration of the COVID-19 pandemic and its impact on the global economy and
financial market conditions and the business, results of operations and
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financial condition of Stock Yards, Kentucky Bancshares and the combined
company; and general competitive, economic, political and market conditions and
fluctuations. All forward-looking statements included in this communication are
made as of the date hereof and are based on information available at that time.
Except as required by law, neither Stock Yards nor Kentucky Bancshares assumes
any obligation to update any forward-looking statement to reflect events or
circumstances that occur after the date the forward-looking statements were
made.
Additional Information Regarding the Proposed Transaction
This communication is being made in respect of the proposed merger transaction
between Stock Yards and Kentucky Bancshares. Stock Yards will file a
registration statement on Form S-4 with the SEC in connection with the proposed
transaction. The registration statement will include a proxy statement of
Kentucky Bancshares that also constitutes a prospectus of Stock Yards which,
when finalized, will be sent to the shareholders of Kentucky Bancshares seeking
their approval of the merger-related proposals. This document is not a
substitute for the proxy statement/prospectus or registration statement or any
other document that Stock Yards or Kentucky Bancshares may file with the SEC.
KENTUCKY BANCSHARES' SHAREHOLDERS ARE ADVISED TO READ THE REGISTRATION STATEMENT
ON FORM S-4 AND THE RELATED PROXY STATEMENT/PROSPECTUS, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS
FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION,
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
STOCK YARDS, KENTUCKY BANCSHARES AND THE PROPOSED TRANSACTION. When filed, the
registration statement, the definitive proxy statement/prospectus and other
documents relating to the merger transaction filed by Stock Yards and Kentucky
Bancshares can be obtained free of charge from the SEC's website at www.sec.gov.
These documents also can be obtained free of charge by accessing Stock Yards'
website at www.syb.com under the tab "Investors Relations" and then under "SEC
Filings." Alternatively, these documents, when available, can be obtained free
of charge from Stock Yards upon written request to Stock Yards, Attention: Chief
Financial Officer, 1040 East Main Street, Louisville, Kentucky 40206 or by
calling (502) 582-2571, or to Kentucky Bancshares, Attention: Chief Financial
Officer, 339 Main Street, Paris, Kentucky 40361 or by calling (859) 987-1795.
Participants in the Solicitation
Stock Yards, Kentucky Bancshares and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies from
Kentucky Bancshares' shareholders in connection with the proposed transaction.
Information about the directors and executive officers of Stock Yards and their
ownership of Stock Yards common stock is set forth in the definitive proxy
statement for Stock Yards' 2020 annual meeting of shareholders, as previously
filed with the SEC on March 13, 2020, and Stock Yards' Annual Report on Form
10-K for the year ended December 31, 2019, as previously filed with the SEC on
February 28, 2020, as well as other documents filed with the SEC. Information
about the directors and executive officers of Kentucky Bancshares and their
ownership of Kentucky Bancshares common stock is set forth in the definitive
proxy statement for Kentucky Bancshares's 2020 annual meeting of shareholders,
as previously filed with the SEC on May 11, 2020, and Kentucky Bancshares'
Annual Report on Form 10-K for the year ended December 31, 2019, as previously
filed with the SEC on March 10, 2020, as well as other documents filed with the
SEC. Additional information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by securities holdings
or otherwise, will be included in the proxy statement/prospectus and other
relevant documents regarding the proposed transaction to be filed with the SEC
when they become available. You may obtain free copies of these documents from
Stock Yards or Kentucky Bancshares using the sources indicated above.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to sell
or the solicitation of an offer to buy securities nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
such jurisdiction. This communication is also not a solicitation of any vote in
any jurisdiction pursuant to the proposed transactions or otherwise. No offer of
securities or solicitation will be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as amended.
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