As filed with the Securities and Exchange Commission on February 4, 2005 Registration No. 333-
Tennessee | 6021 | 62-1497076 | ||
(state or other jurisdiction | (primary standard industrial | (IRS employer | ||
of organization) | classification code number) | identification no.) |
623 West Main Street
Lebanon, Tennessee 37087
(615) 444-2265
(address, including zip code, and telephone number, including area code, of registrants principal executive offices)
(name, address, including zip code, and telephone number, including area code, of agent for service)
Bob F. Thompson, Esq.
Bass, Berry & Sims PLC
315 Deaderick Street, Suite 2700
Nashville, Tennessee 37238
(615) 742-6200
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act,
check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
o
CALCULATION OF REGISTRATION FEE
The Registrant hereby amends this registration statement on such date or dates as may be
necessary to delay its effective date until the Registrant shall file a further amendment that
specifically states that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement
shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may
determine.
Proposed Maximum
Proposed Maximum
Title of Each Class of
Amount to be
Offering Price
Aggregate Offering
Amount of
Securities to be Registered
Registered (1)
Per Share
Price (2)
Registration Fee(3)
Common Stock, par value
$2.00 per share
194,766
N/A
$6,283,429.20
$740
(1)
Based on the maximum number of shares of Wilson Bank Holding Company common stock expected
to be issued in connection with the merger of Community Bank of Smith County with and into
Wilson Bank and Trust.
(2)
Pursuant to Rule 457(f), the registration fee has been computed based on the book value of
Community Bank of Smith Countys common stock as of December 31, 2004, the latest practicable
date prior to the filing of this registration statement.
(3)
Calculated by multiplying 0.0001177 by the proposed maximum aggregate offering price.
The information in this proxy statement/prospectus is not complete and may be changed. Wilson Bank Holding Company may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to completion dated February 4, 2005
MERGER PROPOSED YOUR VOTE IS VERY IMPORTANT
Dear Community Bank of Smith County Shareholders:
You are cordially invited to attend a special meeting in lieu of an annual meeting of shareholders of Community Bank of Smith County, which will be held on March 24, 2005, beginning at 6:30 p.m., local time, at the Community Bank of Gordonsville, 7 New Middleton Highway, Gordonsville, TN 38563. At the special meeting, Community Bank of Smith Countys shareholders will be asked to approve the merger of Community Bank of Smith County with and into Wilson Bank and Trust. If we complete the merger, each share of Community Bank of Smith County common stock will be exchanged for 1.0043 shares of Wilson Bank Holding Company common stock, along with cash in lieu of any fractional shares.
Approval of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Community Bank of Smith County common stock entitled to vote at the special meeting at which a quorum is present.
Only shareholders who hold shares of Community Bank of Smith County at the close of business of February 1, 2005 will be entitled to vote at the special meeting.
Based on our reasons described herein, including the fairness opinion issued by our financial advisor, PBS, which is attached as Appendix C to the attached proxy statement/prospectus, your board of directors believes that the merger agreement is in the best interests of Community Bank of Smith County shareholders. Accordingly, your board of directors recommends that you vote For approval and adoption of the merger agreement.
The accompanying proxy statement/prospectus contains a detailed description of the merger agreement, its terms and conditions, and the transactions contemplated thereby. Please review these materials carefully and consider thoughtfully the information set forth therein.
The merger involves certain investment considerations which you should evaluate carefully before voting for the merger. See Risk Factors on page 14 of the enclosed proxy statement/prospectus.
It is very important that your shares be voted at the special meeting. Please take the time to vote by completing and mailing the enclosed proxy card. If you decide to attend our special meeting and wish to change your proxy vote, you may do so by voting in person at the meeting.
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Sincerely, | |
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Joe Vance
President |
The date of this proxy statement/prospectus is ___, 2005. This proxy statement/prospectus is first being mailed to Community Bank of Smith County shareholders on or about ___, 2005.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of Wilson Bank Holding Company common stock to be issued in the merger, or determined if the proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
1300 MAIN STREET NORTH
CARTHAGE, TENNESSEE 37030
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 24, 2005
To Community Bank of Smith County Shareholders:
Notice is hereby given that a special meeting in lieu of an annual meeting of shareholders of Community Bank of Smith County will be held at the Community Bank of Gordonsville, 7 New Middleton Highway, Gordonsville, TN 38563 on March 24, 2005, at 6:30 p.m., local time, for the following purposes:
1. | To consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger, dated November 16, 2004, among Wilson Bank Holding Company, Wilson Bank and Trust and Community Bank of Smith County, a copy of which is attached as Appendix A to the attached proxy statement/prospectus, pursuant to which, among other things, Community Bank of Smith County will merge with and into Wilson Bank and Trust; and | |||
2. | To transact such other business as may properly come before the special meeting. |
We have fixed the close of business on February 1, 2005 as the record date for the determination of shareholders entitled to notice of and to vote at the special meeting. Only holders of Community Bank of Smith County common stock of record at the close of business on that date will be entitled to notice of and to vote at the special meeting. As of the record date, Wilson Bank Holding Company and its directors and officers owned 194,722 of the 387,866 shares of Community Bank of Smith County common stock issued and outstanding.
A form of proxy and a proxy statement/prospectus containing more detailed information with respect to the matter to be considered at the special meeting accompanies this notice. A copy of the merger agreement is attached as Appendix A to the proxy statement/prospectus.
Dissenting shareholders who comply with the provisions of Chapter 23 of the Tennessee Business Corporation Act, are entitled to dissent from the merger and receive payment of the fair value of their shares of Community Bank of Smith County common stock if the merger is consummated. A copy of Chapter 23 of the Tennessee Business Corporation Act is attached as Appendix B to the proxy statement/prospectus. Please see the section entitled The Merger - Dissenters Rights in the proxy statement/prospectus for a summary of the procedures to be followed in asserting these dissenters rights. A dissenting shareholder will be entitled to payment only if written notice of intent to demand payment is delivered to Community Bank of Smith County before the vote is taken and the shareholder does not vote in favor of the merger agreement.
The affirmative vote of the holders of a majority of the shares of Community Bank of Smith County common stock issued and outstanding and entitled to vote at the special meeting is necessary to approve and adopt the merger agreement. Because Wilson Bank Holding Company and its directors and affiliates own in excess of 50% of the outstanding shares of Community Bank of Smith County common stock, approval of the merger is highly likely.
Your board of directors has determined that the merger agreement is in the best interests of Community Bank of Smith Countys shareholders and recommends that shareholders vote For approval and adoption of the merger.
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By Order of the Board of Directors | |
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J. Randall Clemons, Secretary |
Carthage, Tennessee
________, 2005
IMPORTANT: Your vote is important regardless of the number of shares you own. Whether or not you expect to attend the meeting, please sign, date and promptly return the accompanying proxy card using the enclosed postage-prepaid envelope. If you are a record shareholder and for any reason you should desire to revoke your proxy, you may do so at any time before it is voted at the special meeting.
Proxy Statement of Community Bank of Smith County
Prospectus of Wilson Bank Holding Company
This proxy statement/prospectus is being furnished to shareholders of Community Bank of Smith County, a state chartered bank incorporated under the laws of the State of Tennessee, in connection with the solicitation of proxies by the board of directors of Community Bank of Smith County for use at the special meeting of shareholders of Community Bank of Smith County to be held at 6:30 p.m., local time, on March 24, 2005 at the Community Bank of Gordonsville, 7 New Middleton Highway, Gordonsville, TN 38563. At the special meeting, holders of Community Bank of Smith County common stock, no par value per share, are being asked to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of November 16, 2004, referred to as the merger agreement, among Wilson Bank Holding Company, Wilson Bank and Trust and Community Bank of Smith County, providing for, among other things, the merger of Community Bank of Smith County with and into Wilson Bank and Trust with Wilson Bank and Trust continuing as the surviving entity of the merger. A copy of the merger agreement is attached as Appendix A to this proxy statement/prospectus and made a part of this proxy statement/prospectus.
Wilson Bank Holding Companys common stock is not listed on any national securities exchange or on the Nasdaq Stock Market.
At the effective time of the merger, Community Bank of Smith County will merge with and into Wilson Bank and Trust. Each outstanding share of Community Bank of Smith County common stock, other than shares owned by Wilson Bank Holding Company and shareholders who properly perfect their dissenters rights, will be converted into the right to receive 1.0043 shares of Wilson Bank Holding Company common stock. In lieu of any fractional share that Community Bank of Smith County shareholders would otherwise receive, Community Bank of Smith County shareholders will receive cash equal to their fractional share amount multiplied by the last sale price of Wilson Bank Holding Companys common stock on the date closest to, but not after, the closing date of the merger. For additional information regarding the terms of the merger, see the merger agreement attached as Appendix A to this proxy statement/prospectus and the discussion under The Merger beginning on page 20 and The Merger Agreement beginning on page 35. Completion of the merger is conditioned upon, among other things, adoption of the merger agreement by the Community Bank of Smith County shareholders and receipt of certain required regulatory approvals.
Community Bank of Smith County shareholders are strongly urged to read and consider carefully this proxy statement/prospectus in its entirety, particularly the matters referred to under Risk Factors beginning on page 14.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of Wilson Bank Holding Company common stock to be issued in the merger, or determined if the proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The Wilson Bank Holding Company common stock offered hereby has not been approved or disapproved by the Federal Deposit Insurance Corporation, the Tennessee Department of Financial Institutions or the Board of Governors of the Federal Reserve System nor has the Federal Deposit Insurance Corporation, the Tennessee Department of Financial Institutions or the Board of Governors of the Federal Reserve System passed on the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is unlawful.
The date of this proxy statement/prospectus is ___, 2005. This proxy statement/prospectus is first being mailed to the shareholders of Community Bank of Smith County on or about ___, 2005.
TABLE OF CONTENTS
i
This proxy statement/prospectus incorporates important business and financial information
about Wilson Bank Holding Company from other documents filed with the Securities and Exchange
Commission that are not included in this proxy statement/prospectus. This information is available
to you without charge upon your written or oral request. You can obtain the documents incorporated
by reference in this proxy statement/prospectus by requesting them in writing or by telephone from
Wilson Bank Holding Company at the following address:
If you would like to request any of the documents referred to above, please do so by March 17,
2005 in order to receive them before the special meeting. See Where You Can Find More
Information beginning on page 53 for more information.
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EX-2.1 AGREEMENT AND PLAN OF MERGER DATED NOVERMBER 16, 2004
EX-5.1 OPINION OF BASS, BERRY & SIMS PLC.
EX-23.1 CONSENT OF MAGGART & ASSOCIATES, P.C.
EX-99.1 FORM OF COMMUNITY BANK OF SMITH COUNTY PROXY CARD
EX-99.2 CONSENT OF PROFESSIONAL BANK SERVICES, INC.
Wilson Bank Holding Company
623 West Main Street
P.O. Box 768
Lebanon, Tennessee 37087
(615) 444-2265
Table of Contents
QUESTIONS AND ANSWERS ABOUT THE MERGER
1
2
3
Q.
What am I being asked to vote on?
A.
Community Bank of Smith County shareholders are being asked to vote on the merger of
Community Bank of Smith County with and into Wilson Bank and Trust and the merger agreement
related to the merger. As a result of the merger, each outstanding share of Community Bank of
Smith County common stock, other than shares owned by Wilson Bank Holding Company and
shareholders who properly perfect their dissenters rights of appraisal, will be converted
into the right to receive 1.0043 shares of Wilson Bank Holding Company common stock. In lieu
of any fractional share that Community Bank of Smith County shareholders would otherwise
receive Community Bank of Smith County shareholders will receive cash equal to their
fractional share amount multiplied by the last sale price of Wilson Bank Holding Companys
common stock on the date closest to, but not after, the closing date of the merger. You may
also be asked to consider other matters as may properly come before the special meeting.
Community Bank of Smith County does not know of any other matters other than the approval of
the merger that will be presented for consideration at its special meeting.
Q.
Why is Wilson Bank Holding Company choosing to combine Wilson Bank and Trust with Community
Bank of Smith County?
A.
Wilson Bank Holding Company owns 100% of the issued and outstanding shares of the common
stock of Wilson Bank and Trust along with 50% of the issued and outstanding shares of common
stock of DeKalb Community Bank and the Community Bank of Smith County, two banks organized by
Wilson Bank Holding Company in 1996 to serve DeKalb and Smith County Tennessee. Following
the formation of Community Bank of Smith County, Community Bank of Smith County issued
additional shares of its common stock to residents of Smith County to reduce Wilson Bank
Holding Companys initial ownership interest to 50% of the outstanding shares. Community Bank
of Smith Countys board of directors includes three of Wilson Bank Holding Companys directors
and eight other directors. Randall Clemmons, Wilson Bank Holding Companys Chief Executive
Officer, serves as the Chief Executive Officer of Community Bank of Smith County but the
Chairman, President, Vice President and other officers of Community Bank of Smith County are
officers only of Community Bank of Smith County.
Since July 2002, Wilson Bank Holding Company and its three bank subsidiaries have incurred
significantly higher internal control, auditing and accounting costs related to their
compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the related rules and
regulations imposed by the Securities and Exchange Commission as a result of that act. These
costs, which have increased substantially during 2004 as a result of the requirement that
Wilson Bank Holding Company document, and have its independent public accountants attest to,
the effectiveness of its internal controls over financial reporting, are increased over bank
holding companies of similar size, by the fact that Wilson Bank Holding Company maintains
three separate bank subsidiaries. Prompted by these elevating costs, management of Wilson
Bank Holding Company began consideration of combining Wilson Bank and Trust, DeKalb Community
Bank and Community Bank of Smith County. The boards of directors of Wilson Bank Holding
Company, Wilson Bank and Trust, DeKalb Community Bank and Community Bank of Smith County
thereafter agreed that it was in the best interests of each of the companys respective
shareholders to merge DeKalb Community Bank and Community Bank of Smith County with and into
Wilson Bank and Trust. The boards of directors believe that combining these entities will
result in cost savings to the combined companies related to both Sarbanes-Oxley compliance
and the centralization of certain back office functions.
Q.
What do I need to do now?
A.
First, carefully read this proxy statement/prospectus in its entirety. Then, vote your
shares of Community Bank of Smith County common stock by marking, signing, dating and
returning your proxy card in the enclosed prepaid envelope. You may also attend the special
meeting and submit a properly executed proxy or ballot, although we ask that you cast your
vote now, even if you intend to attend the special meeting. If a broker holds your shares in
street name, you are not the record owner and you will need to ask your broker how you can
vote at the special meeting.
Q.
Why is my vote important?
A.
A majority of the outstanding shares of Community Bank of Smith County common stock must be
represented in person or by proxy at the special meeting for there to be a quorum. If you do
not vote using one of the methods described above, it will be more difficult for Community
Bank of Smith County to obtain the necessary quorum to hold its
special meeting. In addition, the affirmative vote of the holders of
a majority of the shares of Community Bank of Smith County common
Table of Contents
stock outstanding and entitled to vote at the special meeting is
necessary to approve and adopt the merger agreement. Therefore, abstentions or failures to
vote have the same effect as a vote against the merger agreement. While Wilson Bank Holding
Company and its directors and officers own over 50% of the outstanding shares of Community
Bank of Smith County common stock, and as such, approval of the merger is highly likely,
Community Bank of Smith County encourages all of its shareholders to vote on the merger.
Q.
If my shares are held in street name by my broker, will my broker automatically vote my
shares for me?
A.
No. If you do not provide your broker with instructions on how to vote your shares that are
held in street name, your broker will not be permitted to vote them. Therefore, you should be
sure to provide your broker with instructions on how to vote these shares.
Q.
Can I change my vote?
A.
Yes. If you have not voted through your broker, there are several ways you can change your
vote after you have submitted a proxy.
First, you may send a written notice stating that you would like to revoke your proxy
to Community Bank of Smith Countys Corporate Secretary, J. Randall Clemons, at 1300
Main Street North, Carthage, Tennessee 37030 before the special meeting;
Second, you may complete and submit a new proxy card. Any earlier proxy will be
revoked automatically; or
Third, you may attend the meeting and vote in person. Any earlier proxy will be
revoked. However, simply attending the meeting without voting will not revoke your
earlier proxy.
If you have instructed a broker to vote your shares, you must follow directions you receive
from your broker to change your vote.
Q: What are the principal risks relating to the merger?
A.
The anticipated benefits of combining the three bank subsidiaries, including the expected
compliance cost savings, may not be realized. The merger is subject to certain conditions,
including receipt of certain governmental approvals which, if delayed or not satisfied, may
jeopardize or postpone the merger, result in additional expense or reduce the anticipated
benefits of the transaction. These and other risks are discussed under the caption Risk
Factors beginning on page 14 of this proxy statement/prospectus.
Q.
As a Community Bank of Smith County shareholder, what are the U.S. federal income tax
consequences to me?
A.
We expect that for U.S. federal income tax purposes, your exchange of shares of Community
Bank of Smith County common stock for shares of Wilson Bank Holding Company common stock by
virtue of the merger generally will not cause you to recognize any gain or loss. You will,
however, have to recognize gain in connection with any cash received instead of fractional
shares. The holding period for the Wilson Bank Holding Company common stock received in the
merger generally will include the holding period for the Community Bank of Smith County common
stock exchanged in the merger. That period determines how any gain or loss should be treated
for United States federal income tax purposes upon future sales of Wilson Bank Holding Company
common stock
We provide a more detailed review of the material U.S. federal income tax consequences of the
merger at page 32 of this proxy statement/prospectus.
Q.
Should I send in my stock certificates now?
A.
No. You should not send in your stock certificates at this time. Instructions for
surrendering your Community Bank of Smith County stock certificate, in exchange for the merger
consideration, will be sent to you after we complete the merger.
Q.
When do you expect the merger to be completed?
A.
We currently expect to complete the merger as promptly as practicable following the special
meeting, assuming all the conditions to completion of the merger, including receipt of
regulatory approvals, have been satisfied. Fulfilling some
Table of Contents
these conditions, such as
receiving certain regulatory approvals, is not entirely within our control. If all the
conditions to completion of the merger have not been satisfied at that time, we expect to
complete the merger as quickly as practicable once the conditions are satisfied.
Q.
As a Community Bank of Smith County shareholder, do I have to accept Wilson Bank Holding
Company common stock in exchange for my shares of Community Bank of Smith County common stock
if the merger is approved?
A.
No. If you are a Community Bank of Smith County shareholder and you follow the procedures
prescribed by Tennessee law, you may dissent from the merger and have the fair value of your
stock appraised by a court and paid in cash. If you follow those procedures, you wont
receive Wilson Bank Holding Company common stock. The fair value of your Community Bank of
Smith County common stock, determined in the manner prescribed by Tennessee law, will be paid
to you in cash. That amount could be more or less than the market value of Wilson Bank
Holding Company common stock as of the closing date of the merger. For a more complete
description of these dissenters rights, see pages 33 and 39 of this document.
Q.
Whom do I call if I have questions about the special meeting or the merger?
A.
You should direct any questions regarding the special meeting of shareholders or the merger
to Randall Clemons, the Chief Executive Officer of Wilson Bank Holding Company and Community
Bank of Smith County at 623 West Main Street, Lebanon, Tennessee 37087, (615) 444-2265 or to
Joe Vance, the President of Community Bank of Smith County, at 1300 Main Street North,
Carthage, Tennessee 37030, (615) 735-3990.
Q.
Where can I find additional information about the merger?
A.
This document, the appendices and the documents incorporated by reference in this document
contain additional information about the merger. Also, see Where You Can Find More
Information on page 53 of this proxy statement/prospectus.
Table of Contents
SUMMARY OF THE MERGER
This brief summary highlights selected information from this proxy statement/prospectus. It
does not contain all of the information that may be important to you. You should read carefully
this entire document and the other documents to which this proxy statement/prospectus refers you to
fully understand the merger. See Where You Can Find More
Information on page 53. Each item in
this summary refers to the page where that subject is discussed in more detail.
The Companies
Wilson Bank Holding Company
Wilson Bank Holding Company was incorporated on March 17, 1992 under the laws of the State of
Tennessee. The purpose of the Company was to acquire all of the issued and outstanding capital
stock of Wilson Bank and Trust and act as a one-bank holding company. On November 17, 1992, Wilson
Bank Holding Company acquired 100% of the capital stock of Wilson Bank and Trust pursuant to the
terms of a plan of share exchange and agreement. As of September 30, 2004 it had over $892 million
in total consolidated assets, approximately $791 million in deposits, and shareholders equity of
about $69 million. All of Wilson Bank Holding Companys banking business is conducted through
Wilson Bank and Trust, a state chartered bank organized under the laws of the State of Tennessee,
and two fifty-percent owned subsidiaries, DeKalb Community Bank and Community Bank of Smith County.
The principal executive office is located in Lebanon, Tennessee at the address noted above.
The principal telephone number is (615) 444-2265.
Wilson Bank and Trust
Wilson Bank and Trust is a wholly-owned bank subsidiary of Wilson Bank Holding Company and is
a state chartered bank organized under the laws of the State of Tennessee. Wilson Bank and Trust
was organized in 1987 to provide Wilson County with a locally-owned, locally-managed commercial
bank. Since its opening, it has experienced a steady growth in deposits and loans as a result of
providing personal, service-oriented banking services to its targeted market. At January 1, 2005,
it had nine full service banking offices located in Wilson County, Tennessee, one full service
banking facility in Trousdale County, Tennessee, two full service
banking offices in eastern
Davidson County and one banking facility located in Rutherford County.
Wilson Bank and Trust offers a wide range of banking services, including checking, savings,
and money market deposit accounts, certificates of deposit and loans for consumer, commercial and
real estate purposes. It also offers custodial, trust and discount brokerage services to its
customers.
The principal executive office is located in Lebanon, Tennessee at the address noted above.
The principal telephone number is (615) 444-2265.
Community Bank of Smith
County
(page 41)
Community Bank of Smith County is an independent, state chartered bank, which was established
by Wilson Bank Holding Company in December 1996. It is owned 50% by Wilson Bank Holding Company and
50% by residents who primarily reside in Smith County, Tennessee. Its board of directors includes
three members who are also members of the Wilson Bank Holding Company board of directors and eight
other members. Its Chief Executive Officer is Randall Clemons, Wilson Bank Holding Companys Chief
Executive Officer, but its Chairman, President and Vice Presidents are officers only of Community
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Bank of Smith County. Community Bank of Smith County operates two full-service branches, one
in Carthage and one in Gordonsville, Tennessee and is considered a subsidiary of Wilson Bank
Holding Company for purposes of the Bank Holding Company Act of 1956. Community Bank of Smith
County offers a wide range of banking services, including checking, savings, and money market
deposit accounts, certificates of deposit and loans for consumer, commercial and real estate
purposes.
The Special Meeting
(page 18)
The Community Bank of Smith County special meeting will be on March 24, 2005, at 6:30 p.m.,
local time, at the Community Bank of Gordonsville, 7 New Middleton Highway in Gordonsville,
Tennessee. At the Community Bank of Smith County special meeting, you will be asked:
Risk Factors
(page 14)
See Risk Factors beginning on page 14 for a discussion of the factors you should carefully
consider before deciding how to vote your shares of Community Bank of Smith County common stock at
the special meeting.
Reasons for the Merger
(page 21)
Since July 2002, Wilson Bank Holding Company and its three bank subsidiaries have incurred
significantly higher internal control, auditing and accounting costs related to their compliance
with the requirements of the Sarbanes-Oxley Act of 2002 and the related rules and regulations
imposed by the Securities and Exchange Commission as a result of that act. These costs, which have
increased substantially during 2004 as a result of the requirement that Wilson Bank Holding Company
document, and have its independent public accountants attest to, the effectiveness of its internal
controls over financial reporting, are increased over bank holding companies of similar size, by
the fact that Wilson Bank Holding Company maintains three separate bank subsidiaries. Prompted by
these elevating costs, management of Wilson Bank Holding Company began consideration of combining
Wilson Bank and Trust, DeKalb Community Bank and Community Bank of Smith County. The boards of
directors of Wilson Bank Holding Company, Wilson Bank and Trust, DeKalb Community Bank and
Community Bank of Smith County thereafter agreed that it is in the best interests of each of the
companys respective shareholders to merge DeKalb Community Bank and Community Bank of Smith County
with and into Wilson Bank and Trust. The boards of directors believe that combining these entities
will result in cost savings to the combined companies related to both Sarbanes-Oxley compliance and
the centralization of certain back office functions.
Community Bank of Smith Countys Recommendation to Shareholders
(page 19)
Community Bank of Smith Countys board believes that the merger is fair to you and in your
best interests, and the members of the board, other than those directors abstaining from the vote
because of the fact that they also serve on the board of directors of Wilson Bank Holding Company,
unanimously recommend that you approve the merger agreement attached hereto as Appendix A.
Record Date; Vote Required
(page 18)
You may vote at the Community Bank of Smith County special meeting if you owned Community Bank
of Smith County common stock at the close of business on February 1, 2005. On that date, there
were 387,866 shares Community Bank of Smith County common stock outstanding and entitled to vote,
193,933 of which were owned by Wilson Bank Holding Company, 328 of which were owned by officers
and directors of Wilson Bank Holding Company other than those persons who are also directors of
Community Bank of Smith County, and 41,159 of which were owned by the officers and directors of
Community Bank of Smith County. You are entitled to cast one vote for each share of common stock
you owned on that date.
In order for the merger to be approved, under Tennessee law, Community Bank of Smith County
shareholders holding a majority of the outstanding shares of our common stock on the record date
must vote in favor of the merger. Because Wilson Bank Holding Company and its officers and directors own in excess of 50.2% of the outstanding
shares of Community Bank of Smith County common stock, approval of the merger is highly likely.
5
The Merger
(page 20)
Community Bank of Smith County will merge with and into Wilson Bank and Trust with Wilson Bank
and Trust as the surviving corporation of the merger. After the merger, Community Bank of Smith
County shareholders, other than those who properly perfect their dissenters rights, will be
shareholders of Wilson Bank Holding Company. Wilson Bank and Trust will, however, operate Community
Bank of Smith Countys branches as Community Bank of Smith County, a Wilson Bank and Trust branch.
We have attached the agreement and plan of merger by and among Wilson Bank Holding Company,
Wilson Bank and Trust and Community Bank of Smith County to this proxy statement/prospectus as
Appendix A. We encourage you to read the merger agreement. It is the legal document that governs
the merger.
Merger Consideration That
You Will Receive
(page 28)
As merger consideration, you will receive 1.0043 shares of Wilson Bank Holding Company common
stock plus cash in lieu of fractional shares in an amount equal to your fractional share amount
multiplied by the last sale price of Wilson Bank Holding Companys common stock on the date closest
to, but not after, the closing date of the merger.
Opinion of Community Bank
of Smith Countys Financial Advisor
(page 24)
It is a condition to the parties obligation to consummate the merger that Community Bank of
Smith Countys board of directors shall have received the written opinion of PBS, Community Bank of
Smith Countys financial advisor, as to the fairness to Community Bank of Smith Countys
shareholders, from a financial point of view, of the merger consideration. The full text of PBSs
opinion is attached to this proxy statement/prospectus as Appendix C. We encourage you to read
this opinion carefully in its entirety for a description of the assumptions made, procedures
followed, matters considered and limitations on the review undertaken. PBSs opinion, which has
been provided to Community Bank of Smith Countys board of directors in connection with the
transaction, does not address any other aspect of the merger and does not constitute a
recommendation to any shareholder as to how to vote or act on matters relating to the merger.
Conditions to Completion
of the Merger
(page 37)
The completion of the merger depends on a number of conditions being met, including the
following:
In cases where the law permits, a party to the merger agreement could elect to waive a
condition that has not been satisfied and complete the merger although it is entitled not to. We
cant be certain whether or when any of the conditions weve listed will be satisfied (or waived,
where permissible), or that the merger will be completed.
6
Material United States
Federal Income Tax Consequences
(page 32)
We have structured the transaction with the intent that Community Bank of Smith Countys
shareholders will not recognize any gain or loss for U.S. federal income tax purposes in the
merger, except in connection with cash received instead of fractional shares.
Determining the actual tax consequences of the merger to you can be complicated. They will
depend on your specific situation and many variables not within our control. You should consult
your own tax advisor for a full understanding of the mergers tax consequences.
Accounting Treatment
(page 33)
The merger will be accounted for using the purchase method of accounting for financial
reporting purposes.
Interests of Other Persons
in the Merger that are Different from Yours
(page 29)
Directors and executive officers of Community Bank of Smith County have interests in the
merger that are different from the interests of a Community Bank of Smith County shareholder
generally. Three of the Community Bank of Smith County directors, Charles Bell, Randall Clemons
and James Comer, also serve as directors of Wilson Bank Holding Company. In addition, certain of
the directors and executive officers of Wilson Bank Holding Company own shares of Community Bank of
Smith County common stock. The directors of Community Bank of Smith County, who are not also
directors of Wilson Bank and Trust, will serve as members of the community advisory board of
directors of the Community Bank of Smith County branches of Wilson Bank and Trust following
consummation of the merger. In addition, the executive officers of Community Bank of Smith County
will retain their positions with the Community Bank of Smith County branches of Wilson Bank and
Trust.
Restrictions on Ability to
Sell Wilson Bank Holding Company Common Stock
(page 34)
All shares of Wilson Bank Holding Company common stock you receive in connection with the
merger will be freely transferable unless you are considered an affiliate of either Community
Bank of Smith County, Wilson Bank and Trust or Wilson Bank Holding Company for the purposes of the
Securities Act of 1933 as of the date of the special meeting, in which case you will be permitted
to sell the shares of Wilson Bank Holding Company common stock you receive in the merger only
pursuant to an effective registration statement or an exemption from the registration requirements
of the Securities Act. This proxy statement/prospectus does not register the resale of stock held
by affiliates.
Effective Time
(page 29)
The merger shall become effective upon the filing of the Articles of Merger with the Secretary
of State of the State of Tennessee, or at such later time that the parties hereto shall have agreed
upon and designated in such filings as the effective time of the merger.
Comparative Per Share
Market Price Information
(page 12)
Shares of Wilson Bank Holding Company common stock are not listed or traded on a national
exchange or over-the-counter. Shares of Community Bank of Smith County common stock are neither
listed nor publicly traded. Based on information known to Wilson Bank Holding Companys senior
management, the only price paid for shares of Wilson Bank Holding Company common stock during the
week ended November 15, 2004 (the day prior to the signing of the merger agreement) was $30.50. On
___, 2005, the latest practicable date before the mailing of this proxy
statement/prospectus the closing sale price was $___. To the knowledge of the Community Bank of Smith County senior management, the last sale of
Community Bank of Smith County common stock was the sale of 160 shares at $26.00 per share on
December 14, 2004.
Based on the exchange ratio in the merger agreement, the market value of the consideration
that Community Bank of Smith Countys shareholders, other than Wilson Bank Holding Company, will
receive in the merger for each share of Community Bank of Smith County common stock would be
approximately $30.63 based on the closing sale price for Wilson Bank Holding Companys common stock
on November 15, 2004 and $___based on the closing sale price for Wilson Bank Holding Companys
common stock on ___, 2005.
7
Dissenters Rights
(page 33)
Tennessee law permits you to dissent from the merger and to have the fair value of your stock
appraised by a court and paid to you in cash. To do this, you must follow certain procedures,
including filing certain notices with us and refraining from voting your shares in favor of the
merger. If you properly dissent from the merger, your shares of Community Bank of Smith County
common stock will not be exchanged for shares of Wilson Bank Holding Company common stock in the
merger, and your only right will be to receive the appraised value of your shares in cash.
A dissenting shareholder will be entitled to payment only if written notice of intent to
demand payment is properly delivered to Community Bank of Smith County before the vote on the
merger is taken and the shareholder does not vote in favor of the merger.
Termination of the Merger
Agreement
(page 39)
Wilson Bank Holding Company and Community Bank of Smith County can mutually agree at any time
to terminate the merger agreement without completing the merger, even if Community Bank of Smith
Countys shareholders have already voted to approve it. Also, Community Bank of Smith County can
terminate the merger agreement if, within five (5) business days of its board of directors being
advised by PBS of its proposed adjustments to the book value of Wilson Bank Holding Companys or
Community Bank of Smith Countys common stock, the Community Bank of Smith County board of
directors determines, in its sole discretion, to terminate the merger agreement.
Moreover, either Wilson Bank Holding Company or Community Bank of Smith County can terminate
the merger agreement in, among others, the following circumstances:
Regulatory Approvals
(page 32)
Wilson Bank Holding Company and Community Bank of Smith County cant complete the merger
unless they obtain certain approvals from the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, or FDIC, and the Tennessee Department of Financial
Institutions. The U.S. Department of Justice has input into the Federal Reserve Boards approval
process.
While Wilson Bank Holding Company and Community Bank of Smith County dont know of any reason
why they shouldnt obtain the regulatory approvals in a timely manner, they cant be certain when
they will obtain them or that they will obtain them.
Surrender of Stock
Certificates
(page 29)
Following the effective time of the merger, Wilson Bank Holding Company will cause a letter of
transmittal to be mailed to all holders of Community Bank of Smith County common stock containing
instructions for surrendering their stock certificates. Certificates should not be surrendered
until the letter of transmittal is received, fully completed and returned as instructed in the
letter of transmittal. Please do not send stock certificates with your proxy.
8
Certain Effects of the Merger
Upon completion of the merger, Community Bank of Smith County shareholders, other than those
who properly perfect their dissenters rights, will become shareholders of Wilson Bank Holding
Company. The internal affairs of Wilson Bank Holding Company are governed by the Tennessee Business
Corporation Act and Wilson Bank Holding Companys charter and bylaws. The merger may result in
differences in the rights of Community Bank of Smith Countys shareholders, which are summarized in
Comparison of Rights of Wilson Bank Holding Company and Community Bank of Smith County
Shareholders beginning on page 45.
DeKalb Community Bank Merger
As described above, Wilson Bank Holding Companys board of directors also believes it is in
the best interest of Wilson Bank Holding Company and its shareholders to merger its other 50% owned
subsidiary, DeKalb Community Bank, with Wilson Bank and Trust. To that end, on November 16, 2004,
Wilson Bank Holding Company also entered into a merger agreement with DeKalb Community Bank,
pursuant to which DeKalb Community Bank will merge with and into Wilson Bank and Trust with Wilson
Bank and Trust continuing as the surviving entity of the merger. At a special meeting of DeKalb
Community Banks shareholders to be held on March 14, 2005, DeKalb Community Banks shareholders
will be asked to approve the merger of DeKalb Community Bank with and into Wilson Bank and Trust.
9
Selected Consolidated Historical Financial Data
The following table summarizes selected historical consolidated financial data of Wilson Bank
Holding Company, which should be read in conjunction with the consolidated financial statements of
Wilson Bank Holding Company included in Wilson Bank Holding Companys Annual Report on Form 10-K
for the year ended December 31, 2003 and Wilson Bank Holding Companys Quarterly Report on Form
10-Q for the quarter ended September 30, 2004, which are incorporated herein by reference and from
which this information is derived. The financial data as of and for the five years ended December
31, 2003, has been derived from the audited consolidated financial statements of Wilson Bank
Holding Company. The financial data as of and for the nine months ended September 30, 2004 and
2003 have been derived from the unaudited condensed consolidated financial statements of Wilson
Bank Holding Company. In the opinion of Wilson Bank Holding Companys management, all adjustments,
consisting of normal recurring adjustments necessary for a fair presentation of the financial data
for the nine months ended September 30, 2004 and 2003, have been reflected therein. Operating
results for the nine months ended September 30, 2004 are not necessarily indicative of the results
that may be expected for the full year.
10
11
623 West Main Street
P.O. Box 768
Lebanon, Tennessee 37087
(615) 444-2265
http://www.wilsonbank.com
623 West Main Street
P.O. Box 768
Lebanon, Tennessee 37087
(615) 444-2265
http://www.wilsonbank.com
1300 Main Street North
Carthage, Tennessee 37030
(615) 735-3990
http://www.communitybankofsmithcounty.com/
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To consider and vote upon a proposal to approve and adopt the Agreement and Plan of
Merger, dated November 16, 2004, among Wilson Bank Holding Company, Wilson Bank and
Trust and Community Bank of Smith County, a copy of which is attached as Appendix A to
this proxy statement/prospectus, pursuant to which, among other things, Community Bank
of Smith County will merge with and into Wilson Bank and Trust; and
To transact such other business as may properly come before the special meeting.
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Community Bank of Smith Countys shareholders approving the merger;
receipt of all required regulatory approvals and the expiration of any regulatory waiting periods;
the absence of any governmental order blocking completion of the merger, or of any
proceedings by a governmental body trying to block it;
receipt of all regulatory and material non-regulatory consents that are required to
complete the merger;
receipt by Community Bank of Smith Countys board of directors of the written opinion
of PBS to the effect that the merger consideration to be received by the Community Bank
of Smith County shareholders is fair to the holders of Community Bank of Smith County
common stock from a financial point of view;
the absence of any litigation which, if adversely determined might, in the reasonable
opinion of Wilson Bank Holding Company, have a material adverse effect on Community Bank
of Smith County; and
PBS shall have performed its review of the book values of Wilson Bank Holding
Companys and Community Bank of Smith Countys common stock prior to the mailing of this
proxy statement/prospectus to its shareholders and made its determination as to the
adequacy and calculation methodologies of Wilson Bank Holding Companys and Community
Bank of Smith Countys loan loss reserves and allowance for doubtful accounts, among
other items, by such date and as a result thereof recommended any adjustments to the
book value of Community Bank of Smith Countys or Wilson Bank Holding Companys common
stock, with all such recommended adjustments being acceptable to the board of
directors of Community Bank of Smith County.
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if the other party makes an assignment for the benefit of creditors, files a
voluntary petition in bankruptcy or seeks or consents to any reorganization or similar
relief under any present or future bankruptcy act or similar law, or is adjudicated a
bankrupt or insolvent, or if a third party commences any bankruptcy, insolvency,
reorganization or similar proceeding involving the other;
if the merger isnt completed by April 30, 2005;
in the event the approval of any governmental authority required for consummation of
the merger and the other transactions contemplated by the merger agreement shall have
been denied by final nonappealable action of such governmental authority or an
application therefor shall have been permanently withdrawn at the request of a
governmental authority;
if the Community Bank of Smith County shareholders dont approve the merger; or
if the other party violates or breaches, in a material way, any of its agreements,
representations, and warranties under the merger agreement.
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of Wilson Bank Holding Company
For the Nine
Months Ended
For the Year Ended December 31,
September 30,
2003
2002
2001
2000
1999
2004
2003
(unaudited)
$
852,619
752,786
667,804
602,218
495,218
892,416
823,964
$
584,714
543,658
489,277
427,764
354,758
693,614
576,936
$
149,536
118,342
98,561
91,064
83,780
134,843
146,149
$
770,419
679,408
602,576
543,583
447,792
791,065
738,209
$
63,323
55,031
45,971
38,735
32,250
69,404
61,212
$
44,115
45,090
47,883
42,426
35,193
36,513
34,614
15,217
18,215
25,633
22,860
17,457
11,450
11,519
28,898
26,875
22,250
19,566
17,736
25,063
23,095
1,904
2,344
1,976
1,417
1,103
2,272
1,518
26,994
24,531
20,274
18,149
16,633
22,791
21,577
9,060
8,076
7,732
5,752
4,350
5,996
6,766
20,377
18,685
17,314
14,871
13,265
17,852
16,380
15,677
13,922
10,692
9,030
7,718
10,935
11,963
6,242
5,393
4,041
3,397
2,816
4,255
4,783
$
9,435
8,529
6,651
5,633
4,902
6,680
7,180
$
916
866
587
460
271
391
726
$
2,651
2,378
1,920
1,579
1,447
3,262
2,651
$
2.20
2.04
1.63
1.42
1.26
1.52
1.68
$
2.20
2.04
1.63
1.42
1.26
1.52
1.68
$
0.63
0.58
0.48
0.40
0.38
0.75
0.63
$
14.66
13.05
11.19
9.66
8.22
15.66
14.17
16.00
%
16.98
%
15.70
%
16.39
%
16.04
%
12.25
%
14.44
%
1.31
%
1.33
%
1.14
%
1.14
%
1.12
%
1.08
%
1.30
%
8.19
%
8.08
%
7.61
%
7.13
%
7.25
%
8.55
%
8.20
%
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For the Nine
Months Ended
For the Year Ended December 31,
September 30,
2003
2002
2001
2000
1999
2004
2003
(unaudited)
26.36
%
28.19
%
29.14
%
28.27
%
29.76
%
49.34
%
37.50
%
(1)
Per share data has been retroactively adjusted to reflect a 2 for 1 split which occurred
effective October 31, 2003.
(2)
Includes minority interest earnings of consolidated subsidiaries in numerator.
(3)
Includes minority interest of consolidated subsidiaries in numerator.
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MARKET PRICE AND DIVIDEND INFORMATION
The common stock of Wilson Bank Holding Company is not traded on an exchange nor is there
a known active trading market. Based solely on information made available to Wilson Bank Holding
Company from limited numbers of buyers and sellers, Wilson Bank Holding Company believes that the
following table sets forth the quarterly range of sale prices for the Wilson Bank Holding Companys
common stock during the years 2003, 2004 and 2005. The information set forth below has been
adjusted to reflect a 2-for-1 stock split paid by Wilson Bank Holding Company on October 31, 2003.
There is no established public trading market for Community Bank of Smith County common stock.
Because of the limited number of Community Bank of Smith County shareholders, trading in Community
Bank of Smith County common stock has been essentially nonexistent. To the knowledge of the
Community Bank of Smith County senior management, the following table sets forth all sales of
Community Bank of Smith County stock during the years 2003, 2004 and 2005.
Dividend Information
On January 1, 2003, a $.30 per share cash dividend was declared and on July 1, 2003, a $.33
per share cash dividend was declared and subsequently paid to shareholders of record of Wilson Bank
Holding Company as of those dates. On January 1, 2004, a $.35 per share cash dividend was declared
and on July 1, 2004, a $.40 per share cash dividend was declared and subsequently paid to
shareholders of record of Wilson Bank Holding Company as of those dates. On January 1, 2005, a
$.40 per share cash dividend was declared. The dividend is expected to be paid on January 31, 2005
to Wilson Bank Holding Companys shareholders of record as of January 1, 2005. Future dividends
will be dependent on the Companys profitability, its capital needs, overall financial condition,
economic and regulatory consideration.
In
2005, Community Bank of Smith County has declared a cash dividend of
$0.40 per share payable on January 31, 2005. In 2004, Community Bank
of Smith County paid cash dividends totaling $0.75 per share. In
2003, Community Bank of Smith County paid cash dividends totaling
$0.65 per share to its shareholders.
Comparative Per Share Market Price Information
Shares of Wilson Bank Holding Company common stock are not listed or traded on a national
exchange, the Nasdaq Stock Market or over-the-counter. Shares of Community Bank of Smith County
common stock also are not listed or publicly
12
traded. Based on information known to Wilson Bank
Holding Companys senior management, the closing sales price for shares of Wilson Bank Holding
Company common stock on November 15, 2004 (the day prior to the signing of the merger agreement)
was $30.50. On ___, 2005, the most recent practicable date prior to the mailing of this proxy
statement/prospectus, the closing sales price of Wilson Bank Holding Company common stock was
$___. To the knowledge of the Community Bank of Smith County senior management, the last sale of
Community Bank of Smith County common stock was the sale of 160 shares at $26.00 per share on
December 14, 2004.
Based on the exchange ratio in the merger agreement, the market value of the consideration
that Community Bank of Smith Countys shareholders, other than
Wilson Bank Holding Company, will receive in the merger for each share of
Community Bank of Smith County common stock would be approximately
$30.63 based on the sale price for
Wilson Bank Holding Companys common stock on November 15, 2004 and $___based on the closing
sale price for Wilson Bank Holding Companys common stock on ___, 2005.
Number of Shareholders
As of February 1, 2005, there were approximately 361 shareholders of record of Community
Bank of Smith County common stock. As of February 1, 2005, there were approximately 1,651
shareholders of record of Wilson Bank Holding Company common stock.
Shares Held by Certain Shareholders
Adoption of the merger agreement by Community Bank of Smith County shareholders requires
the affirmative vote of the holders of a majority of the shares of Community Bank of Smith County
common stock outstanding and entitled to vote at the special meeting. As of February 1, 2005,
approximately 10.6% of the outstanding shares of Community Bank of Smith County common stock were
held by directors and executive officers of Community Bank of Smith County and their affiliates and
an additional 50.1% of the outstanding shares were held by Wilson Bank Holding Company and its
directors and executive officers and their affiliates, other than those persons who also serve as
directors of Community Bank of Smith County.
13
CASH
DIVIDEND
HIGH
LOW
DECLARED
$
22.50
$
21.75
$
0.30
23.25
22.50
24.12
23.25
0.33
27.50
24.12
28.50
27.50
0.35
29.50
28.50
30.50
29.50
0.40
30.50
29.50
31.50
30.50
0.40
NUMBER OF
PRICE PER
DATE
SHARES
SHARE
4,000
$
24.75
104
24.75
628
25.50
409
28.00
128
30.00
160
26.00
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RISK FACTORS
Before you vote for adoption of the merger agreement, you should carefully consider the
risks described below in addition to the other information contained in this proxy
statement/prospectus, including the section entitled Cautionary Statement Regarding
Forward-Looking Statements beginning on page 17. By voting for adoption of the merger agreement,
you will be choosing to invest in Wilson Bank Holding Company common stock. The risks and
uncertainties described below are not the only ones facing Wilson Bank Holding Company. If any of
the following risks actually occur, Wilson Bank Holding Companys business, financial condition or
results of operations could be materially adversely affected, the value of Wilson Bank Holding
Company common stock could decline and you may lose all or part of your investment.
Risks Associated with the Merger
Because Wilson Bank Holding Company and certain of its board members and executive officers
own in excess of 50% of the outstanding common stock of Community Bank of Smith County there are
certain conflicts of interest related to the merger.
Wilson Bank Holding Company owns 50% of the issued and outstanding shares of Community Bank of
Smith County common stock. Additionally, the executive officers and directors of Wilson Bank
Holding Company, including those persons who are also directors of Community Bank of Smith County,
own 0.29% of the outstanding shares of Community Bank of Smith County. Under Tennessee law and
Community Bank of Smith Countys organizational documents, the merger must be approved by the
holders of a majority of the outstanding shares of Community Bank of Smith County common stock
entitled to vote at the meeting. Because of the ownership of Wilson Bank Holding Company and its
officers and directors (all of whom are anticipated to vote in favor of the merger), approval of
the merger by the required shareholder vote is highly likely. Furthermore, Wilson Bank Holding
Company proposed the merger and its principal terms to the board of directors of Community Bank of
Smith County, and was not willing to condition the merger on the approval of the shareholders of
Community Bank of Smith County who were not affiliated with Wilson Bank Holding Company. The board
of directors of Community Bank of Smith County was aware of these facts when it approved the merger
and the board members recommended that the Community Bank of Smith County shareholders vote in
favor of the merger. Messrs. Charles Bell, Randall Clemons, and James Comer, all of whom are
directors of Wilson Bank Holding Company, abstained from voting on the merger. As described below
in the sections entitled The Merger Opinion of Community Bank of Smith Countys Financial
Advisor and The Merger Agreement Conditions to the Merger, the board of directors of Community
Bank of Smith County must receive the opinion of its financial advisor prior to the mailing of this
proxy statement/prospectus to the effect that the merger consideration to be received by the
shareholders of Community Bank of Smith County is fair from a financial point of view.
The anticipated benefits of consolidating Community Bank of Smith County and Wilson Bank and
Trust may not be realized.
Wilson Bank Holding Company and Community Bank of Smith County have entered into the merger
agreement with the expectation that the merger will result in various benefits including, among
other things, that the expenses for the combined bank will be significantly less than those
experienced by the separate stand alone operations, particularly with respect to expenses
associated with Wilson Bank Holding Companys accounting, auditing and internal control function
and its Sarbanes-Oxley compliance efforts. The parties also anticipate that the combined structure
will result in additional savings and operating efficiencies with the centralization of certain
back office activities. Achieving the anticipated benefits of the merger is subject to a number of
uncertainties, including the ability to integrate the operations of Community Bank of Smith County
in an efficient and effective manner. Failure to achieve these expense savings and operating
efficiencies could result in unanticipated additional cost to Wilson Bank Holding Company.
If the conditions to the merger are not met, the merger may not occur.
Specified conditions set forth in the merger agreement must be satisfied or waived to
complete the merger. For a more complete discussion of the conditions to the merger, please see
The Merger AgreementConditions to the Merger
beginning on page 37. If the conditions are not
satisfied or waived, the merger will not occur or will be delayed, and each of Wilson Bank Holding
Company, Wilson Bank and Trust and Community Bank of Smith County may lose some or all of the
intended benefits of the merger. The following conditions must be satisfied or waived, if
permissible, before Wilson Bank Holding Company and Community Bank of Smith County are obligated to
complete the merger:
14
Risks Related to Wilson Bank Holding Companys Business
Wilson Bank Holding Company is geographically concentrated in Wilson County, Tennessee and its
surrounding counties and changes in local economic conditions impact its profitability.
Wilson Bank Holding Company operates primarily in Wilson, DeKalb and Smith counties and the
surrounding counties and substantially all of its loan customers and most of its deposit and other
customers live or have operations in this same geographic area. Accordingly, Wilson Bank Holding
Companys success significantly depends upon the growth in population, income levels, and deposits
in these areas, along with the continued attraction of business ventures to the area, and its
profitability is impacted by the changes in general economic conditions in this market. In
addition, and like Community Bank of Smith County, unfavorable local or national economic
conditions could reduce Wilson Bank Holding Companys growth rate, affect the ability of its
customers to repay their loans and generally affect its financial condition and results of
operations. Wilson Bank Holding Company is less able than a larger institution to spread the risks
of unfavorable local economic conditions across a large number of diversified economies.
Wilson Bank Holding Companys key management personnel may leave at any time.
Wilson Bank Holding Companys future success depends to a significant extent on the continued
service of its key management personnel, especially Randall Clemons, its president and chief
executive officer and Elmer Richerson, the president of Wilson Bank and Trust. While Wilson Bank
Holding Company does not have employment agreements with any of its personnel and can provide no
assurance that it will be able to retain any of its key officers and employees or attract and
retain qualified personnel in the future, it has entered into non-competition agreements with such
persons which would prevent them in most circumstances, from competing with Wilson Bank and Trust
for one year following their termination. In addition, these persons are parties to certain
deferred compensation and equity incentive plans, the benefits of which would cease to accrue upon
the termination of the persons employment with Wilson Bank Holding Company or Wilson Bank and
Trust.
Wilson Bank Holding Company, as well as Wilson Bank and Trust, operate in a highly regulated
environment and are supervised and examined by various federal and state regulatory agencies who
may adversely affect Wilson Bank Holding Companys ability to conduct business.
The Tennessee Department of Financial Institutions and the Board of Governors of the Federal
Reserve supervise and examine Wilson Bank and Trust and Wilson Bank Holding Company, respectively.
Because Wilson Bank and Trusts deposits are federally insured up to $100,000, the FDIC also
regulates its activities. These and other regulatory agencies impose certain regulations and
restrictions on Wilson Bank and Trust, including:
15
Federal and state regulatory agencies have extensive discretion and power to prevent or remedy
unsafe or unsound practices or violations of law by banks and bank holding companies. As a result,
Wilson Bank Holding Company must expend significant time and expense to assure that it is in
compliance with regulatory requirements and agency practices.
Wilson Bank Holding Company, as well as Wilson Bank and Trust, also undergoes periodic
examinations by one or more regulatory agencies. Following such examinations, Wilson Bank Holding
Company or Wilson Bank and Trust may be required, among other things, to make additional provisions
to its allowance for loan loss or to restrict its operations. These actions would result from the
regulators judgments based on information available to them at the time of their examination.
Wilson Bank and Trusts operations are also governed by a wide variety of state and federal
consumer protection laws and regulations. These federal and state regulatory restrictions limit
the manner in which Wilson Bank Holding Company and Wilson Bank and Trust may conduct business and
obtain financing. These laws and regulations can and do change significantly from time to time,
and any such change could adversely affect Wilson Bank Holding Companys results of operations.
Wilson Bank Holding Companys common stock is thinly traded, and recent prices may not reflect
the prices at which the stock would trade in an active trading market.
Wilson Bank Holding Companys common stock, like that of Community Bank of Smith County, is
not traded through an organized exchange, but rather is traded in individually-arranged
transactions between buyers and sellers. Therefore, recent prices, including those reflected in
this proxy statement/prospectus may not necessarily reflect the actual value of Wilson Bank Holding
Companys common stock. Your ability to sell the shares of common stock you acquire as a result of
the merger in a timely manner and at a price similar to those prices set out in this document may
be substantially limited by the lack of a trading market for the common stock.
16
Community Bank of Smith Countys shareholders must approve the merger;
All required regulatory approvals must be received, and any regulatory waiting periods must have expired;
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No governmental order blocking completion of the merger shall have been received, or
shall a proceeding by a government body trying to block the merger have been initiated;
All regulatory and material non-regulatory consents that are required to complete the
merger shall have been received;
Community Bank of Smith Countys board of directors shall have received the written
opinion of PBS to the effect that the merger consideration to be received by the
Community Bank of Smith County shareholders is fair to the holders of Community Bank of
Smith County common stock from a financial point of view;
No litigation which, if adversely determined might, in the reasonable opinion of
Wilson Bank Holding Company, have a material adverse effect on Community Bank of Smith
County shall have been commenced; and
PBS shall have performed its review of the book values of Wilson Bank Holding
Companys and Community Bank of Smith Countys Common Stock prior to the mailing of this
proxy statement/prospectus and made its determination as to the adequacy and calculation
methodologies of the Wilson Bank Holding Companys and Community Bank of Smith Countys
loan loss reserves and allowance for doubtful accounts, among other items, by such date
and as a result thereof recommended any adjustments to the book value of Community Bank
of Smith Countys or Wilson Bank Holding Companys common stock, with all such
recommended adjustments being acceptable to the board of directors of Community Bank of
Smith County.
explicit standards as to capital and financial condition;
limitations on the permissible types, amounts and extensions of credit and investments;
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restrictions on permissible non-banking activities; and
restrictions on dividend payments.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this
proxy statement/prospectus referring to Wilson Bank Holding Company, including the Appendices
attached to this proxy statement/prospectus and made part of this proxy statement/prospectus, and
may include statements regarding the period following completion of the merger. These statements
are intended to take advantage of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995.
These forward-looking statements are based on current projections about operations, industry,
financial condition and liquidity. Words such as may, will, should, plan, predict,
potential, anticipate, estimate, expect, project, intend, believe and words and terms
of similar substance used in connection with any discussion of future operating or financial
performance, the merger or Wilson Bank Holding Companys businesses, identify forward-looking
statements. You should note that the discussion of Wilson Bank Holding Companys reasons for the
merger and the description of the opinion of Community Bank of Smith Countys financial advisor
contain many forward-looking statements that describe beliefs, assumptions and estimates of the
management of each of Community Bank of Smith County and Wilson Bank Holding Company and public
sources as of the indicated dates and those forward-looking expectations may have changed as of the
date of this proxy statement/prospectus. In addition, any statements that refer to expectations,
projections or other characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. Those statements are not guarantees and are subject to
risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results could
differ materially and adversely from these forward-looking statements. Factors that could cause
actual results to differ materially include, but are not limited to the following matters:
The above list is not intended to be exhaustive and there may be other factors that would
preclude us from realizing the predictions made in the forward-looking statements. Because such
forward-looking statements are subject to assumptions and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking statements. Community Bank of
Smith County shareholders are cautioned not to place undue reliance on such statements.
All subsequent written and oral forward-looking statements concerning the merger or other
matters addressed in this proxy statement/prospectus and attributable to Wilson Bank Holding
Company or Community Bank of Smith County or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements contained or referred to in this section.
Except to the extent required by applicable law or regulation, neither Wilson Bank Holding Company
nor Community Bank of Smith County undertakes any obligation to release publicly any revisions or
updates to such forward-looking statements to reflect events or circumstances after the date of
this proxy statement/prospectus or to reflect the occurrence of unanticipated events.
17
THE SPECIAL MEETING
General; Dates, Times and Places
Community Bank of Smith County and Wilson Bank Holding Company have mailed this proxy
statement/prospectus to you, on or about ___, 2005, and included with it the notice of
special meeting of Community Bank of Smith County shareholders. Community Bank of Smith County
also has included a form of proxy that Community Bank of Smith Countys board of directors is
soliciting for use at the Community Bank of Smith County special meeting to be held on March 24,
2005 at 6:30 p.m., local time, at the Community Bank of Gordonsville, 7 New Middleton Highway in
Gordonsville, Tennessee. This proxy statement/prospectus is also furnished to you as a prospectus
in connection with Wilson Bank Holding Companys issuance of shares of Wilson Bank Holding Company
common stock pursuant to the merger agreement.
Purpose of the Community Bank of Smith County Meeting
At the Community Bank of Smith County special meeting, Community Bank of Smith County will ask
you to consider and vote on the following proposals:
Revocation of Proxies
You have the unconditional right to revoke your proxy at any time before it is voted by any of
the following actions:
To be effective, we must receive notice of your revocation at or before the special meeting.
Record Date
The Community Bank of Smith County board of directors has fixed the close of business on
February 1, 2005, as the record date for the determination of the holders of Community Bank of
Smith County common stock entitled to receive notice of and to vote at the special meeting. Only
holders of record of shares of Community Bank of Smith County common stock on the record date will
be entitled to notice of and to vote at the special meeting.
Vote Required
As of the record date there were 387,866 shares of Community Bank of Smith County common stock
outstanding, each of which is entitled to one vote on the merger agreement and the merger, and each
other matter properly submitted at the special meeting. Approval and adoption of the merger
agreement by the Community Bank of Smith County shareholders requires the affirmative vote of a
majority of the votes entitled to be cast by the holders of record of the Community Bank of Smith
County common stock. Under Community Bank of Smith Countys bylaws, the presence, in person, or by
proxy, of the holders of a majority of the shares of Community Bank of Smith County common stock
outstanding and entitled to vote is necessary to constitute a quorum at the special meeting.
The
Community Bank of Smith County board recommends that the Community Bank of Smith County
shareholders vote FOR approval and adoption of the merger and the merger agreement.
To Community Bank of Smith Countys knowledge, Wilson Bank Holding Company is the only
Community Bank of Smith County shareholder that owned greater than 5% of the outstanding Community
Bank of Smith County common stock as of February 1, 2005.
18
Based on the 387,866 shares of Community Bank of Smith County common stock outstanding on
February 1, 2005, a total of 193,934 shares must be voted in favor of the proposal for the merger
agreement and merger to be approved by the Community Bank of Smith County shareholders. As of
February 1, 2005, the directors and executive officers of Community Bank of Smith County, and their
affiliates, as a group, beneficially owned 41,159 of the outstanding shares of Community Bank of
Smith County common stock and the directors and executive officers of Wilson Bank Holding Company,
and their affiliates, as a group, other than those persons who are also directors of Community Bank
of Smith County, beneficially owned 328 of the outstanding shares of Community Bank of Smith County
common stock. Therefore, as of February 1, 2005 the directors and executive officers of Community
Bank of Smith County and their affiliates, as a group, combined with the directors and executive
officers of Wilson Bank Holding Company and their affiliates, as a group, other than those persons
who are also directors of Community Bank of Smith County, beneficially owned 21.4% of the 193,934
shares required for approval of the merger agreement and merger. As of the record date, Wilson Bank
Holding Company owned 193,933 of the 387,866 shares of Community Bank of Smith County common stock
outstanding. Because it is expected that Wilson Bank Holding Company and its directors and
executive officers owning Community Bank of Smith County common stock will vote in favor of the
merger, approval of the merger is highly likely.
Quorum; Broker Abstentions and Broker Non-Votes
The required quorum for the transaction of business at the special meeting is a majority of
the shares of Community Bank of Smith County common stock issued and outstanding on the record
date. Abstentions and broker non-votes each will be included in determining the number of shares
present and voting at the meeting for the purpose of determining the presence of a quorum. Because
adoption of the merger agreement requires the affirmative vote of a majority of the outstanding
shares of Community Bank of Smith County common stock entitled to vote, abstentions and broker
non-votes will have the same effect as votes against adoption of the merger agreement. In addition,
the failure of a Community Bank of Smith County shareholder to return a proxy will have the effect
of a vote against the adoption of the merger agreement.
The actions proposed in this proxy statement/prospectus are not matters that can be voted on
by brokers holding shares for beneficial owners without the owners specific instructions. If your
shares are held of record by a broker, bank or other nominee and you do not instruct such broker,
bank or other nominee, they will not vote your shares. Such failure to vote is referred to as a
broker non-vote. Accordingly, if a broker, bank or other nominee holds your shares you are urged to
instruct such broker, bank or other nominee on how to vote your shares.
Recommendation of the Board
The Community Bank of Smith County board of directors has approved and adopted the merger
agreement and recommends that Community Bank of Smith County shareholders vote FOR the adoption
of the merger agreement. Messrs. Charles Bell, Randall Clemons and James Comer, who are also
directors of Wilson Bank Holding Company, abstained from voting on the merger.
The matters to be considered at the special meeting are of great importance to the
shareholders of Community Bank of Smith County. Accordingly, you are urged to read and carefully
consider the information presented in this proxy statement/prospectus, and to complete, date, sign
and promptly return the enclosed proxy in the enclosed postage-paid envelope.
Surrender of Stock Certificates
Shareholders should not send any stock certificates at this time. A transmittal form with
instructions for the surrender of stock certificates for Community Bank of Smith County common
stock will be mailed to you promptly after completion of the merger.
Miscellaneous
The Community Bank of Smith County board is not aware of any matters to be presented for
action at the Community Bank of Smith County special meeting other than the matter described in
this proxy statement/prospectus. Only business within the purpose or purposes described in the
meeting notice may be conducted at the Community Bank of Smith County special meeting. Should any other matter requiring your vote arise, the proxies on the enclosed form
give the holders of the proxy discretionary authority to vote your shares in their best judgment in
Community Bank of Smith Countys interest.
19
increased competition with other financial institutions;
lack of sustained growth in the economy in Wilson Bank Holding Companys market area;
rapid fluctuations in interest rates;
significant downturns in the businesses of one or more large customers;
changes in the legislative and regulatory environment;
inadequate allowance for loan losses; and
loss of key personnel
Table of Contents
To consider and vote upon a proposal to approve and adopt the Agreement and Plan of
Merger, dated November 16, 2004, among Wilson Bank Holding Company, Wilson Bank and
Trust and Community Bank of Smith County, a copy of which is attached as Appendix A to
this proxy statement/prospectus, pursuant to which, among other things, Community Bank
of Smith County will merge with and into Wilson Bank and Trust; and
To transact such other business as may properly come before the special meeting.
notifying the Community Bank of Smith County corporate secretary in writing of your
intent to revoke your proxy;
executing a later proxy; or
personally attending the special meeting and casting a vote contrary to your proxy.
Table of Contents
Table of Contents
THE MERGER
This section of the proxy statement/prospectus describes material aspects of the merger.
While Wilson Bank Holding Company and Community Bank of Smith County believe that the description
covers the material terms of the merger and the related transactions, this summary may not contain
all of the information that is important to you. You should read this entire proxy
statement/prospectus, the attached appendices and the other documents to which this proxy
statement/prospectus refers carefully for a more complete understanding of merger.
General Description of the Merger
At the effective time of the merger, Community Bank of Smith County will merge with and
into Wilson Bank and Trust. Upon completion of the merger, the separate corporate existence of
Community Bank of Smith County will cease and Wilson Bank and Trust will continue as the surviving
entity and a wholly-owned subsidiary of Wilson Bank Holding Company. Wilson Bank and Trust will,
however, operate the Community Bank of Smith County branches as Community Bank of Smith County, a
Wilson Bank and Trust branch.
Each share of Community Bank of Smith County common stock outstanding at the effective
time of the merger will be converted automatically into the right to receive 1.0043 shares of
Wilson Bank Holding Company common stock. Wilson Bank Holding Company will not issue fractional
shares of Wilson Bank Holding Company common stock. Instead, in lieu of any fractional share that
Community Bank of Smith County shareholders would otherwise receive, Community Bank of Smith County
shareholders will receive cash equal to their fractional share amount multiplied by the last sale
price of Wilson Bank Holding Companys common stock on the date closest to, but not after, the
closing date of the merger.
Based on the exchange ratio and the number of shares of Community Bank of Smith County common
stock and Wilson Bank Holding Company common stock outstanding and assuming that none of the
Community Bank of Smith County shareholders exercise their dissenters rights, approximately
195,000 shares of Wilson Bank Holding Company common stock will be issued to shareholders of
Community Bank of Smith County, other than Wilson Bank Holding Company, pursuant to the merger
agreement, representing approximately 4.16% of the Wilson Bank Holding Company common stock
outstanding immediately after the merger.
Background of the Merger
Community Bank of Smith County was organized in 1996 by Wilson Bank Holding Company. Wilson
Bank and Trust, a wholly owned subsidiary of Wilson Bank Holding Company, applied to the Tennessee
Department of Financial Institutions to open a branch in Carthage and to simultaneously organize
and incorporate that branch as Community Bank of Smith County. Thereafter, Community Bank of Smith
County issued additional shares to residents of Smith County sufficient to reduce Wilson Bank
Holding Companys initial ownership to 50% of the shares outstanding. Community Bank of Smith
County has remained a 50% owned subsidiary of Wilson Bank Holding Company since that time. Wilson
Bank Holding Company has included Community Bank of Smith County as a consolidated subsidiary in
its consolidated financial statements; however, eight of the eleven members of the Community Bank
of Smith County board of directors are independent of any association with Wilson Bank Holding
Company. Randall Clemons, Chief Executive Officer of Wilson Bank Holding Company and Wilson Bank
and Trust, serves as Chief Executive Officer of Community Bank of Smith County, but the Chairman,
President, Vice Presidents and other officers of Community Bank of Smith County are officers only
of Community Bank of Smith County.
As a result of recent changes in U.S. securities laws, primarily the Sarbanes-Oxley Act,
Wilson Bank Holding Company incurred significantly higher internal control, accounting and auditing
costs because Community Bank of Smith County was a separate corporate entity with substantial
minority ownership. As a result of these increased costs, and similar increased costs with respect
to the operations of DeKalb Community Bank, its other 50% owned subsidiary, Wilson Bank Holding
Companys management began consideration of combining DeKalb Community Bank and the Community Bank
of Smith County with Wilson Bank and Trust.
At a Wilson Bank Holding Company board meeting held on August 23, the board of directors of
Wilson Bank Holding Company engaged in preliminary discussions regarding acquiring the other 50% of
the shares of Community Bank of Smith County.
At a Community Bank of Smith County board of directors meeting held on September 7, 2004,
Randall Clemons, the Chief Executive Officer of Wilson Bank Holding Company and a director of
Community Bank of Smith County, presented a proposal from Wilson Bank Holding Company to acquire
the other 50% of the outstanding shares of Community Bank of Smith County common stock not owned by
Wilson Bank Holding Company. At that meeting, the proposed terms of the merger were discussed,
including that the shareholders of Community Bank of Smith County, other than Wilson Bank Holding
Company, would receive shares of Wilson Bank Holding Company common stock in exchange for their
shares of Community Bank of
20
Smith County common stock based on the respective book values of each companys common stock as of
December 31, 2004, as determined by an outside financial advisory firm. At that meeting, the
Community Bank of Smith County board of directors discussed the concerns of its members as they
related to the shareholders and employees of Community Bank of Smith County and all of the
directors present at the meeting, other than Messrs. Bell, Clemons and Comer, unanimously approved
the transaction.
At its September 27, 2004 board meeting, a representative of PBS made a presentation to the
board of Wilson Bank Holding Company regarding the acquisition of the remaining 50% of the
outstanding shares of Community Bank of Smith County common stock. At this meeting, the board of
directors further considered the potential acquisition and engaged in general discussion regarding
possible valuation levels for the interest.
On October 12, 2004, the board of directors of Community Bank of Smith County held a meeting
to discuss the terms of the draft of the merger agreement and to engage PBS as its financial
advisor. At that meeting, representatives of PBS discussed with the Community Bank of Smith County
board of directors the procedures to be used by PBS to evaluate the book values of Community Bank
of Smith County and Wilson Bank Holding Company in connection with establishing the merger
consideration, and the board of directors approved the engagement of PBS as its financial advisor.
At this meeting, the members of the board of directors were also given a copy of a draft of the
merger agreement to review for discussion at a future meeting of the board of directors.
During the next three weeks, certain members of the board of directors of Community Bank of
Smith County had discussions with Mr. Clemons about concerns they had with the breadth of the
representations and warranties being requested of Community Bank of Smith County in the merger
agreement along with concerns regarding the manner in which the merger consideration was
determined.
On October 25, 2004, the board of directors of Wilson Bank and Trust met to consider the terms
of the merger agreement and the merger. Following a discussion about the terms of the merger, the
board approved the merger agreement and the merger.
On October 25, 2004, the board of directors of Wilson Bank Holding Company reviewed the terms
of the merger agreement and, following a discussion on the terms, approved the merger agreement and
the merger.
At the November 9, 2004, meeting of the Community Bank of Smith County board of directors, a
revised draft of the merger agreement was presented to the board in response to the concerns
expressed by certain members of the board following its October 12, 2004 meeting. The changes to
the merger agreement were reviewed by the board and a general discussion followed regarding the
manner in which the book values of Community Bank of Smith County and Wilson Bank Holding Company
could be adjusted by PBS in determining the merger consideration. Following a discussion of the
merger agreement, the board of directors voted to approve the merger agreement and all of the
directors voted in favor of the merger and to approve and adopt the merger agreement and to
recommend that the shareholders of Community Bank of Smith County vote For approval and adoption
of the merger agreement. Messrs. Charles Bell, Randall Clemons and James Comer, each of whom is a
director of Wilson Bank Holding Company, abstained from voting.
On November 16, 2004, Wilson Bank Holding Company, Wilson Bank and Trust and Community Bank of
Smith County executed the merger agreement. On January 24, 2005 and
January 25, 2005, representatives of PBS met with the boards of
directors of Wilson Bank Holding Company and Community Bank of Smith
County to present the fairness opinion and to discuss the fairness,
from a financial perspective, of the merger consideration.
Wilson Bank Holding Companys Reasons for the Merger
In approving, adopting and authorizing the merger and the merger agreement, Wilson Bank
Holding Companys board of directors considered a number of factors, including, without limitation,
those described in the following paragraphs. The Wilson Bank Holding Company board did not
consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights
to the specific factors it considered in reaching its determination. The board viewed its position
and recommendations as being based on all of the information available to it and the factors
presented to and considered by it. In addition, individual directors may have given different
weight to different factors. In reaching its decision, the Wilson Bank Holding Company board
consulted with management and with its legal counsel with respect to the merger agreement and the
transactions contemplated thereby.
The Wilson Bank Holding Company board identified the potential benefits of the merger that it
believes will contribute to the success of the combined enterprise. These potential benefits
include:
21
The Wilson Bank Holding Company board of directors also considered the structure of the
transaction and the terms of the merger agreement, including:
The Wilson Bank Holding Company board of directors also considered a number of uncertainties
and risks associated with the merger. These negative factors included:
The Wilson Bank Holding Company board weighed the benefits, advantages and opportunities
against the challenges inherent in the combination of the two banks. The board realized that there
can be no assurance about the future results of the combined banks and the expected cost savings,
including results expected or considered in the factors described above. However, Wilson Bank
Holding Companys board concluded that the potential benefits outweighed the potential risks of
consummating the merger.
After taking into account these and other factors, the Wilson Bank Holding Company board
determined that the merger agreement and the transactions contemplated thereby were in the best
interests of Wilson Bank Holding Company and its shareholders, and approved, adopted and authorized
the merger agreement and the transactions contemplated thereby, including the merger.
Community Bank of Smith Countys Reasons for the Merger
In approving, adopting and authorizing the merger and the merger agreement, Community Bank of
Smith Countys board of directors considered a number of factors, including, without limitation,
those described in the following paragraphs. The Community Bank of Smith County board did not
consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights
to the specific factors it considered in reaching its determination. The board viewed its position
and recommendations as being based on all of the information available to it and the factors
presented to and considered by it. In
22
addition, individual directors may have given different
weight to different factors. In reaching its decision, the Community Bank of Smith County board
consulted with management, representatives of Wilson Bank Holding Company and with its legal
counsel with respect to the merger agreement and the transactions contemplated thereby.
The Community Bank of Smith County board identified the potential benefits of the merger that
it believes will contribute to the success of the combined enterprise. These potential benefits
include:
The Community Bank of Smith County board of directors also considered the structure of the
transaction and the terms of the merger agreement, including:
The Community Bank of Smith County board of directors also considered a number of
uncertainties and risks associated with the merger. These negative factors included:
23
The Community Bank of Smith County board weighed the benefits, advantages and opportunities
against these and other risks. The board realized that there can be no assurance about the future
results of the combined banks or the future performance of the Wilson Bank Holding Company common
stock. However, Community Bank of Smith Countys board concluded that the potential benefits
outweighed the potential risks of consummating the merger.
After taking into account these and other factors, the Community Bank of Smith County board
determined that the merger agreement and the transactions contemplated thereby were fair to, and in
the best interests of, Community Bank of Smith County and its shareholders, and approved, adopted
and authorized the merger agreement and the transactions contemplated thereby, including the
merger.
Opinion of Community Bank of Smith Countys Financial Advisor
PBS was engaged by Community Bank of Smith County to advise Community Bank of Smith Countys board
of directors as to the fairness of the consideration, from a financial perspective, to be paid by
Wilson Bank Holding Company to Community Bank of Smith Countys shareholders in connection with the
merger.
PBS is a bank consulting firm with offices located throughout the United States. As part of its
investment banking business, PBS is regularly engaged in reviewing the fairness of financial
institution acquisition transactions from a financial perspective and in the valuation of financial
institutions and other businesses and their securities in connection with mergers, acquisitions,
estate settlements, and other transactions. Neither PBS nor any of its affiliates has a material
financial interest in Community Bank of Smith County or Wilson Bank Holding Company. PBS was
selected to advise Community Bank of Smith Countys board of directors because of its familiarity
with Tennessee financial institutions and knowledge of the banking industry as a whole.
PBS performed certain analyses described herein and presented the range of values for
Community Bank of Smith County, resulting from such analyses, to the Community Bank of Smith County
board of directors in connection with its advice as to the fairness of the consideration to be paid
to the Community Bank of Smith County shareholders.
A fairness opinion of PBS was delivered to the Community Bank of Smith County board of
directors of the Bank on January 25, 2005 at a special meeting of the Community Bank of Smith
County board of directors. A
copy of the fairness opinion, which includes a summary of the assumptions made and information
analyzed in deriving the fairness opinion, is attached as Appendix C to this proxy
statement/prospectus and should be read in its entirety.
In arriving at its fairness opinion, PBS reviewed certain publicly available business and
financial information relating to Community Bank of Smith County and Wilson Bank Holding Company.
PBS considered certain financial and stock market data of Community Bank of Smith County and Wilson
Bank Holding Company, compared that data with similar data for certain other bank holding companies
and considered the financial terms of certain other comparable bank transactions that had recently
been effected. PBS also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria that it deemed relevant. In connection
with its review, PBS did not independently verify the foregoing information and relied on such
information as being complete and accurate in all material respects. Financial forecasts prepared
by PBS were based on assumptions believed by PBS to be reasonable and to reflect currently available
information. PBS did not make an independent evaluation or appraisal of the assets of Community
Bank of Smith County or Wilson Bank Holding Company.
As part of preparing this fairness opinion, PBS performed a limited scope due diligence review of
Wilson Bank Holding Company and Community Bank of Smith County the week of December 20
th
2004, at Wilson Bank Holding Companys and Community Bank of Smith Countys corporate offices. As
part of the due diligence, PBS reviewed among other things the following items:
24
PBS also reviewed and analyzed the historical performance of Community Bank of Smith County
including:
PBS reviewed and tabulated statistical data regarding the loan portfolio, securities portfolio
and other performance ratios and statistics. Financial projections were prepared and analyzed as
well as other financial studies, analyses and investigations as deemed relevant for the purposes of
this opinion. In review of the aforementioned information, PBS took into account its assessment of
general market and financial conditions, its experience in other similar transactions, and its
knowledge of the banking industry generally.
In connection with rendering the fairness opinion and preparing its written and oral
presentation to Community Bank of Smith Countys board of directors, PBS performed a variety of
financial analyses, including those summarized herein. The summary does not purport to be a
complete description of the analyses performed by PBS in this regard. The preparation of a fairness
opinion involves various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular circumstances and
therefore, such an opinion is not readily susceptible to summary description. Accordingly,
notwithstanding the separate factors summarized below, PBS believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of the factors considered by
it, without considering all analyses and factors, could create an incomplete view of the evaluation
process underlying its opinion. In performing its analyses, PBS made numerous assumptions with
respect to industry performance, business and economic conditions and other matters, many of which
are beyond Community Bank of Smith Countys or Wilson Bank Holding Companys control. The analyses
performed by PBS are not necessarily indicative of actual values or future results, which may be
significantly more or less
25
favorable than suggested by such analyses. In addition, analyses
relating to the values of businesses do not purport to be appraisals or to reflect the process by
which businesses actually may be sold.
In the proposed merger, Community Bank of Smith County shareholders will receive 1.0043 shares
of Wilson Bank Holding Companys common stock for each share of Community Bank of Smith County held
by them at the effective time. As such, Wilson Bank Holding Company will issue approximately
194,766 shares of its common stock in exchange for the 193,933 shares of Community Bank of Smith
County common stock outstanding that are not owned by Wilson Bank
Holding Company. The 193,933
shares of Community Bank of Smith County common stock currently owned by Wilson Bank Holding
Company will be cancelled at the effective time of the merger.
On January 25, 2005, the proposed consideration to be received by the Community Bank of Smith
County shareholders represented $31.64 per share based on the closing price of Wilson Bank Holding
Companys common stock on January 25, 2005.
The $31.64 per share represents a multiple of Community Bank of Smith Countys December 31,
2004 stated common equity of 1.95X, a multiple of Community Bank of Smith Countys 2004 stated net
income of 22.05X and a premium of 13.36% over Community Bank of Smith Countys weighted average
price per share since January 1, 2004 of $27.91. In addition, the proposed consideration to be
received by Community Bank of Smith Countys shareholders represents 16.30% of Community Bank of
Smith Countys December 31, 2004 total deposits and a 10.40% premium over Community Bank of Smith
Countys December 31, 2004 tangible equity as a percentage of the Community Bank of Smith Countys
December 31, 2004 core deposits.
Acquisition Comparison Analysis:
In performing this analysis, PBS reviewed the 89 bank
transactions in the states of Tennessee, Kentucky, South Carolina, North Carolina, Georgia and
Alabama since June 30, 2001, for which financial information was available. The purpose of the
analysis was to obtain an evaluation range of Community Bank of Smith County based on these
comparable group bank acquisition transactions. Median multiples of book value, earnings, deposits
and the premium paid over the sellers tangible equity as a percentage of the acquired
institutions core deposits implied by the comparable group transactions were utilized in obtaining
a range for the acquisition value of Community Bank of Smith County. In addition to reviewing
recent comparable group bank transactions, PBS performed separate comparable analyses for
transactions where the bank being acquired had total assets between $75 $150 million and had an
equity to assets ratio between 6.5% and 8.5%, transactions where the shareholders of the entity
being acquired received all stock, and transactions in Tennessee since June 30, 2001. Median values
for the 89 comparable group transactions expressed as multiples of book value and earnings were
1.96 and 22.92, respectively and median premiums on deposits and franchise premiums over core
deposits were 21.66% and 13.94%, respectively
.
The following tables demonstrate the median
multiples of book value and earnings as compared to the comparable group, as well as, acquisition
pricing for the comparable group transactions median percentiles.
26
Acquisition Pricing for Comparable Group Transactions
Acquisition Pricing for Comparable Group Transactions
Comparable Group Transactions
Comparable Group Transactions
27
Adjusted Net Asset Value Analysis:
PBS reviewed the Community Bank of Smith Countys
balance sheet data to determine the amount of material adjustments required to the stockholders
equity of Community Bank of Smith County based on differences between the market value of Community
Bank of Smith Countys assets and those assets value reflected on Community Bank of Smith Countys
financial statements. PBS determined that one adjustment was warranted. PBS increased the Community
Bank of Smith Countys equity by $2,601,000 to reflect an estimated increase in the value of the
core deposits on Community Bank of Smith Countys books as of December 31, 2004. The aggregate
adjusted net asset value of Community Bank of Smith County was determined to be $8,811,000 or
$22.98 per Community Bank of Smith County common share.
Discounted Earnings Analysis:
A dividend discount analysis was performed by PBS
pursuant to which a range of values of Community Bank of Smith County was determined by adding (i)
the present value of estimated future dividend streams that Community Bank of Smith County could
generate over a five-year period and (ii) the present value of the terminal value of Community
Bank of Smith Countys earnings and equity at the end of the fifth year. The terminal value of
the Community Bank of Smith Countys earnings and equity at the end of the five-year period was
determined by applying a multiple of 1.96 times the projected terminal years equity. The 1.96
multiple represents the median price paid as a multiple of equity for all comparable group bank
transactions effected since June 30, 2001 when Financial Accounting Statements 141 and 142 went
into effect.
Dividend streams and terminal values were discounted to present values using a discount rate
of 13%. This rate reflects assumptions regarding the required rate of return of holders or buyers
of Community Bank of Smith Countys common stock. The aggregate value of Community Bank of Smith
County, determined by adding the present value of the total cash flows, was $11,974,000 or $31.23
per share. In addition, using the five-year projection as a base, a twenty-year projection was
prepared assuming an annual growth rate in assets of 6.0% in years one through five and 4.0% in
years six through twenty. Community Bank of Smith Countys return on assets was assumed to equal
1.30% in year one, 1.30% in year two and 1.35% in years three through five and then increase to
1.40% by year six and remain constant at this level for the remainder of the analysis. Dividends
equal to 40.0% of net income were assumed to be paid in years one through five then were assumed to
increase to 70.0% of net income in years six through twenty. This long-term projection resulted in
an aggregate value of $9,063,000 or $23.64 per share of Community Bank of Smith County common
stock.
Pro Forma Merger Analysis:
PBS compared the historical performance of Wilson Bank
Holding Company to that of publicly traded regional bank holding companies as well as to Community
Bank of Smith County. This analysis included, among other things, a comparison of profitability,
asset quality and capital measures. In addition, the contribution of Community Bank of Smith County
and Wilson Bank Holding Company to the income statement and balance sheet of the pro forma combined
company was analyzed in relation to the pro forma ownership position of Community Bank of Smith
Countys shareholders in the combined institution.
The effect of the affiliation on the historical and pro forma financial data of Community Bank
of Smith County was prepared and analyzed. Community Bank of Smith Countys historical financial
data was compared to the pro forma combined historical and projected earnings, book value and
dividends per share.
The fairness opinion is directed only to the question of whether the consideration to be
received by Community Bank of Smith Countys shareholders under the Agreement is fair and equitable
from a financial perspective and does not constitute a recommendation to any Community Bank of
Smith County shareholder to vote in favor of the affiliation. No limitations were imposed on PBS
regarding the scope of its investigation or otherwise by Community
Bank of Smith County.
Based on the results of the various analyses described above, PBS concluded that the
consideration to be received by Community Bank of Smith Countys shareholders under the merger
agreement is fair and equitable from a financial perspective to the shareholders of Community Bank
of Smith County.
PBS will receive total fees of approximately $15,000 for all services performed in connection
with the merger of Community Bank of Smith County with and into Wilson Bank and Trust. It will
also be compensated for the services it performed in connection with the merger of DeKalb Community
Bank with and into Wilson Bank and Trust. Community Bank of Smith County will be responsible for
the payment of its fees to PBS, but will be reimbursed for these expenses by Wilson Bank and Trust.
In addition, Community Bank of Smith County has agreed to indemnify PBS and its directors,
officers and employees, from liability in connection with the transaction, and to hold PBS harmless
from any losses, actions, claims, damages, expenses or liabilities related to any of PBS acts or
decisions made in good faith and in the best interest of Community Bank of Smith County.
Merger Consideration
Upon consummation of the merger, each outstanding share of Community Bank of Smith County
common stock, other than those owned by Wilson Bank Holding Company and the Community Bank of Smith
County shareholders who properly
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perfect their dissenters rights, will be converted into the right to receive 1.0043 shares of
Wilson Bank Holding Company common stock. No fractional shares of Wilson Bank Holding Company
common stock will be issued in connection with the merger. Instead Community Bank of Smith County
shareholders will receive an amount of cash in lieu of a fraction of a share of Wilson Bank Holding
Company common stock equal to their fractional share amount multiplied by the last sale price of
Wilson Bank Holding Company common stock on the date closest to, but not after, the closing date
for the merger.
Completion and Effectiveness of the Merger
The merger will be completed as promptly as practicable after all of the conditions to
completion of the merger are satisfied or waived, if permissible, including adoption of the merger
agreement by the shareholders of Community Bank of Smith County and receipt of required regulatory
approvals. The merger will become effective upon the filing of articles of merger with the
Secretary of State of the State of Tennessee.
Wilson Bank Holding Company and Community Bank of Smith County intend to complete the merger
as promptly as practicable after adoption of the merger agreement by Community Bank of Smith
Countys shareholders at the special meeting and the satisfaction or waiver, if permissible, of
certain conditions to completion of the merger. The parties expect to complete the merger in the
first or second quarter of 2005; however, the merger is subject to the approval of the Federal Reserve Board,
the FDIC and the Tennessee Department of Financial Institutions.
Exchange of Stock Certificates
Promptly after the effective time, Wilson Bank Holding Company, acting as exchange agent, will
mail to the Community Bank of Smith County shareholders a letter of transmittal and instructions
for exchanging their Community Bank of Smith County common stock for shares of Wilson Bank Holding
Company common stock. On surrender of their Community Bank of Smith County stock certificate
together with a duly executed letter of transmittal, they will be entitled to receive shares of
Wilson Bank Holding Company common stock and any cash payable in lieu of fractional shares. The
surrendered Community Bank of Smith County stock certificate shall be promptly canceled.
Until surrendered in accordance with the previous paragraph, each Community Bank of Smith
County stock certificate shall, following the effective time of the merger, represent only the
right to receive the Wilson Bank Holding Company shares issuable upon surrender of such certificate
and the right to receive cash in lieu of fractional shares.
No Community Bank of Smith County shareholder will be entitled to exercise any rights as a
shareholder of Wilson Bank Holding Company until the holder has properly surrendered his
certificates(s) (together with all required documents) as set forth above. No dividend or other
distribution payable after the effective time with respect to the Wilson Bank Holding Company
common stock will be paid to a Community Bank of Smith County shareholder of any unsurrendered
certificate until the holder thereof properly surrenders the certificate (together with all
required documents), at which time the holder will receive all dividends and distributions, without
interest, previously withheld from the holder.
After the effective time, the Community Bank of Smith County shareholders will cease to be,
and will have no rights as, shareholders of Community Bank of Smith County, other than to receive
shares of Wilson Bank Holding Company common stock into which the shares have been converted and
the right to receive fractional share payments.
If your stock certificates of Community Bank of Smith County have been lost, stolen or
destroyed prior to the closing of the merger, Wilson Bank Holding Company may require you to make a
proper affidavit of that fact and deliver an appropriate indemnity agreement to Wilson Bank Holding
Company as indemnity against any claim that may be made against Wilson Bank Holding Company with
respect to your certificates.
Interests of Certain Persons in the Merger
Community Bank of Smith Countys directors and officers have interests in the merger as
individuals in addition to, and that may be different from, your interests as shareholders.
Community Bank of Smith Countys board of directors was aware of these interests of Community Bank
of Smith Countys directors and executive officers and considered them in its decision to approve
and adopt the merger agreement.
Three of Community Bank of Smith Countys directors, Messrs. Bell, Clemons and Comer, are also
members of the board of directors of Wilson Bank Holding Company. In addition, Mr. Clemons is the
Chief Executive Officer and President of Wilson Bank Holding Company. Because of these
relationships to Wilson Bank Holding Company, these three directors abstained from voting to
approve and adopt the merger agreement.
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The members of the board of directors of Community Bank of Smith County that are not members
of the board of directors of Wilson Bank and Trust, will become members of a community advisory
board to the Community Bank of Smith County branches of Wilson Bank and Trust following
consummation of the merger. These individuals are expected to provide advice and input to the
Wilson Bank and Trust board of directors surrounding the operations of the Community Bank of Smith
County branches as well as the financial services needs of the residents of DeKalb and Smith County
and will be compensated for their service on this community advisory board.
The executive officers of Community Bank of Smith County are expected to remain employed in
their current positions with the combined bank following closing of the transaction. These
executive officers will be compensated by Wilson Bank and Trust in their capacity as officers of
the combined bank.
Community Bank of Smith County Common Stock Ownership
The following table provides information about each shareholder of Community Bank of Smith
County that owned beneficially more than 5% of the outstanding shares of Community Bank of Smith
County common stock as of February 1, 2005:
The following table provides information about the beneficial ownership of Community Bank of
Smith County common stock as of February 1, 2005, by each director of Community Bank of Smith
County, each executive officer of Community Bank of Smith County and by all Community Bank of Smith
County directors and executive officers as a group. Unless otherwise noted, each person named in
the table has sole voting and investment power (or shares such powers with his spouse) for all
shares shown.
For purposes of this table, a person is deemed to be the beneficial owner of securities that
can be acquired within 60 days of February 1, 2005 through the exercise of any option, warrant or
right. As of February 1, 2005, there were no outstanding options or warrants or other rights to
acquire Community Bank of Smith County common stock. The amounts and percentages are based upon
387,866 shares of Community Bank of Smith County common stock outstanding as of February 1, 2005.
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Wilson Bank Holding Company Common Stock Ownership
The following table sets forth information, as of February 1, 2005, regarding the beneficial
ownership of Wilson Bank Holding Companys common stock by (i) each person or group known by Wilson
Bank Holding Company to be the beneficial owner of more than five percent of the common stock, (ii)
each director of Wilson Bank Holding Company, (iii) each executive officer named in the Summary
Compensation Table contained in Wilson Bank Holding Companys Proxy Statement on Schedule 14A filed
with the SEC on March 15, 2004; and (iv) all directors and executive officers of Wilson Bank
Holding Company as a group. The number of shares beneficially owned is determined under rules of
the Securities and Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose.
For purposes of the table, a person or group of persons is deemed to beneficially own shares
of common stock issuable upon the exercise of stock options that are currently exercisable or that
become exercisable within 60 days from the date set forth above. For purposes of computing the
percentage of outstanding common stock held by each person or group of persons named above, any
shares that such person or group has the right to acquire within 60 days after the date set forth
above are deemed outstanding, but are not deemed to be outstanding for purposes of computing the
percentage ownership of any other person or group. Wilson Bank Holding Company believes that the
beneficial owners of the common stock listed in the table below, based on information furnished by
such owners, have sole voting and dispositive power (or share such powers with his or her spouse)
with respect to such shares, except as explained in the footnotes to the table.
For purposes of computing the number of shares and percentage of outstanding common stock
beneficially owned by a person or group of persons, the number of shares of common stock
outstanding after the completion of the merger:
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Regulatory Matters
The acquisition of 100% of the outstanding shares of Community Bank of Smith County by Wilson
Bank Holding Company is subject to prior approval by the Federal Reserve Board under the Bank
Holding Company Act of 1956, as amended. The Bank Holding Company Act and Federal Reserve
Regulation Y require the Federal Reserve Board, when approving the acquisition of more than 50% of
the outstanding shares of a bank by an existing bank holding company, to take into consideration
(1) the financial and managerial resources (including the competence, experience, and integrity of
officers, directors and principal shareholders); (2) future prospects of the existing and proposed
institutions; and (3) the convenience and needs of the communities to be served. In considering
financial resources and future prospects, the Federal Reserve Board will, among other things,
evaluate the adequacy of the capital levels of the parties to a proposed transaction.
The Bank Holding Company Act prohibits the Federal Reserve Board from approving an acquisition
if (1) it would result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of banking in any part of the United States;
(2) its effect in any section of the country would be substantially to lessen competition or to
tend to create a monopoly; or (3) it would in any other manner result in a restraint of trade,
unless the Federal Reserve Board finds that the anti-competitive effects of a merger are clearly
outweighed in the public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served. In addition, under the Community
Reinvestment Act of 1977, as amended, the Federal Reserve Board must take into account the record
of performance of the existing institutions in meeting the credit needs of the entire community,
including low and moderate income neighborhoods, served by such institutions.
The merger of Community Bank of Smith County with and into the Wilson Bank and Trust, a
Tennessee state nonmember bank, requires prior approval from the FDIC under the Bank Merger Act,
and the approval of the Commissioner of the Tennessee Department of Financial Institutions,
pursuant to Part 13 of the Tennessee Banking Act.
Applicable federal and Tennessee law provides for the publication of notice and public comment
on applications or notices filed with the Federal Reserve Board, the FDIC and the Tennessee
Department of Financial Institutions and authorizes those agencies to permit interested parties to
intervene in the proceedings. If an interested party is permitted to intervene, this intervention
could delay the regulatory approvals required for consummation of the merger.
Wilson Bank Holding Company made application to the Federal Reserve on January 28, 2005, the
FDIC on January 27, 2005, and the Tennessee Department of Financial Institutions on January 25,
2005 for the requisite approvals. As of the date of this proxy statement/prospectus, none of the
required approvals had been received.
The merger generally may not be consummated until 30 days (which may be shortened to 15 days
with the consent of the United States Department of Justice) following the date of Federal Reserve
Board approval, during which time the United States Department of Justice may challenge the merger
on antitrust grounds. The commencement of an antitrust action by the United States Department of
Justice, if it occurred, would stay the effectiveness of the Federal Reserve Boards approval
unless a court specifically ordered otherwise.
Material United States Federal Income Tax Consequences
The following summary discloses some of the federal income tax consequences of the merger.
The summary is based upon the Internal Revenue Code, applicable Treasury regulations and
administrative rulings and judicial authority as of the date of this proxy statement/prospectus.
All of the foregoing are subject to change, possibly with retroactive effect, and the change could
affect the continuing validity of the discussion. The discussion assumes that Community Bank of
Smith County shareholders hold their shares as capital assets. Further, the discussion does not
address the tax consequences that may be relevant to a particular Community Bank of Smith County
shareholder subject to special treatment under federal income tax laws, like dealers in securities,
traders in securities that elect to use a mark-to-market method of accounting, non-United States
persons, tax-exempt organizations, or Community Bank of Smith County shareholders that hold
Community Bank of Smith County common stock as part of a straddle or conversion transaction. The
discussion does not address any consequences arising under the laws of any state, locality or
foreign jurisdiction.
Community Bank of Smith County shareholders will not recognize income, gain or loss upon the
receipt of Wilson Bank Holding Company common stock in exchange for their shares of Community Bank
of Smith County common stock pursuant to the merger. The aggregate tax basis of the shares of
Wilson Bank Holding Company common stock received by Community Bank of
Smith County shareholders, including any fractional share of Wilson Bank Holding Company common
stock for which cash is received, will be the same as the tax basis of the shares of Community Bank
of Smith County common stock exchanged for the Wilson Bank Holding Company common stock. The
holding period of the shares of Wilson Bank Holding Company common stock received by Community Bank
of Smith County shareholders will include the holding period of Community Bank of Smith
32
County
common stock exchanged for the Wilson Bank Holding Company common stock. Cash received by a
shareholder of Community Bank of Smith County in lieu of a fractional share of Wilson Bank Holding
Company common stock will be treated as received in exchange for the fractional interest, and gain
or loss will be recognized in an amount equal to the difference between the amount of cash received
and the portion of the shareholders adjusted tax basis in the shares of Community Bank of Smith
County common stock allocated to such fractional share. This gain or loss generally will be
treated as capital gain or loss if the shareholder holds his or her Community Bank of Smith County
common stock as a capital asset at the effective time.
The discussion above does not purport to be a complete analysis or discussion of all potential
tax effects relevant to the merger. Thus, you are urged to consult your own tax advisors as to the
specific tax consequences to you of the merger, including tax return reporting requirements, the
applicability and the effect of federal, state, local and other applicable tax laws and the effect
of any proposed changes in the tax laws.
Accounting Treatment
The acquisition of the noncontrolling interest in Community Bank of Smith County will be
accounted for using the purchase method of accounting by Wilson Bank Holding Company as prescribed
by Statement of Financial Accounting Board Standard No. 141 (SFAS No. 141). Any intangibles
resulting from the merger will be accounted for in subsequent years pursuant to the provisions of
SFAS No. 142. Intangible assets with a finite life will be amortized over their useful life.
Intangible assets with indefinite lives such as goodwill are not subject to amortization; however,
these intangibles must be tested for impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired.
Dissenters Rights
Under Tennessee law, if you do not vote in favor of the merger you have the right to seek an
appraisal of the fair value of your Community Bank of Smith County common stock and receive a cash
payment of such fair value. Community Bank of Smith County shareholders electing to exercise
dissenters rights must comply with the provisions of Chapter 23 of the Tennessee Business
Corporation Act in order to perfect their rights. Community Bank of Smith County will require
strict compliance with the statutory procedures. A copy of Chapter 23 of the Tennessee Business
Corporation Act is attached as Appendix B to this proxy statement.
The following is intended as a brief summary of the material provisions of the Tennessee
statutory procedures required to be followed by a shareholder in order to dissent from the merger
and perfect the shareholders appraisal rights. This summary, however, is not a complete statement
of all applicable requirements and is qualified in its entirety by reference to Chapter 23 of the
Tennessee Business Corporation Act, the full text of which appears as Appendix B of this proxy
statement.
Holders of common stock who do not want to accept the merger consideration, who do not vote in
favor of (or who abstain from voting on) the merger agreement, and who perfect their dissenters
rights by complying with the provisions of Chapter 23 of the Tennessee Business Corporation Act,
will have the right to receive cash payment for the fair value of their common stock.
In order to be eligible to exercise the right to dissent, a shareholder must file with
Community Bank of Smith County a written objection to the merger, stating that he intends to
dissent if the merger is effected. Such statement must be filed before the vote is taken at the
special meeting, and it must be addressed as follows: Community Bank of Smith County, 1300 Main
Street North, Carthage, Tennessee 37030, Attention: J. Randall Clemons, Corporate Secretary. It
is not necessary for a dissenting shareholder to vote against the merger to preserve dissenters
rights; however, such rights will be lost if the shareholder votes in favor of the merger.
If the merger is approved, Community Bank of Smith County will deliver a written notice to
dissenting shareholders no later than ten days after approval of the merger, unless the merger is
terminated and abandoned. The notice will set forth where the dissenting shareholders payment
demands must be sent and where and when stock certificates must be deposited. The notice will also
supply a form for dissenting shareholders to use in demanding payment. A dissenting shareholder
must deliver his payment demand to Community Bank of Smith County no later than the date set forth
in such notice, which may not be fewer than one nor more than two months after the written notice
is delivered. Merely abstaining from or voting against the merger will not satisfy the two
requirements that the shareholder (i) object in writing to the merger and (ii) file a written
demand for payment within such two-month period. Failure of a shareholder to take the required
action during the two-month period binds such shareholder to the terms of the merger and precludes
exercise of dissenters rights.
Within the two-month period, a dissenting shareholder must submit his stock certificates
representing his shares of common stock to Community Bank of Smith County in accordance with the
terms of notice of Community Bank of Smith County.
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As soon as practicable after the merger is
effected, or upon receipt of a dissenting shareholders payment demand, whichever is later,
Community Bank of Smith County shall pay each dissenting shareholder the fair value of his shares,
plus accrued interest.
If a dissenting shareholder believes that the amount paid by Community Bank of Smith County is
less than the fair value of the shares or that interest due was incorrectly calculated, the
dissenting shareholder must, within one month after Community Bank of Smith County has made payment
to the dissenting shareholder, demand payment of his estimate of the fair value. If a demand for
payment remains unsettled, Community Bank of Smith County must commence a suit in a court having
equity jurisdiction located in Smith County, Tennessee, within two months after receiving the
dissenting shareholders payment demand. All dissenting shareholders will be made a party to the
proceeding and will be served with a copy of the petition. The court shall determine the
dissenting shareholders right to receive payment or the fair value of his shares or both. The
costs and expenses of such proceedings shall be assessed against Community Bank of Smith County
unless the court shall find the actions of a dissenting shareholder who is party to the suit to be
arbitrary, vexatious or not in good faith. If Community Bank of Smith County fails to bring such a
suit within such time, it shall pay each dissenting shareholder whose demand remains unsettled the
amount demanded.
Section 48-23-101 of the Tennessee Business Corporation Act provides that the fair value of
shares shall be determined immediately before the effectuation of the merger, excluding any
appreciation or depreciation of shares in anticipation of such corporate action. The value so
determined could be more or less than the value of the merger consideration into which shares of
the common stock are to be converted pursuant to the merger. Any dissenting shareholder who
perfects such holders rights to be paid the fair value of such holders shares will recognize
taxable gain or loss upon receipt of cash for such shares for federal income tax purposes. See
The Merger Material United States Federal Income Tax
Consequences on Page 32
.
Any shareholder contemplating the exercise of dissenters rights should carefully review
Chapter 23 of the Tennessee Business Corporation Act, a copy of which is attached to this proxy
statement as Appendix B. A shareholder who fails to comply with all requirements of such Chapter
23 will forfeit such holders dissenters rights and, upon consummation of the merger, such
holders shares of common stock will be converted into the right to receive the merger
consideration to which such shareholder is entitled under the merger agreement.
In view of the complexities of Chapter 23 of the Tennessee Business Corporation Act, the
material provisions of which are briefly summarized above, shareholders of Community Bank of Smith
County who consider pursuing dissenters rights are urged to consult with legal counsel.
The above summary is qualified in its entirety by reference to Chapter 23 of the Tennessee
Business Corporation Act, a copy of which is reprinted in full as Appendix B to this proxy
statement/prospectus.
Restrictions on Ability to Sell Wilson Bank Holding Company Common Stock
The shares of Wilson Bank Holding Company common stock to be received by the Community Bank of
Smith County shareholders in connection with the merger will be registered under the Securities Act
and will be freely transferable, except for shares of Wilson Bank Holding Company common stock
issued to any person who is deemed to be an affiliate of either Community Bank of Smith County or
Wilson Bank Holding Company at the time of the annual meeting. Persons who may be deemed to be
affiliates include individuals and entities that control, are controlled by or are under common
control with either Community Bank of Smith County or Wilson Bank Holding Company and may include
the executive officers and directors, as well as principal shareholders, of both companies.
Affiliates may not sell their shares of Wilson Bank Holding Company common stock acquired in
connection with the merger except pursuant to:
Listing of Shares Issued to Community Bank of Smith County Shareholders
The shares of Wilson Bank Holding Company common stock issued to the shareholders of Community
Bank of Smith County will not be listed for trading on any national securities exchange or on the
NASDAQ Stock Markets SmallCap Market or National Market System.
34
THE MERGER AGREEMENT
The following is a summary of selected aspects of the merger agreement. This summary is not
complete and is qualified in its entirety by reference to the complete text of the merger
agreement, which is attached to this proxy statement/prospectus as Appendix A and made a part of
this proxy statement/prospectus. Wilson Bank Holding Company and Community Bank of Smith County
urge you to read carefully the merger agreement in its entirety because this summary may not
contain all of the information that is important to you.
Structure of the Merger and Conversion of Community Bank of Smith County Common Stock
In accordance with the merger agreement and Tennessee law, Community Bank of Smith County will
merge with and into Wilson Bank and Trust, a direct wholly-owned subsidiary of Wilson Bank Holding
Company. As a result of the merger, the separate corporate existence of Community Bank of Smith
County will cease, and Wilson Bank and Trust will continue as the surviving corporation and a
wholly-owned subsidiary of Wilson Bank Holding Company. Effective upon completion of the merger,
all of the property, rights, privileges, powers, and franchises of Community Bank of Smith County
and Wilson Bank and Trust will vest in Wilson Bank and Trust, and all debts, liabilities and duties
of Community Bank of Smith County and Wilson Bank and Trust will become debts, liabilities and
duties of Wilson Bank and Trust.
At the effective time of the merger, each outstanding share of Community Bank of Smith County
common stock, other than shares owned by Wilson Bank Holding Company and shares owned by
shareholders who properly perfect their dissenters rights, will be converted into the right to
receive 1.0043 shares of Wilson Bank Holding Company common stock. No fractional shares of Wilson
Bank Holding Company common stock will be issued in connection with the merger. Instead, in lieu
of any fractional share that Community Bank of Smith County shareholders would otherwise receive,
Community Bank of Smith County shareholders will receive cash equal to your fractional share amount
multiplied by the last sale price of Wilson Bank Holding Companys common stock on the date closest
to, but not after, the closing date of the merger.
No fractional shares of Wilson Bank Holding Company common stock will be issued in connection
with the merger. Instead, in lieu of any fractional share that Community Bank of Smith County
shareholders would otherwise receive, Community Bank of Smith County shareholders will receive cash
equal to your fractional share amount multiplied by the last sale price of Wilson Bank Holding
Companys common stock on the date closest to, but not after, the closing date of the merger.
Community Bank of Smith County shareholders will be entitled to receive dividends or other
distributions on Wilson Bank Holding Company common stock with a record date after the merger is
completed in accordance with the terms of the merger agreement, but only if they have surrendered
their Community Bank of Smith County stock certificates.
Closing and Effective Time
The merger will take place as soon as practicable after satisfaction or waiver, if
permissible, of all conditions to the obligations of the parties to complete the merger. The
merger will become effective at the date and time at which articles of merger are filed with the
Secretary of State of the State of Tennessee, or at such later time as the parties shall agree and
specify in the articles of merger.
Representations and Warranties
Each of Community Bank of Smith County, Wilson Bank Holding Company and Wilson Bank and Trust
made a number of representations and warranties in the merger agreement regarding their authority
to enter into the merger agreement and to complete the merger, and with regard to certain aspects
of their respective businesses, financial condition, structure, and other facts pertinent to the
merger.
The representations and warranties made by Community Bank of Smith County cover, among others,
the following topics as they relate to Community Bank of Smith County:
35
The representations made by Wilson Bank Holding Company and Wilson Bank and Trust cover, among
others, the following topics as they relate to Wilson Bank Holding Company and its subsidiaries:
The representations and warranties in the merger agreement are complicated and not easily
summarized. You are urged to carefully read the sections in the merger agreement under the
headings Representations and Warranties by CBSC and Representations and Warranties by Parent and
the Bank.
Business Pending the Merger
Community Bank of Smith County has agreed that until the merger occurs or the merger agreement
is terminated, unless Wilson Bank Holding Company otherwise consents in writing, it will use its
best efforts to operate generally in the ordinary course consistent with past practices and,
without limiting the foregoing, to fulfill the following covenants and agreements:
36
Conditions to the Merger
The obligations of Wilson Bank Holding Company and Wilson Bank and Trust to consummate the
merger are subject to the satisfaction (or waiver, where legally allowed), at or prior to the
effective time, of a number of conditions set forth in the merger agreement, including:
37
The obligations of Community Bank of Smith County to consummate the merger are subject to the
satisfaction (or waiver, where legally allowed), at or prior to the effective time, of a number of
conditions set forth in the merger agreement, including:
38
Termination of the Merger Agreement
Wilson Bank Holding Company and Community Bank of Smith County can mutually agree at any time
to terminate the merger agreement without completing the merger, even if Community Bank of Smith
Countys shareholders have already voted to approve it. Also, Community Bank of Smith County can
terminate the merger agreement if, within five (5) business days of its board of directors being
advised by PBS of its proposed adjustments to the book value of Wilson Bank Holding Companys or
Community Bank of Smith Countys common stock, the Community Bank of Smith County board of
directors determines, in its sole discretion, to terminate the merger agreement.
Moreover, either Wilson Bank Holding Company or Community Bank of Smith County can terminate
the merger agreement in the following circumstances:
Amendment of the Merger Agreement
The merger agreement may be amended only by a written instrument duly executed by all parties
or their respective heirs, successors, assigns or legal personal representatives.
Expenses of the Merger
All fees and expenses incurred by Community Bank of Smith County including without limitation
legal fees and expenses, in connection with the merger agreement are to be borne by Community Bank
of Smith County; provided, however, that Wilson Bank and Trust shall reimburse Community Bank of
Smith County for the fees and expenses of PBS. All fees and expenses incurred by Wilson Bank
Holding Company and Wilson Bank and Trust, including without limitation, legal fees and expenses,
in connection with the merger agreement are to be borne by Wilson Bank Holding Company or Wilson
Bank and Trust, as the case may be. Filing fees payable by Wilson Bank Holding Company or
Community Bank of Smith County in connection with any regulatory filing shall be paid by Wilson
Bank Holding Company.
APPRAISAL RIGHTS FOR COMMUNITY BANK OF SMITH COUNTY SHAREHOLDERS
Under Tennessee law, if you do not vote in favor of the merger you have the right to seek an
appraisal of the fair value of your Community Bank of Smith County common stock and receive a cash
payment of such fair value. Community Bank of Smith County shareholders electing to exercise
dissenters rights must comply with the provisions of Chapter 23 of the Tennessee
Business Corporation Act in order to perfect their rights. Community Bank of Smith County will
require strict compliance with the statutory procedures. A copy of Chapter 23 of the Tennessee
Business Corporation Act is attached as Appendix B to this proxy statement/prospectus.
The following is intended as a brief summary of the material provisions of the Tennessee
statutory procedures required to be followed by a shareholder in order to dissent from the merger
and perfect the shareholders appraisal rights. This summary, however, is not a complete statement
of all applicable requirements and is qualified in its entirety by reference to Chapter 23 of the
Tennessee Business Corporation Act, the full text of which appears as Appendix B of this proxy
statement.
39
Holders of common stock who do not want to accept the merger consideration, who do not vote in
favor of (or who abstain from voting on) the merger agreement, and who perfect their dissenters
rights by complying with the provisions of Chapter 23 of the Tennessee Business Corporation Act,
will have the right to receive cash payment for the fair value of their common stock.
In order to be eligible to exercise the right to dissent, a shareholder must file with
Community Bank of Smith County a written objection to the merger, stating that he intends to
dissent if the merger is effected. Such statement must be filed before the vote is taken at the
special meeting, and it must be addressed as follows: Community Bank of Smith County, 1300 Main
Street North, Carthage, Tennessee 37030, Attention: J. Randall Clemons, Corporate Secretary. It
is not necessary for a dissenting shareholder to vote against the merger to preserve dissenters
rights; however, such rights will be lost if the shareholder votes in favor of the merger.
If the merger is approved, Community Bank of Smith County will deliver a written notice to
dissenting shareholders no later than ten days after approval of the merger, unless the merger is
terminated and abandoned. The notice will set forth where the dissenting shareholders payment
demands must be sent and where and when stock certificates must be deposited. The notice will also
supply a form for dissenting shareholders to use in demanding payment. A dissenting shareholder
must deliver his payment demand to Community Bank of Smith County no later than the date set forth
in such notice, which may not be fewer than one nor more than two months after the written notice
is delivered. Merely abstaining from or voting against the merger will not satisfy the two
requirements that the shareholder (i) object in writing to the merger and (ii) file a written
demand for payment within such two-month period. Failure of a shareholder to take the required
action during the two-month period binds such shareholder to the terms of the merger and precludes
exercise of dissenters rights.
Within the two-month period, a dissenting shareholder must submit his stock certificates
representing his shares of common stock to Community Bank of Smith County in accordance with the
terms of notice of Community Bank of Smith County. As soon as practicable after the merger is
effected, or upon receipt of a dissenting shareholders payment demand, whichever is later,
Community Bank of Smith County shall pay each dissenting shareholder the fair value of his shares,
plus accrued interest.
If a dissenting shareholder believes that the amount paid by Community Bank of Smith County is
less than the fair value of the shares or that interest due was incorrectly calculated, the
dissenting shareholder must, within one month after Community Bank of Smith County has made payment
to the dissenting shareholder, demand payment of his estimate of the fair value. If a demand for
payment remains unsettled, Community Bank of Smith County must commence a suit in a court having
equity jurisdiction located in Smith County, Tennessee, within two months after receiving the
dissenting shareholders payment demand. All dissenting shareholders will be made a party to the
proceeding and will be served with a copy of the petition. The court shall determine the
dissenting shareholders right to receive payment or the fair value of his shares or both. The
costs and expenses of such proceedings shall be assessed against Community Bank of Smith County
unless the court shall find the actions of a dissenting shareholder who is party to the suit to be
arbitrary, vexatious or not in good faith. If Community Bank of Smith County fails to bring such a
suit within such time, it shall pay each dissenting shareholder whose demand remains unsettled the
amount demanded.
Section 48-23-101 of the Tennessee Business Corporation Act provides that the fair value of
shares shall be determined immediately before the effectuation of the merger, excluding any
appreciation or depreciation of shares in anticipation of such corporate action. The value so
determined could be more or less than the value of the merger consideration into which shares of
the common stock are to be converted pursuant to the merger. Any dissenting shareholder who
perfects such holders rights to be paid the fair value of such holders shares will recognize
taxable gain or loss upon receipt of cash for such shares for federal income tax purposes. See
The MergerMaterial United States Federal Income Tax
Consequences on Page 32.
Any shareholder contemplating the exercise of dissenters rights should carefully review
Chapter 23 of the Tennessee Business Corporation Act, a copy of which is attached to this proxy
statement as Appendix B. A shareholder who fails to comply with all requirements of such Chapter
23 will forfeit such holders dissenters rights and, upon consummation of the merger, such
holders shares of common stock will be converted into the right to the merger consideration to
which such shareholder is entitled under the merger agreement.
In view of the complexities of Chapter 23 of the Tennessee Business Corporation Act, the
material provisions of which are briefly summarized above, shareholders of Community Bank of Smith
County who consider pursuing dissenters rights are urged to consult with legal counsel.
The above summary is qualified in its entirety by reference to Chapter 23 of the Tennessee
Business Corporation Act, a copy of which is reprinted in full as Appendix B to this proxy
statement/prospectus.
40
INFORMATION CONCERNING COMMUNITY BANK OF SMITH COUNTY
Business of Community Bank of Smith County and Market Area Served
Community Bank of Smith County is an independent, state chartered bank, which was established
in December 1996. It is owned 50% by Wilson Bank Holding Company and 50% by residents primarily of
Smith County. Community Bank of Smith County operates two full-service branches, one in Carthage
and one in Gordonsville, Tennessee and is considered a subsidiary of Wilson Bank Holding Company
for purposes of the Bank Holding Company Act of 1956. Community Bank of Smith County offers a wide
range of banking services, including checking, savings, and money market deposit accounts,
certificates of deposit and loans for consumer, commercial and real estate purposes.
As of September 30, 2004, Community Bank of Smith County had total assets of approximately
$79.2 million, total liabilities of approximately $73.0 million and shareholders equity of
approximately $6.2 million. At such date, it had total deposits of approximately $71.1 million and
total loans of approximately $64.1 million.
As of September 30, 2004, Community Bank of Smith County had 29 employees, 24 of which were
full time employees.
As a state chartered bank, Community Bank of Smith County is subject to the supervision and
regulation of the Tennessee Department of Financial Institutions. Because its deposits are insured
by the FDIC, it is also subject to the supervision and regulation of the FDIC.
As described above, Community Bank of Smith County operates in Smith County, Tennessee where,
as of June 30, 2004, it held approximately 18.5% of the total market share for deposits. It
competes with three other commercial banking institutions in Smith County, all of which are small
community banking organizations. At June 30, 2004, Community Bank of Smith County had
approximately $67 million in deposits within Smith County, up from approximately $31 million at
June 30, 2000.
Community Bank of Smith County has substantial competition in attracting and retaining
deposits and in lending funds. The primary factors in competing for deposits are the range and
quality of financial services offered, the ability to offer attractive rates and the availability
of convenient office locations. Direct competition for deposits includes other commercial banks.
Additional competition for deposits comes from other investment alternatives, such as money market
mutual funds and corporate and government securities. The primary factors in competing for loans
are the range and quality of the lending services offered, interest rates, and loan origination
fees. Competition for the origination of loans normally comes from other financial institutions,
commercial banks, credit unions, insurance companies and other financial services companies.
Community Bank of Smith County believes that it has successfully competed with larger banks and
other smaller community banks in the Smith County market by focusing on personal service and
financial products to meets the needs of the community.
Market for Community Bank of Smith Countys Common Stock
Shares of Community Bank of Smith County are not listed on an exchange. Because of the
limited number of Community Bank of Smith County shareholders, trading in Community Bank of Smith
County common stock has been essentially nonexistent. To the knowledge of the Community Bank of
Smith County senior management, the following table sets forth all sales of Community Bank of Smith
County stock during the years 2003, 2004 and 2005.
As indicated above, the last sale of Community Bank of Smith Countys common stock was the
sale of 160 shares at $26.00 per share on December 14, 2004. The last reported sale of Community
Bank of Smith Countys common stock prior to the
announcement of the merger was on March 23, 2004, in which 409 shares of Community Bank of
Smith County common stock were sold for $28.00 per share. In 2005, Community Bank of Smith County
has declared a cash dividend of $0.40 per share payable on January 31, 2005. In 2004, Community
Bank of Smith County paid cash dividends totaling $0.75 per share. In 2003, Community Bank of
Smith County paid cash dividends totaling $0.65 per share to its shareholders.
41
As of February 1, 2005, Community Bank of Smith County had approximately 361 shareholders of
record.
Community Bank of Smith County does not have any shares of its common stock reserved for
issuance under an equity compensation plan, whether approved by Community Bank of Smith Countys
shareholders or not.
42
DESCRIPTION OF WILSON BANK HOLDING COMPANYS CAPITAL STOCK
Wilson Bank Holding Company has the authority to issue 10,000,000 shares of common stock. As
of February 1, 2005 4,488,083 shares of Wilson Bank Holding Company common stock were outstanding.
The following summary descriptions of selected provisions of the Wilson Bank Holding Company
charter, bylaws, common stock and Tennessee Business Corporation Act are not complete. The
summaries are subject to, and are qualified entirely by, the provisions of Wilson Bank Holding
Companys charter and bylaws, all of which are included or incorporated by reference as exhibits to
the registration statement of which this proxy statement/prospectus is a part. You are encouraged
to read the Wilson Bank Holding Company charter and bylaws.
Common Stock
The holders of Wilson Bank Holding Companys common stock are entitled to one vote per share
on all matters to be voted on by shareholders, including the election of directors. Holders of
common stock have no preemptive rights, and there are no conversion rights or redemption or sinking
fund provisions with respect to shares of Wilson Bank Holding Companys common stock. All shares
of Wilson Bank Holding Company common stock being offered to the Community Bank of Smith County
shareholders under this proxy statement/prospectus will be fully paid and not liable for further
calls or assessment by Wilson Bank Holding Company.
Anti-Takeover Effect of Wilson Bank Holding Companys Charter and Bylaw Provisions
Wilson Bank Holding Companys charter and bylaws contain provisions that could make it more
difficult to consummate an acquisition of Wilson Bank Holding Company by means of a tender offer, a
proxy contest or otherwise.
Board of Directors
. Wilson Bank Holding Companys bylaws provide that the number of directors
shall be no fewer than five nor more than 15. The Wilson Bank Holding Company charter provides
that the directors will be classified into three classes, as nearly equal in number as possible
with each class to serve for staggered three year terms. Under the Wilson Bank Holding Company
bylaws, the shareholders may remove one or more directors with or without cause. If a director is
elected by a voting group of shareholders, only the shareholders of that voting group may
participate in the vote to remove him without cause. The Wilson Bank Holding Company bylaws
provides that if so provided in the Wilson Bank Holding Company charter, any of the directors may
be removed for cause by the affirmative vote of a majority of the entire board of directors;
however, such a method of removal is not provided for in the Wilson Bank Holding Company charter.
A director may be removed by the shareholders or directors only at a meeting called for the purpose
of removing him, and the meeting notice must state the purpose, or one of the purposes, of the
meeting is the removal of directors. Directors may be removed without cause only by vote of a
majority of the shareholders entitled to vote at a regular or special meeting. The Wilson Bank
Holding Company charter provides that any vacancy on the board of directors, including a vacancy
that results from an increase in the number of directors or a vacancy that results from the removal
of a director with cause, may be filled only by the board of directors. Any director elected to
fill a vacancy shall hold office until the next annual meeting following his or her election to the
board of directors at which time such person will be subject to election and classification. Under
the Wilson Bank Holding Company bylaws, if the directors remaining in office constitute fewer than
a quorum of the board of directors, they may fill such vacancies by the affirmative vote of a
majority of all the directors remaining in office.
Charter Provisions
. The Wilson Bank Holding Company charter provides that the affirmative
vote of holders of two-thirds of the voting power of the shares entitled to vote at an election of
directors shall be required to amend, alter, change or repeal, or to adopt any provision as part of
the charter or as part of Wilson Bank Holding Companys bylaws inconsistent with the purpose and
intent of Article 8 of the charter, which creates staggered terms for the board of directors.
Tennessees Anti-takeover Provisions
Provisions in Tennessee law could make it harder for someone to acquire Wilson Bank Holding
Company through a tender offer, proxy contest or otherwise.
Tennessee Business Combination Act
. The Tennessee Business Combination Act provides that a
party owning shares equal to 10% or more of the voting power of any class or series of the then
outstanding voting stock of a resident domestic corporation is an interested shareholder. An
interested shareholder also includes a party that is an affiliate or associate, as defined in the
Tennessee Business Combination Act, of a resident domestic corporation. Wilson Bank Holding
Company is currently a resident domestic corporation within the meaning of this act. An interested
shareholder cannot engage in a business combination with the resident domestic corporation unless
the combination:
43
These provisions apply unless one of the following exemptions is available:
Wilson Bank Holding Company has not adopted a charter amendment or bylaw to remove it from the
Tennessee Business Combination Act.
Tennessee Greenmail Act
. The Tennessee Greenmail Act prohibits Wilson Bank Holding Company
from purchasing or agreeing to purchase any of its securities, at a price higher than fair market
value, from a holder of 3% or more of any class of its securities who has beneficially owned the
securities for less than two years. Wilson Bank Holding Company can, however, make this purchase
if the majority of the outstanding shares of each class of voting stock issued by it approves the
purchase or if it makes an offer of at least equal value per share to all holders of shares of the
same class of securities as those held by the prospective seller.
Tennessee Control Share Acquisition Act
. The Tennessee Control Share Acquisition Act strips a
purchasers shares of voting rights any time an acquisition of shares in a Tennessee corporation
which has elected to be covered by the Tennessee Control Share Acquisition Act (which Wilson Bank
Holding Company at this time has not) brings the purchasers voting power to one-fifth, one-third
or a majority of all voting power. The purchasers voting rights can be restored only by a
majority vote of the other shareholders. The purchaser may demand a meeting of shareholders to
conduct such a vote. The purchaser can demand a meeting for this purpose before acquiring shares
in excess of the thresholds described above, which we refer to as a control share acquisition, only
if it holds at least 10% of the outstanding shares and announces a good faith intention to make the
acquisition of shares having voting power in excess of the thresholds stated above. If a target
corporation so elects prior to the date on which a purchaser makes a control share acquisition, a
target corporation may redeem the purchasers shares if the shares are not granted voting rights.
The effect of these provisions may make a change of control of Wilson Bank Holding Company
harder by delaying, deferring or preventing a tender offer or takeover attempt that you might
consider to be in your best interest, including those attempts that might result in the payment of
a premium over the market price for Wilson Bank Holding Companys shares. They may also promote
the continuity of Wilson Bank Holding Companys management by making it harder for you to remove or
change the incumbent members of the board of directors.
Limitations on Liability and Indemnification of Directors and Officers
. The Tennessee
Business Corporation Act provides that a corporation may indemnify any of its directors and
officers against liability incurred in connection with a proceeding if:
44
In actions brought by or in the right of the corporation, however, the Tennessee Business
Corporation Act provides that no indemnification may be made if the director or officer was
adjudged to be liable to the corporation. In cases where the director or officer is wholly
successful, on the merits or otherwise, in the defense of any proceeding instituted because of his
or her status as an officer or director of a corporation, the Tennessee Business Corporation Act
mandates that the corporation indemnify the director or officer against reasonable expenses
incurred in the proceeding. The Tennessee Business Corporation Act also provides that in
connection with any proceeding charging improper personal benefit to an officer or director, no
indemnification may be made if the officer or director is adjudged liable on the basis that
personal benefit was improperly received. Notwithstanding the foregoing, the Tennessee Business
Corporation Act provides that a court of competent jurisdiction, upon application, may order that
an officer or director be indemnified for reasonable expenses if, in consideration of all relevant
circumstances, the court determines that the individual is fairly and reasonably entitled to
indemnification, notwithstanding the fact that:
Wilson Bank Holding Companys charter provides that to the extent permitted by the Tennessee
Business Corporation Act, the company may indemnify every officer, director or employee, his heirs,
executors and administrators, against judgments resulting from the expenses reasonably incurred by
him in connection with any action to which he may be made a party by reason of his being an
officer, director or employee of the company, including any action based upon any alleged act or
omission on his part as an officer, director or employee of the company, except in relation to
matters as to which he shall be finally adjudged in such action to be liable for negligence or
misconduct. Under the Tennessee Business Corporation Act, this provision relieves Wilson Bank
Holding Companys directors from personal liability to it or its shareholders for monetary damages
for breach of fiduciary duty as a director, except for liability arising from a judgment or other
final adjudication establishing:
COMPARISON OF RIGHTS OF WILSON BANK HOLDING COMPANY AND
Both Wilson Bank Holding Company and Community Bank of Smith County are incorporated under the
laws of the State of Tennessee. The holders of shares of Community Bank of Smith County common
stock whose rights as shareholders are currently governed by Tennessee law, the charter of
Community Bank of Smith County and the bylaws of Community Bank of Smith County, will, upon the
exchange of their shares of Community Bank of Smith County common stock for shares of Wilson Bank
Holding Company common stock at the effective time pursuant to the merger, become holders of Wilson
Bank Holding Company common stock and their rights as such will be governed by Tennessee law, the
Wilson Bank Holding Company charter and the Wilson Bank Holding Company bylaws. The material
differences between the rights of holders of shares of Community Bank of Smith County common stock
and Wilson Bank Holding Company common stock, which result from differences in their governing
corporate documents, are summarized below.
The following summary is not intended to be complete and is qualified in its entirety by
reference to the Tennessee Business Corporation Act, the Wilson Bank Holding Company charter, the
Wilson Bank Holding Company bylaws, the Community Bank of Smith County charter and the Community
Bank of Smith County bylaws, as appropriate. The identification of specific differences is not
meant to indicate that other equally or more significant differences do not exist. Copies of the
Wilson
45
Bank Holding Company charter, the Wilson Bank Holding Company bylaws, the Community Bank of
Smith County charter and the Community Bank of Smith County bylaws are available upon request.
46
47
48
49
50
51
52
EXPERTS
The consolidated financial statements of Wilson Bank Holding Company and its subsidiaries
included in Wilson Bank Holding Companys Annual Report on Form 10-K for the year ended December
31, 2003 have been incorporated in this proxy statement/prospectus by reference, in reliance on the
report of Maggart & Associates, P.C., independent registered public accounting firm, given on the
authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
Bass, Berry & Sims PLC, Nashville, Tennessee, special counsel to Wilson Bank Holding Company,
will pass on the validity of the securities offered in this proxy statement/prospectus and the
registration statement of which it forms a part for Wilson Bank Holding Company.
WILSON BANK HOLDING COMPANY 2005 ANNUAL SHAREHOLDER MEETING
The deadline for shareholders to submit proposals for presentation at the next Annual Meeting
of Wilson Bank Holding Company and inclusion in the proxy statement and form of proxy for such
meeting was November 15, 2004.
For any other shareholder proposals to be timely (but not considered for inclusion in Wilson
Bank Holding Companys proxy statement), a shareholder must forward such proposal to J. Randall
Clemons, Wilson Bank Holding Company, 623 West Main Street, Lebanon, Tennessee 37087 prior to
January 29, 2005.
WHERE YOU CAN FIND MORE INFORMATION
Wilson Bank Holding Company files annual, quarterly, current and special reports, proxy
statements and other information with the SEC. You may read and copy any reports, statements or
other information it files at the SECs public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. Wilson Bank Holding Company filings with the SEC are also available to the public
from commercial document retrieval services and at the Internet website maintained by the SEC at
http://www.sec.gov.
Wilson Bank Holding Company has filed a registration statement on Form S-4 to register the
shares of its common stock to be issued to Community Bank of Smith County shareholders in the
merger. This proxy statement/prospectus is a part of the registration statement and constitutes the
prospectus of Wilson Bank Holding Company as well as the proxy statement of Community Bank of Smith
County for the special meeting. This proxy statement/prospectus does not contain all the
information set forth in the registration statement, certain portions of which have been omitted as
permitted by the rules and regulations of the SEC. Such additional information may be obtained from
the SECs principal office in Washington, D.C. or at the Internet website maintained by the SEC at
http://www.sec.gov. Statements contained in this proxy statement/prospectus as to the contents of
any contract or other document referred to herein or therein are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document filed as an exhibit
to the registration statement or such other document, each such statement being qualified in all
respects by such reference.
As allowed by SEC rules, this proxy statement/prospectus does not contain all the information
you can find in the registration statement on Form S-4 filed by Wilson Bank Holding Company to
register the shares of stock to be issued pursuant to the merger and the exhibits to the
registration statement. The SEC allows Wilson Bank Holding Company to incorporate by reference
information into this proxy statement/prospectus, which means that we can disclose important
information to you by referring you to other documents filed separately with the SEC. The
information incorporated by reference is deemed to be part of this proxy statement/prospectus,
except for any information superseded by information in this proxy statement/prospectus. This
proxy statement/prospectus incorporates by reference the documents set forth below that Wilson
Bank Holding Company has previously filed with the SEC.
53
In addition, Wilson Bank Holding Company also incorporates by reference additional documents
that it may file with the SEC between the date of this proxy statement/prospectus and the date of
the Community Bank of Smith County special meeting. These documents include periodic reports, such
as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements. Nothing in this proxy statement/ prospectus shall be deemed to
incorporate information furnished but not filed with the SEC pursuant to Item 9 or Item 12 of Form
8-K for periods prior to August 23, 2004 and Items 2.01 and 7.01 of Form 8-K for periods
thereafter.
You should rely only on the information contained in this proxy statement/prospectus including
the Appendices to this proxy statement/prospectus to vote on the merger. We have not authorized
anyone to provide you with information that is different from what is contained in this proxy
statement/prospectus. You should not assume that the information contained in this proxy
statement/prospectus is accurate as of any date other than its date, and neither the mailing of
this proxy statement/prospectus to shareholders nor the issuance of Wilson Bank Holding Company
common stock in the merger shall create any implication to the contrary. This proxy
statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy,
any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom
it is not lawful to make any such offer or solicitation in such jurisdiction.
This proxy statement/prospectus does not cover any resales of the Wilson Bank Holding Company
common stock offered hereby to be received by shareholders of Community Bank of Smith County deemed
to be affiliates of Community Bank of Smith County or Wilson Bank Holding Company as of the
Community Bank of Smith County special meeting. No person is authorized to make use of this proxy
statement/prospectus in connection with such resales.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 16, 2004
BY AND AMONG
WILSON BANK HOLDING COMPANY, WILSON BANK AND TRUST
AND
COMMUNITY BANK OF SMITH COUNTY
A-1
TABLE OF CONTENTS
A-2
A-3
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (Agreement) made this 16th day of November, 2004 by and
among WILSON BANK HOLDING COMPANY, a Tennessee corporation (Parent), WILSON BANK AND TRUST, a
state chartered bank incorporated under the laws of the State of Tennessee (the Bank), and
COMMUNITY BANK OF SMITH COUNTY, a state chartered bank incorporated under the laws of the State of
Tennessee (CBSC).
WHEREAS, the Boards of Directors of Parent, the Bank and CBSC each have determined that a
business combination between Parent, the Bank, and CBSC is in the best interests of their
respective companies and shareholders and presents an opportunity for their respective companies to
achieve long-term strategic and financial benefits, and accordingly have agreed to effect the
merger provided for herein upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and of the representations, warranties,
covenants, and agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE 1
1.1
The Merger
.
Subject to the terms and conditions of this Agreement, at the
Effective Time, CBSC shall be merged with and into the Bank in accordance with the applicable
provisions of the Tennessee Business Corporation Act (the TBCA) (the Merger), the separate
corporate existence of CBSC shall cease and the Bank shall survive and continue to exist as a
corporation incorporated under the TBCA and as a wholly owned subsidiary of Parent (the Bank, as
the surviving corporation in the Merger, sometimes being referred to herein as the Surviving
Corporation). The Merger shall be consummated pursuant to the terms of this Agreement, which has
been approved and adopted by the respective Boards of Directors of Parent, the Bank and CBSC.
1.2
The Closing
.
Subject to the terms and conditions of this Agreement, the closing of
the Merger (the Closing) shall take place at the offices Bass, Berry & Sims PLC, 315 Deaderick
Street, Suite 2700, Nashville, TN 37238, at 10:00 a.m., local time, on March 31, 2005 or, if later,
the first business day immediately following the day on which the last to be fulfilled or waived of
the conditions set forth in Articles 8 and 9 shall be fulfilled or waived in accordance herewith or
at such other time, date, or place as Parent and CBSC may agree. The date on which the Closing
occurs is hereinafter referred to as the Closing Date.
1.3
Effective Time
.
If all the conditions to the Merger set forth in Articles 8 and 9
shall have been fulfilled or waived in accordance herewith and this Agreement shall not have been
terminated as provided in Article 10, the parties hereto shall cause Articles of Merger, in
substantially the form attached hereto as Exhibit A, to be properly executed and filed in
accordance with the applicable provisions of the TBCA on the Closing Date. The Merger shall become
effective upon the filing of the Articles of Merger with the Secretary of State of the State of
Tennessee, or at such later time that the parties hereto shall have agreed upon and designated in
such filings as the effective time of the Merger (the Effective Time).
ARTICLE 2
2.1
Charter and Bylaws
.
The Charter and Bylaws of the Surviving Corporation
immediately after the Merger shall be the Charter and Bylaws of the Bank in effect immediately
prior to the Merger.
2.2
Directors and Executive Officers of the Surviving Corporation
.
The directors and
executive officers of the Surviving Corporation immediately after the Merger shall be the directors
and executive officers of the Bank immediately prior to the Merger, each of whom shall serve until
such time as their successors shall be duly elected and qualified.
A-4
2.3
CBSC Board and Branches
.
After the Merger, the directors of the CBSC shall become
members of the CBSC Community Board, shall meet monthly to provide advice regarding CBSC operations
to the Board of Directors of the Bank and shall be compensated therefore in the same amount as
previously compensated as directors of CBSC. The branches of CBSC after the Merger shall operate as
Community Bank of Smith County, an office of Wilson Bank and Trust.
ARTICLE 3
3.1
Conversion of CBSC Common Stock in the Merger
.
At the Effective Time, by virtue of
the Merger and without any action on the part of any holder of any capital stock of CBSC, each
issued and outstanding share of common stock of CBSC (CBSC Common Stock) shall be converted into
and become a number of shares of Parent common stock (Parent Common Stock), equal to the quotient
of the (i) book value per share of the CBSC Common Stock at December 31, 2004 divided by (ii) the
book value per share of the Parent Common Stock, at December 31, 2004 as such book values may be
adjusted by Professional Bank Services, Inc. (PBS) (the Merger Consideration). No fractional
shares shall be issued and in lieu thereof, a cash payment shall be made pursuant to Section 3.4
hereof
3.2
Surrender and Exchange of Shares
.
(a) The Bank shall act as Exchange Agent hereunder (the Exchange Agent). Prior to Effective
Time, Parent shall deposit with or for the account of the Exchange Agent stock certificates
representing the number of shares of Parent Common Stock issuable pursuant to Section 3.1 in
exchange for outstanding shares of CBSC Common Stock, which shares of Parent Common Stock shall be
deemed to have been issued at the Effective Time and which certificates shall be returned to Parent
if such Effective Time does not occur.
(b) As soon as practicable after the Effective Time (but not later than the first business day
after the Effective Time), Parent shall cause the Exchange Agent to mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time represented
outstanding shares of CBSC Common Stock (the Certificates) that were converted pursuant to
Section 3.1 into the right to receive shares of Parent Common Stock (i) a form of letter of
transmittal specifying 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
(ii) instructions for use in surrendering such Certificates in exchange for certificates
representing shares of Parent Common Stock and any cash in lieu of fractional shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other documents as may be reasonably required
by the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor (x) a certificate representing that number of whole shares of Parent Common Stock which
such holder has the right to receive pursuant to the provisions of this Article 3 and (y) cash in
lieu of any fractional shares of Parent Common Stock to which such holder is entitled pursuant to
Section 3.4, after giving effect to any required tax withholdings, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership of CBSC Common
Stock which is not registered in the transfer records of the CBSC, a certificate representing the
proper number of shares of Parent Common Stock may be issued to a transferee if the Certificate
representing such CBSC Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer, and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section 3.2(b), each
Certificate shall be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender a certificate representing shares of Parent Common Stock and cash in
lieu of any fractional shares of Parent Common Stock as contemplated by this Article 3. In no event
will the holder of any such surrendered Certificate be entitled to receive interest on any cash to
be received in lieu of fractional shares.
(c) If any Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and,
if reasonably required by Parent, the posting by such person of a bond, in such reasonable and
customary amount as Parent may direct, as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue the corresponding Certificate
representing Parent Common Stock to which the person is entitled to hereunder in exchange for such
lost, stolen or destroyed Certificate.
A-5
3.3
Dividends; Transfer Taxes; Withholdings; Escheat
.
No dividends or distributions
that are declared on shares of Parent Common Stock after the Effective Time will be paid to persons
entitled to receive certificates representing shares of Parent Common Stock until such persons
surrender their Certificates. Subject to applicable law, upon such surrender, there shall be paid,
to the person in whose name the certificates representing such shares of Parent Common Stock shall
be issued, any dividends or distributions with respect to such shares of Parent Common Stock which
have a record date after the Effective Time and shall have become payable between the Effective
Time and the time of such surrender. In no event shall the person entitled to receive such
dividends or distributions be entitled to receive interest thereon. As soon as practicable
following the date which is six months after the Effective Time, the Exchange Agent shall deliver
to the Surviving Corporation all cash, certificates and other documents in its possession relating
to the transactions described in this Agreement, and any holders of CBSC Common Stock who have not
theretofore complied with this Article 3 shall look thereafter only to the Surviving Corporation
for the shares of Parent Common Stock, any dividends or distributions thereon, and any cash in lieu
of fractional shares thereof to which they are entitled pursuant to this Article 3. Notwithstanding
the foregoing, neither the Exchange Agent nor any party hereto shall be liable to a holder of CBSC
Common Stock for any shares of Parent Common Stock, any dividends or distributions thereon or any
cash in lieu of fractional shares thereof delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws upon the lapse of the applicable time periods provided
for therein. Parent or the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of a Certificate such
amounts as Parent or the Exchange Agent are required to deduct and withhold under the Code or any
provision of state, local or foreign tax law with respect to the making of such payment. To the
extent that amounts are so withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of the Certificate in
respect of whom such deduction and withholding were made by Parent or the Exchange Agent.
3.4
No Fractional Securities
.
No certificates or scrip representing less than one
whole share of Parent Common Stock shall be issued pursuant to this Agreement. In lieu of any such
fractional share, each holder of record of CBSC Common Stock who would otherwise have been entitled
to such fractional shares of Parent Common Stock shall be paid cash (without interest) in an amount
equal to the fractional share amount to which such holder would be otherwise entitled multiplied by
the closing sale price of Parents Common Stock on the date closest to, but not after, the Closing
Date. As soon as practicable after the determination of the amount of cash to be paid to the
holders of CBSC Common Stock in lieu of any fractional share interests, the Exchange Agent shall
make available in accordance with this Agreement such amounts to such holders. The fractional
Parent Common Stock interests of each such holder will be aggregated, and no such holder will
receive cash in an amount equal to or greater than the value of one whole share of Parent Common
Stock.
3.5
No Further Rights; Closing of CBSC Transfer Books
.
All shares of Parent Common
Stock issued pursuant to this Article 3 shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to the corresponding shares of CBSC Common Stock, subject,
however, to the Surviving Corporations obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been declared or made
by CBSC on such shares of CBSC Common Stock in accordance with the terms of this Agreement or prior
to the date of this Agreement and which remain unpaid at the Effective Time. At the Effective Time,
the stock transfer books of CBSC shall be closed and no transfer of shares of CBSC Common Stock
shall thereafter be made on such stock transfer books. If, after the Effective Time, Certificates
are presented to the Surviving Corporation, they shall be canceled and exchanged as provided in
this Article 3; provided, however, if any Certificate has not been surrendered prior to five years
after the Effective Time (or immediately prior to such earlier date on which Parent Common Stock or
any dividends or distributions with respect to Parent Common Stock as contemplated by Section 3.5
in respect of such Certificate would otherwise escheat to or become the property of any
Government), any such shares, cash, dividends or distributions in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled thereto.
3.6
Dissenting Shares
. Each outstanding share of CBSC Common Stock the holder of which
has perfected his right to dissent under the Tennessee Business Corporation Act (the TBCA) and
has not effectively withdrawn or lost such right as of the Effective Time (the Dissenting Shares)
shall not be converted into or represent a right to the Merger Consideration hereunder, and the
holder thereof shall be entitled only to such rights
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as are granted by the TBCA. CBSC shall give Parent prompt notice upon receipt by CBSC of any
such written demands for payment of the fair value of such shares of CBSC Common Stock and of
withdrawals of such demands and any other instruments provided pursuant to the TBCA. If any holder
of Dissenting Shares shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent at or prior to the Effective Time, the Dissenting Shares held by such holder shall be
converted into a right to receive the Merger Consideration in accordance with the applicable
provisions of this Agreement. If any holder of Dissenting Shares shall have effectively withdrawn
or lost the right to dissent (through failure to perfect or otherwise) after the Effective Time,
the Dissenting Shares held by such holder shall be converted on a share by share basis into the
Merger Consideration in accordance with the applicable provisions of this Agreement as Parent or
the Exchange Agent shall determine. Any payments made in respect of Dissenting Shares shall be made
by the Surviving Corporation.
ARTICLE 4
CBSC hereby represents and warrants as follows:
4.1
Organization, Good Standing and Qualification
.
CBSC is a state chartered bank duly
organized, validly existing and in good standing under the laws of the State of Tennessee. CBSC has
full corporate power and authority to carry on its business as now conducted and possesses all
governmental and other permits, licenses and other authorizations to own, lease or operate its
assets and properties as now owned, leased and operated and to carry on its business as presently
conducted, except where failure to possess such permit, license or other authorization could not
reasonably be expected to have a material adverse effect on the business, results of operations,
prospects or financial condition (Material Adverse Effect) of CBSC.
4.2
Authorization
.
The Board of Directors of CBSC has taken all action required by
law, its respective Charter, Bylaws and otherwise to authorize the execution and delivery by CBSC
of this Agreement and the consummation by CBSC of the transactions contemplated hereby.
4.3
Valid and Binding Agreement
.
This Agreement constitutes a valid and binding
agreement of CBSC, enforceable against CBSC in accordance with its terms subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors rights and as to general equity principles.
4.4
No Violation
.
Except as set forth on Schedule 4.4, the execution and delivery of
this Merger Agreement and any other documents contemplated hereby by CBSC do not, and the
consummation of the transactions contemplated hereby will not, (a) violate any provision of,
constitute a default under or otherwise give any person the right to terminate, or result in the
creation of any lien or security interest under, any agreement, indenture, instrument, lease,
security agreement, mortgage or lien to which CBSC is a party or by which any of CBSCs assets or
properties are bound; (b) violate any provision of the Charter or Bylaws of CBSC; (c) violate any
order, arbitration award, judgment, writ, injunction, decree, statute, rule or regulation
applicable to CBSC; or (d) violate any other contractual or legal obligation or restriction to
which CBSC is subject.
4.5
Capitalization
.
The authorized capital stock of CBSC consists solely of 1,000,000
shares of CBSC Common Stock of which 383,362 shares are issued and outstanding. All of the CBSC
Shares are duly authorized, validly issued and outstanding and fully paid and nonassessable and
free of preemptive rights. There are no outstanding options, warrants or rights to purchase or
acquire from CBSC any securities of CBSC, and there are no contracts, commitments, agreements,
understandings, arrangements or restrictions to which CBSC is a party or by which it is bound
relating to any shares of capital stock or other securities of CBSC whether or not outstanding.
4.6
Title to Properties; Encumbrances
.
Except as set forth on Schedule 4.6, CBSC has
good, valid and marketable title to all properties and assets it purports to own, real, personal
and mixed, tangible and intangible (except for accounts collected or disposed of since the date
hereof in the ordinary course of business and consistent with past practice), subject to no
mortgage, pledge, lien, security interest, conditional sale agreement, encumbrance or charge of any
kind, except liens for current taxes not yet due.
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4.7
No Undisclosed Liability
.
Except as set forth on Schedule 4.7, CBSC does not have
any liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise
and whether due or to become due (including, without limitation, liabilities for Taxes (as defined
herein) and interest, penalties and other charges payable with respect thereto). The reserves
reflected in CBSCs internally generated financial statements as of and for the month ended
September 30, 2004 are adequate, appropriate and reasonable in accordance with accounting
principles generally accepted in the United States (GAAP) applied on a consistent basis.
4.8
Compliance with Applicable Law
.
CBSC has in the past duly complied and is
presently duly complying, in the conduct of its business and the ownership of its assets with all
applicable laws, whether statutory or otherwise, rules, regulations, orders, ordinances, judgments
and decrees of all governmental authorities (federal, state, local or otherwise) (collectively,
Laws). CBSC has not received any notice of, or notice of any investigation of, a possible
violation of any applicable Laws, or any other Law or requirement relating to or affecting the
operations or properties of CBSC.
4.9
Litigation
.
Except as set forth in Schedule 4.9, as of the date hereof, there are
no claims, actions, suits, proceedings or investigations pending or, to the knowledge of CBSC,
threatened by or against, or otherwise affecting CBSC at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board, agency,
instrumentality or authority, the result of which could reasonably be expected to have a Material
Adverse Effect on CBSC.
4.10
Contracts and Commitments
.
(a) Except as set forth in Schedule 4.10, CBSC has no contracts, commitments, arrangements or
understandings which may involve the expenditure or receipt by CBSC after the Closing of more than
$25,000 for any individual contract, commitment, arrangement or understanding or which was not
entered into in the ordinary course of business (Material Contracts). Except for required
consents per Schedule 4.4, the legal enforceability after the Closing of the rights of CBSC under
any of its Material Contracts will not be affected in any manner by the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
(b) To the knowledge of CBSC, all of the Material Contracts to which CBSC is a party or by
which it is bound are in full force and effect, are valid and enforceable in accordance with their
terms, and no condition exists or event has occurred which, with notice or lapse of time or both,
would constitute a default or a basis for force majeure or other claim of excusable delay or
non-performance thereunder by CBSC, or to CBSCs knowledge, the other parties thereto.
4.11
Brokerage Fees
.
Except as set forth on Schedule 4.11, CBSC has not done anything
to cause or incur any liability or obligation for investment banking, brokerage, finders or agents
fees, commissions, expenses or charges in connection with the negotiation, preparation, execution
or performance of this Agreement or the consummation of the transactions contemplated hereby and
CBSC does not know of any claim by anyone for such a commission or fee.
4.12
Corporate Records
.
CBSC has delivered, provided to, or made available for
inspection by, Parent for its review true, complete and correct copies of the following items, as
amended and presently in effect, for CBSC: (a) Charter, (b) Bylaws, (c) minute books, and (d) stock
registration books The stock registration books are complete and accurate and contain a complete
record of all transactions in CBSCs capital stock from the date of its incorporation to the date
hereof.
4.13
Full Disclosure
.
Neither this Agreement, nor any Schedule, exhibit, list,
certificate or other instrument and document furnished or to be furnished by CBSC to Parent or the
Bank pursuant to this Agreement, contains any untrue statement of a material fact or omits to state
any material fact required to be stated herein or therein or necessary to make the statements and
information contained herein or therein not misleading. CBSC has not withheld from Parent
disclosure of any event, condition or fact which CBSC knows is likely to have, in CBSCs reasonable
judgment, a Material Adverse Effect on the assets, prospects or condition (financial or otherwise)
of CBSC.
ARTICLE 5
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REPRESENTATIONS AND WARRANTIES BY PARENT AND THE BANK
Parent and the Bank hereby represent and warrant to CBSC as follows:
5.1
Organization and Good Standing
.
Parent is a bank holding company duly organized,
validly existing and in good standing under the laws of the State of Tennessee and has full
corporate power and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Bank is a state chartered bank incorporated under the laws of the State of
Tennessee and has full corporate power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby.
5.2
Authorization
.
The Boards of Directors of Parent and the Bank have taken all
action required by law, their respective Charters, Bylaws and otherwise to authorize the execution
and delivery by Parent and the Bank of this Agreement and the consummation by Parent of the
transactions contemplated hereby.
5.3
Valid and Binding Agreement
.
This Agreement constitutes a valid and binding
agreement of Parent and the Bank, enforceable against Parent and the Bank in accordance with its
terms subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors rights and as to general
equity principles.
5.4
No Violation
.
The execution and delivery of this Agreement by Parent and the Bank
does not, and the consummation of the transactions contemplated hereby will not, (a) violate any
provision, or result in the creation of any lien or security interest under, any agreement,
indenture, instrument, lease, security agreement, mortgage or lien to which Parent or the Bank is a
party or by which either is bound; (b) violate any provision of Parents or the Banks Charter or
Bylaws; (c) violate any order, arbitration award, judgment, writ, injunction, decree, statute, rule
or regulation applicable to the Bank or Parent; or (d) violate any other contractual or legal
obligation or restriction to which Parent or the Bank is subject.
5.5
Brokerage Fees
.
Except as set forth on Schedule 5.5, neither Parent nor the Bank
has done anything to cause or incur any liability for investment banking, brokerage, finders or
agents fees, commissions, expenses or charges in connection with the negotiation, preparation,
execution and performance of this Agreement or the consummation of the transactions contemplated
hereby, and neither Parent nor the Bank knows of any claim by anyone for such a commission or fee.
5.6
Parent Common Stock
.
Parent Common Stock when issued and delivered to the CBSC
shareholders at Closing in accordance with the provisions of this Agreement will be (i) duly
authorized, validly issued shares of Common Stock of Parent, fully paid and non-assessable, (ii)
registered pursuant to an effective Registration Statement, (iii) registered or exempt from
registration under applicable state securities or Blue Sky laws, and (iv) eligible for sale under
Rule 145 of the Securities Act, subject to the qualifications and limitations set forth in Rule 145
and the CBSC shareholders compliance with the applicable provisions thereof or under the
Registration Statement subject to the Securities and Exchange Commissions powers generally to
issue a stop order with respect to the Registration Statement.
5.7
Capitalization
.
The authorized capital stock of Parent consists of 10,000,000
shares of common stock, $2.00 par value per share, of which 4,430,591 shares were issued and
outstanding on September 30, 2004. All of the shares of Parent Common Stock to be issued to the
CBSC shareholders in accordance herewith will be offered, issued, sold and delivered by Parent in
compliance with all applicable state and federal laws concerning the issuance of securities, and
none of such shares will be issued in violation of the preemptive rights of any shareholder.
5.8
Financial Reports and Securities Documents
.
Parents Annual Report on Form 10-K
for the year ended December 31, 2003 and all other reports, registration statements, definitive
proxy statements or information statements filed or to be filed by it subsequent to December 31,
2003 under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act in
the form filed or to be filed (collectively, Parents Securities Documents) with the SEC, as of
the date filed or to be filed, (A) complied or will comply in all material respects as to form with
the applicable requirements under the Securities Act or the Exchange Act, as the case may be and
(B) did not and will not contain any untrue statement of a material fact or omit to state a
material fact
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required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that information as of a later
date shall be deemed to modify information as of an earlier date; and each of the consolidated
balance sheets contained in or incorporated by reference into any such Securities Document
(including the related notes and schedules thereto) fairly presents, or will fairly present, the
consolidated financial position of Parent and its subsidiaries as of its date, and each of the
consolidated statements of income and changes in stockholders equity and cash flows or equivalent
statements in such Securities Documents (including any related notes and schedules thereto) fairly
presents, or will fairly present, the consolidated results of operations, changes in stockholders
equity and cash flows, as the case may be, of Parent and its subsidiaries for the periods to which
they relate, in each case in accordance with GAAP consistently applied during the periods involved,
except in each case as may be noted therein.
5.9
Full Disclosure
.
Neither this Agreement, nor any Schedule, exhibit, list,
certificate or other instrument and document furnished or to be furnished by Parent or the Bank to
CBSC contains any untrue statement of a material fact or omits to state any material fact required
to be stated herein or therein or necessary to make the statements and information contained herein
or therein not misleading. Neither Parent nor the Bank has withheld from CBSC disclosure of any
event, condition or fact which Parent or the Bank knows is likely to have, in Parents reasonable
judgment, a Material Adverse Effect on the assets, prospects or condition (financial or otherwise)
of Parent or the Bank.
ARTICLE 6
CBSC agrees that from the date hereof until the Closing, and thereafter if so specified, it
will use its best efforts to operate generally in the ordinary course consistent with past
practices and, without limiting the foregoing, to fulfill the following covenants and agreements,
unless otherwise consented to by Parent in writing:
6.1
Conduct of Business Pending the Closing
.
(a) CBSC will use its commercially reasonable efforts to maintain, preserve, renew and keep in
full force and effect the existence, rights and franchises of CBSC, to preserve the business
organization of CBSC intact, to keep available to Parent CBSCs officers and employees, and to
preserve for Parent the present relationships of CBSC with its customers and others having business
relationships with it.
(b) CBSC will not intentionally do or omit to do any act, which may cause a material breach of
any contract, commitment or obligation of CBSC.
(c) CBSC will duly comply in all material respects with all laws applicable to it and its
business and operations and all laws, compliance with which is required for the valid consummation
of the transactions contemplated by this Agreement.
(d) Except as set forth on Schedule 6.1, CBSC will not (i) grant any increase in the wages or
salary of any officer, employee or agent of CBSC, except normal wage or salary increases for
employees and commissions paid in the ordinary course of business and consistent with past
practice; (ii) except pursuant to existing compensation arrangements, by means of any bonus or
pursuant to any plan or arrangement or otherwise, increase by any amount or to any extent the
benefits or compensation of any such officer, employee or agent; (iii) enter into any employment
agreement, sales agency or other contract or arrangement with respect to the performance of
personal services which is not terminable by it without liability on not more than 30 days notice;
(iv) enter into or extend any labor contract with any hourly-paid employees or any union; or (v)
agree to take any such action.
(e) Except in the ordinary course of business and consistent with past practice, CBSC will not
terminate or modify in any material respect any lease, license, permit, contract or other agreement
to which it is a party.
(f) CBSC will not mortgage, pledge or subject to lien or any other encumbrance, any of its
assets.
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(g) Except as set forth on Schedule 6.1, CBSC will not declare, pay or make or set aside for
payment or making, any dividend or other distribution in respect of its capital stock or other
securities, or directly or indirectly redeem, purchase or otherwise acquire any of its capital
stock or other securities, except in each case in the ordinary courses of business consistent with
past practice.
(h) Except as set forth on Schedule 6.1, CBSC will not incur any additional indebtedness
except in the ordinary course of business.
(i) Make, renew or otherwise modify any Loan other than in the ordinary course of business
consistent with past practice.
(j) Enter into any new material line of business; change its material lending, investment,
underwriting, risk and asset liability management and other material banking and operating
policies, except as required by applicable law, regulation or policies imposed by any federal,
state or local court, administrative agency or commission or other governmental authority or
instrumentality; or file any application or make any contract with respect to branching or site
location or branching or site relocation.
(k) CBSC will not enter into any transaction outside the ordinary course of business.
(1) CBSC will not enter into any agreement to do any of the foregoing.
6.2
Access; Further Assurances
.
(a) After the execution of this Agreement and continuing until the Closing, CBSC shall permit
Parent and its counsel, accountants, engineers and other representatives reasonable access upon
reasonable prior notice during normal business hours to all of the directors, officers, facilities,
properties, books, contracts, commitments and records of or relating to CBSC and will furnish
Parent and its representatives during such period with all such information concerning CBSCs
affairs and such copies of such documents relating thereto, as Parent or its representatives may
reasonably request.
(b) At any time and from time to time after the Closing, at Parents request and expense and
without further consideration, CBSC will execute and deliver such other instruments of sale,
transfer, conveyance, assignment, and delivery and confirmation and take such action as may be
reasonably required in order more effectively to transfer, convey and assign to Parent and to place
Parent in possession and control of, and to confirm Parents title to, the CBSC Shares.
6.3
Schedules
.
CBSC shall have the continuing obligation to supplement or amend
promptly the Schedules being delivered pursuant to this Agreement with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this Agreement, would
have been required to be set forth or described in these Schedules, and any such amended Schedule
shall be deemed incorporated herein.
6.4
Regulatory Filings
.
Each of Parent, the Bank and CBSC shall cooperate and use
their respective reasonable best efforts to prepare all documentation, to effect all filings and to
obtain all permits, consents, approvals and authorizations of all third parties and governmental
authorities necessary to consummate the Merger; and any initial filings with governmental
authorities shall be made by Parent as soon as reasonably practicable after the execution hereof.
Each of Parent, the Bank and CBSC shall have the right to review in advance, and to the extent
practicable each shall consult with the other, in each case subject to applicable laws relating to
the exchange of information, with respect to all written information submitted to any third party
or any governmental authority in connection with the Merger. In exercising the foregoing right,
each of such parties agrees to act reasonably and as promptly as practicable. Each party hereto
agrees that it shall consult with the other parties hereto with respect to the obtaining of all
permits, consents, approvals, waivers and authorizations of all third parties and governmental
authorities necessary or advisable to consummate the Merger, and each party shall keep the other
parties apprised of the status of material matters relating to completion of the Merger. Each party
agrees, upon request, to furnish the other parties with all information concerning itself, its
subsidiaries, directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any filing, notice or application made by or on behalf of
such other parties or any of their subsidiaries to any third party or governmental authority.
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6.5
Consents and Approvals
.
CBSC shall, in a timely, accurate and complete manner,
take all necessary corporate and other action and use all reasonable efforts to obtain all
consents, approvals, permits, licenses and amendments of agreements required of CBSC to carry out
the transactions contemplated in this Agreement and shall provide to Parent such information as
Parent may reasonably require to make such filings and prepare such applications as may be required
for the consummation by Parent of the transactions contemplated by this Agreement.
ARTICLE 7
7.1
Further Assurances
.
At any time and from time to time after the Closing, at
CBSCs request and expense and without further consideration, Parent and the Bank will execute and
deliver such other instruments of sale, transfer, conveyance, assignment, and delivery and
confirmation and take such action as may be reasonably required in order more effectively to effect
or confirm the transactions hereby contemplated and to carry out the purposes of this Agreement.
ARTICLE 8
All obligations of Parent and the Bank hereunder are subject to the fulfillment, prior to or
at the Closing, of each of the following conditions:
8.1
Representations and Warranties
.
The representations and warranties made by CBSC
in this Agreement and the statements contained in the Schedules attached hereto or in any
instrument, list, certificate or writing delivered by CBSC, pursuant to this Agreement shall be
true in all material respects (other than representations and warranties qualified by materiality
which shall remain as is) when made and, other than representations made as of a specified date
(other than the date of this Agreement), at and as of the time of the Closing as though such
representations and warranties were made at and as of the Closing.
8.2
Performance by the CBSC
.
CBSC shall have performed and complied with all
covenants, agreements, obligations and conditions required by this Agreement to be so complied with
or performed.
8.3
Officers Certificate
.
CBSC shall have delivered to Parent a certificate, dated
the Closing Date, signed by CBSCs President certifying as to the fulfillment of the conditions
specified in Sections 8.1 and 8.2 hereof.
8.4
Shareholder Approval
.
This Agreement and the Merger shall have been duly approved
by the requisite vote of the holders of outstanding shares of CBSC Common Stock.
8.5
Regulatory Approvals
.
All regulatory approvals required to consummate the Merger
shall have been obtained and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired and no such approvals shall contain any conditions,
restrictions or requirements which the Parent Board reasonably determines in good faith would,
individually or in the aggregate, materially reduce the benefits of the Merger to such a degree
that Parent would not have entered into this Agreement had such conditions, restrictions or
requirements been known at the date hereof.
8.6
No Injunction
.
No governmental authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the Merger.
8.7
Consents and Approvals
.
Parent shall have received from CBSC the executed
counterparts of the consents listed on Schedule 4.4 and all other consents required in connection
with the consummation of the transaction contemplated hereby, which consents shall be in form and
substance reasonably satisfactory to Parent.
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8.8
Litigation
.
On the date of the Closing, except as set forth on Schedule 4.9, CBSC
shall not be a party to, nor will there otherwise be pending or threatened, any judicial,
administrative, or other action, proceeding or investigation which, if adversely determined might,
in the reasonable opinion of Parent, have a Material Adverse Effect on CBSC; and there shall be no
lawsuits pending against CBSC, the Bank or Parent seeking to enjoin, prohibit, restrain or
otherwise prevent the transactions contemplated hereby.
8.9
No Material Adverse Change; Due Diligence Review
.
Since September 30, 2004, there
shall not have been any circumstance, development, state of fact or matter which has, or would
reasonably be expected to have, a Material Adverse Effect on CBSC.
8.10
Fairness Opinion
.
The CBSC Board of Directors shall have received the written
opinion of PBS, dated prior to the mailing of the proxy materials to the CBSC Shareholders, to the
effect that the consideration to be received by the CBSC Shareholders is fair to the holders of
CBSC Common Stock from a financial point of view.
ARTICLE 9
All obligations of CBSC under this Agreement are subject to the fulfillment, prior to or at
the Closing, of each of the following conditions:
9.1
Representations and Warranties
.
The representations and warranties made by Parent
and the Bank in this Agreement and the statements contained in any instrument, list, certificate,
or writing delivered by Parent or the Bank pursuant to this Agreement shall be true in all material
respects (other than representations and warranties qualified by materiality which shall remain as
is) when made and, other than representations made as of a specified date (other than the date of
this Agreement), at and as of the time of the Closing as though such representations and warranties
were made at and as of such date.
9.2
Performance
.
Parent and the Bank shall have performed and complied with all
covenants, agreements, obligations and conditions required by this Agreement to be so complied with
or performed.
9.3
Officers Certificate
.
Parent and the Bank shall have delivered to CBSC a
Certificate of Parent and the Bank, dated the Closing Date, signed by the Chief Executive Officer
of Parent and the Bank certifying as to the fulfillment of the conditions specified in Sections 9.1
and 9.2 hereof.
9.4
No Injunction
.
No governmental authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the Merger.
9.5
Adjustments to Book Value
.
PBS shall have performed its review of the book values
of Parents and CBSCs Common Stock prior to the mailing of CBSCs proxy statement to its
shareholders and made its determination as to the adequacy and calculation methodologies of the
Banks and CBSCs loan loss reserves and allowance for doubtful accounts, among other items, by
such date and as a result thereof recommended any adjustments to the book value of CBSCs or
Parents Common Stock as contemplated by Section 3.1 hereof, with all such recommended adjustments
being acceptable to the Board of Directors of CBSC.
9.6
Fairness Opinion
.
The CBSC Board of Directors shall have received the written
opinion of PBS, dated prior to the mailing of the proxy materials to the CBSC Shareholders, to the
effect that the consideration to be received by the CBSC Shareholders is fair to the holders of
CBSC Common Stock from a financial point of view.
ARTICLE 10
This Agreement may be terminated at any time prior to the Closing:
(a) By mutual agreement of CBSC and Parent.
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(b) By Parent, if (i) there has been a material violation or breach by CBSC or of any of the
agreements, representations or warranties contained in this Agreement which has not been waived in
writing; or (ii) if any of the conditions set forth in Article 8 hereof have not been satisfied by
the Closing or have not been waived in writing by Parent.
(c) By CBSC, if (i) there has been a material violation or breach by Parent or the Bank of any
of the agreements, representations or warranties contained in this Agreement which has not been
waived in writing; or (ii) if any of the conditions set forth in Article 9 hereof have not been
satisfied by the Closing or have not been waived in writing by CBSC.
(d) By Parent or CBSC if the other makes an assignment for the benefit of creditors, files a
voluntary petition in bankruptcy or seeks or consents to any reorganization or similar relief under
any present or future bankruptcy act or similar law, or is adjudicated a bankrupt or insolvent, or
if a third party commences any bankruptcy, insolvency, reorganization or similar proceeding
involving the other.
(e) By Parent on the one hand or CBSC on the other hand, if their Board of Directors so
determines by a vote of a majority of the members of their entire Board, in the event the approval
of any governmental authority required for consummation of the Merger and the other transactions
contemplated by this Agreement shall have been denied by final nonappealable action of such
governmental authority or an application therefor shall have been permanently withdrawn at the
request of a governmental authority.
(f) By either Parent on the one hand or CBSC on the other hand, if any approval of the
shareholders of CBSC contemplated by this Agreement shall not have been obtained by reason of the
failure to obtain the required vote at the CBSCs shareholder meeting at which the Merger is
considered for approval.
(g) By CBSC if, within five (5) days of its Board of Directors being advised by PBS of its
proposed adjustments to the book value of Parents or CBSCs Common Stock as contemplated by
Section 9.5 hereof, the CBSC Board of Directors determines, in its sole discretion, to terminate
this Agreement.
(h) By Parent or CBSC if the transactions contemplated by this Agreement shall not have been
consummated on or before April 30, 2005.
ARTICLE 11
11.1
Survival
.
No representations, warranties, agreements and covenants contained in
this Agreement shall survive the Effective Time (other than agreements or covenants contained
herein that by their express terms are to he performed after the Effective Time) or the termination
of this Agreement if this Agreement is terminated prior to the Effective Time. Notwithstanding
anything in the foregoing to the contrary, no representations, warranties, agreements and covenants
contained in this Agreement shall be deemed to be terminated or extinguished so as to deprive a
party hereto or any of its affiliates of any defense at law or in equity which otherwise would be
available against the claims of any Person, including without limitation any shareholder or former
shareholder.
11.2
Expenses
.
All fees and expenses incurred by CBSC including without limitation
legal fees and expenses, in connection with this Agreement will be borne by CBSC; provided,
however, that the Bank shall reimburse CBSC for the fees and expenses of PBS. All fees and expenses
incurred by Parent and the Bank, including without limitation, legal fees and expenses, in
connection with this Agreement will be borne by Parent or the Bank, as the case may be. Filing fees
payable by Parent or CBSC in connection with any regulatory filing shall be paid by Parent.
11.3
Assignability; Parties in Interest
.
(a) Parent may assign any or all of its rights hereunder to any affiliate or any direct or
indirect subsidiary of Parent, and Parent shall advise CBSC of any such assignment and shall
designate such party as the assignee and transferee of the securities purchased. Any such assignee
shall assume all of Parents duties,
A-14
obligations, representations and warranties and undertakings hereunder, but the assignor shall
remain liable thereunder.
(b) CBSC may not assign, transfer or otherwise dispose of any of its rights hereunder without
the prior written consent of Parent.
(c) All the terms and provisions of this Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the respective heirs, successors, assigns and legal or
personal representatives of the parties hereto.
11.4
Entire Agreement; Amendments
.
This Agreement, including the exhibits, Schedules,
lists and other documents and writings referred to herein or delivered pursuant hereto, which form
a part hereof, contains the entire understanding of the parties with respect to its subject matter.
This Agreement supersedes all prior agreements and understandings between the parties with respect
to its subject matter. This Agreement may be amended only by a written instrument duly executed by
all parties or their respective heirs, successors, assigns or legal personal representatives. Any
condition to a partys obligations hereunder may be waived but only by a written instrument signed
by the party entitled to the benefits thereof. The failure or delay of any party at any time or
times to require performance of any provision or to exercise its rights with respect to any
provision hereof, shall in no manner operate as a waiver of or affect such partys right at a later
time to enforce the same.
11.5
Headings
.
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretations of this
Agreement.
11.6
Severability
.
The invalidity of any term or terms of this Agreement shall not
affect any other term of this Agreement, which shall remain in full force and effect.
11.7
Notices
.
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if delivered or mailed
(registered or certified mail, postage prepaid, return receipt requested) as follows:
If to CBSC:
Community Bank of Smith County
If to Parent or the Bank:
Wilson Bank Holding Company
with a copy to:
Bass, Berry & Sims PLC
or to such other address as any party may have furnished to the others in writing in accordance
herewith, except that notices of change of address shall only be effective upon receipt.
11.8
Governing Law
.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Tennessee without regard to its conflict of laws rules.
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11.9
Counterparts
.
This Agreement may be executed simultaneously in one or more
counterparts, with the same effect as if the signatories executing the several counterparts had
executed one counterpart, provided, however, that the several executed counterparts shall together
have been signed by all the parties hereto. All such executed counterparts shall together
constitute one and the same instrument.
[
Signature page to follow.]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on the date first
above written.
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EXHIBIT A
ARTICLES OF MERGER
In accordance with the provisions of Sections 48-21-107 of the Tennessee Business Corporation
Act (the Act), Wilson Bank and Trust, a Tennessee corporation (Wilson Bank), and Community Bank
of Smith County, a Tennessee corporation (CBSC), collectively referred to herein as the Merging
Entities, hereby adopt the following Articles of Merger for the purpose of merging CBSC with and
into Wilson Bank and Trust (the Merger):
1. The Agreement and Plan of Merger (the Plan of Merger) that has been approved by each of the
Merging Entities in the manner prescribed by the Act is set forth in
Appendix A
attached
hereto and is incorporated for all purposes into these Articles of Merger.
2. Approval of the Plan of Merger by the shareholders of both of the Merging Entities is required
by the Act. The Plan of Merger was approved and adopted by the affirmative vote of the required
percentage of all of the votes entitled to be cast by the shareholders of CBSC on
,
2005 and by the sole shareholder of Wilson Bank and Trust on October 25, 2004.
3. The Merger shall be effective upon the filing of these Articles of Merger with the Secretary of
State of the state of Tennessee.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF
, the undersigned have executed these Articles of Merger effective as of the
day of
, 2005.
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APPENDIX A
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APPENDIX B
CHAPTER 23
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PART 1 RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
48-23-101. Chapter definitions.
As used in this chapter, unless the context otherwise requires:
(1) Beneficial shareholder means the person who is a beneficial owner of shares held by a
nominee as the record shareholder;
(2) 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;
(3) Dissenter means a shareholder who is entitled to dissent from corporate action under §
48-23-102 and who exercises that right when and in the manner required by part 2 of this chapter;
(4) Fair value, with respect to a dissenters 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;
(5) Interest means interest from the effective date of the corporate action that gave rise
to the shareholders right to dissent until the date of payment, at the average auction rate paid
on United States treasury bills with a maturity of six (6) months (or the closest maturity thereto)
as of the auction date for such treasury bills closest to such effective date;
(6) Record shareholder means the person in whose name shares are registered in the records
of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee
certificate on file with a corporation; and
(7) Shareholder means the record shareholder or the beneficial shareholder.
48-23-102.
Right to Dissent.
(a) A shareholder is entitled to dissent from, and obtain payment
of the fair value of the shareholders shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the corporation is a party:
(A) If shareholder approval is required for the merger by §
48-21-104 or the charter and the shareholder is entitled to vote on the
merger; or
(B) If the corporation is a subsidiary that is merged with its
Parent under § 48-21-105;
(2) 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;
(3) 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 the date of
sale;
(4) An amendment of the charter that materially and adversely affects rights in respect of a
dissenters shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) 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;
(C) Alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights; or
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share, if the fractional share is to be acquired for cash
under § 48-16-104; or
(5) Any corporate action taken pursuant to a shareholder vote to the extent the charter,
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.
(b) A shareholder entitled to dissent and obtain payment for the shareholders shares under
this chapter may not challenge the corporate action creating the shareholders entitlement unless
the action is unlawful or fraudulent with respect to the shareholder or the corporation.
(c) Notwithstanding the provisions of subsection (a), no shareholder may dissent as to any shares
of a security which, as of the date of the effectuation of the transaction which would otherwise
give rise to dissenters rights, is listed on an exchange registered under § 6 of the Securities
Exchange Act of 1934, as amended, or is a national market system security, as defined in rules
promulgated pursuant to the Securities Exchange Act of 1934, as amended.
48-23-103.
Dissent by nominees and beneficial owners.
(a) A record shareholder may assert
dissenters rights as to fewer than all the shares registered in the record shareholders name only
if the record shareholder dissents with respect to all shares beneficially owned by any one (1)
person and notifies the corporation in writing of the name and address of each person on
whose behalf the record shareholder asserts dissenters rights. The rights of a partial dissenter
under this subsection are determined
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as if the shares as to which the partial dissenter dissents
and the partial dissenters other shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters rights as to shares of any one (1) or more
classes held on the beneficial shareholders behalf only if the beneficial shareholder:
(1) Submits to the corporation the record shareholders written consent to the dissent not
later than the time the beneficial shareholder asserts dissenters rights; and
(2) Does so with respect to all shares of the same class of which the person is the beneficial
shareholder or over which the person has power to direct the vote.
PART 2 PROCEDURE FOR EXERCISE OF DISSENTERS RIGHTS
48-23-201.
Notice of dissenters rights.
(a) If proposed corporate action creating dissenters
rights under § 48-23-102 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 chapter and
be accompanied by a copy of this chapter.
(b) If corporate action creating dissenters rights under § 48-23-102 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 §
48-23-203.
(c) A corporations failure to give notice pursuant to this section will not invalidate the
corporate action.
48-23-202.
Notice of intent to demand payment.
(a) If proposed corporate action creating
dissenters rights under § 48-23-102 is submitted to a vote at a shareholders meeting, a
shareholder who wishes to assert dissenters rights must:
(1) Deliver to the corporation, before the vote is taken, written notice of the shareholders
intent to demand payment for the shareholders shares if the proposed action is effectuated; and
(2) Not vote the shareholders shares in favor of the proposed action. No such written notice
of intent to demand payment is required of any shareholder to whom the corporation failed to
provide the notice required by § 48-23-201.
(b) A shareholder who does not satisfy the requirements of subsection (a) is not entitled to
payment for the shareholders shares under this chapter.
48-23-203.
Dissenters notice.
(a) If proposed corporate action creating dissenters rights
under § 48-23-102 is authorized at a shareholders meeting, the corporation shall deliver a written
dissenters notice to all shareholders who satisfied the requirements of § 48-23-202.
(b) The dissenters notice must be sent no later than ten (10) days after the corporate action
was authorized by the shareholders or effectuated, whichever is the first to occur, and must:
(1) State where the payment demand must be sent and where and when certificates for
certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of the shares will be
restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the first announcement to
news media or to shareholders of the principal terms of the proposed corporate action and requires
that the person asserting dissenters rights certify whether or not the person asserting
dissenters rights acquired beneficial ownership of the shares before that date;
(4) Set a date by which the corporation must receive the payment demand, which date may not be
fewer than one (1) nor more than two (2) months after the date the subsection (a) notice is
delivered; and
(5) Be accompanied by a copy of this chapter if the corporation has not previously sent a copy
of this chapter to the shareholder pursuant to § 48-23-201.
48-23-204.
Duty to demand payment.
(a) A shareholder sent a dissenters notice described in §
48-23-203 must demand payment, certify whether the shareholder acquired beneficial ownership of the
shares before the date required to be set forth in the dissenters notice pursuant to §
48-23-203(b)(3), and deposit the shareholders certificates in accordance with the terms of the
notice.
(b) The shareholder who demands payment and deposits the shareholders share certificates
under subsection (a) retains all other rights of a shareholder until these rights are cancelled or
modified by the effectuation of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit the shareholders share certificates
where required, each by the date set in the dissenters notice, is not entitled to payment for the
shareholders shares under this chapter.
(d) A demand for payment filed by a shareholder may not be withdrawn unless the corporation
with which it was filed, or the surviving corporation, consents thereto.
48-23-205.
Share restrictions.
(a) 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 effectuated or the restrictions released under § 48-23-207.
(b) The person for whom dissenters rights are asserted as to uncertificated shares retains
all other rights of a shareholder until these rights are cancelled or modified by the effectuation
of the proposed corporate action.
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48-23-206.
Payment.
(a) Except as provided in § 48-23-208, as soon as the proposed corporate
action is effectuated, or upon receipt of a payment demand, whichever is later, the corporation
shall pay each dissenter who complied with § 48-23-204 the amount the corporation estimates to be
the fair value of each dissenters shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporations 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;
(2) A statement of the corporations estimate of the fair value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenters right to demand payment under § 48-23-209; and
(5) A copy of this chapter if the corporation has not previously sent a copy of this chapter
to the shareholder pursuant to § 48-23-201 or § 48-23-203.
48-23-207.
Failure to take action.
(a) If the corporation does not effectuate the proposed
action that gave rise to the dissenters rights within two (2) months 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.
(b) If, after returning deposited certificates and releasing transfer restrictions, the
corporation effectuates the proposed action, it must send a new dissenters notice under §
48-23-203 and repeat the payment demand procedure.
48-23-208.
After-acquired shares.
(a) A corporation may elect to withhold payment required by §
48-23-206 from a dissenter unless the dissenter 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 principal terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under subsection (a), after
effectuating 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 the dissenters 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 dissenters right to demand payment under § 48-23-209.
48-23-209.
Procedure if shareholder dissatisfied with payment or offer.
(a) A dissenter may
notify the corporation in writing of the dissenters own estimate of the fair value of the
dissenters shares and amount of interest due, and demand payment of the dissenters estimate (less
any payment under § 48-23-206), or reject the corporations offer under § 48-23-208 and demand
payment of the fair value of the dissenters shares and interest due, if:
(1) The dissenter believes that the amount paid under § 48-23-206 or offered under § 48-23-208
is less than the fair value of the dissenters shares or that the interest due is incorrectly
calculated;
(2) The corporation fails to make payment under § 48-23-206 within two (2) months after the
date set for demanding payment; or
(3) The corporation, having failed to effectuate the proposed action, does not return the
deposited certificates or release the transfer restrictions imposed on uncertificated shares within
two (2) months after the date set for demanding payment.
(b) A dissenter waives the dissenters right to demand payment under this section unless the
dissenter notifies the corporation of the dissenters demand in writing under subsection (a) within
one (1) month after the corporation made or offered payment for the dissenters shares.
PART 3 JUDICIAL APPRAISAL OF SHARES
48-23-301.
Court action.
(a) If a demand for payment under § 48-23-209 remains unsettled, the
corporation shall commence a proceeding within two (2) months 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 two-month period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in a court of record having equity
jurisdiction in the county where the corporations 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 merged with or whose shares were acquired by the
foreign corporation was located.
(c) 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 must be served with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under subsection (b) is
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 powers
described in the order appointing them, or in any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment:
(1) For the amount, if any, by which the court finds the fair value of the dissenters shares,
plus accrued interest, exceeds the amount paid by the corporation; or
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(2) For the fair value, plus accrued interest, of the dissenters after-acquired shares for
which the corporation elected to withhold payment under § 48-23-208.
48-23-302.
Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under
§ 48-23-301 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 § 48-23-209.
(b) The court may also assess the fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable against:
(1) The corporation and in favor of any or all dissenters if the court finds the corporation
did not substantially comply with the requirements of part 2 of this chapter; or
(2) 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 chapter.
(c) 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 to the dissenters who were benefited.
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APPENDIX C
[Letterhead of Professional Bank Services, Inc.]
January 25, 2005
Board of Directors
Dear Members of the Board:
You have requested our opinion as investment bankers as to the fairness, from a financial
perspective, to the common shareholders of Community Bank of Smith County, Carthage, Tennessee (the
Bank or Community) of the proposed merger of the Bank with Wilson Bank Holding Company,
Lebanon, Tennessee (Wilson or the Company) (the Merger). In the proposed Merger, Bank
shareholders will receive 1.0043 Wilson common shares per Bank common share subject to adjustment,
as further defined in the Agreement and Plan of Merger by and among Wilson Bank Holding Company,
Wilson Bank and Trust and Community Bank of Smith County (the Agreement). Under the terms of the
Merger Wilson will issue 194,766 new common shares in aggregate for
the 193,933 Bank common shares
not currently owned by Wilson and the 193,933 Bank common shares currently owned by Wilson will be
cancelled. On January 25, 2005, the proposed consideration to be received represents $31.64 per
Bank common share based on the most recent trading price of Wilson common shares.
Professional Bank Services, Inc. (PBS) is a bank consulting firm and as part of its investment
banking business is continually engaged in reviewing the fairness, from a financial perspective, of
bank acquisition transactions, and in the valuation of banks and other businesses and their
securities in connection with mergers, acquisitions, estate settlements and other purposes.
C-1
Board of Directors
For purposes of this opinion, PBS performed a review and analysis of the historic performance of the Bank including:
We have reviewed and tabulated statistical data regarding the loan portfolio, securities portfolio
and other performance ratios and statistics. Financial projections were prepared and analyzed as
well as other financial studies, analyses and investigations as deemed relevant for the purposes of
this opinion. In review of the aforementioned information, we have taken into account our
assessment of general market and financial conditions, our experience in other transactions, and
our knowledge of the banking industry generally.
A limited scope due diligence review of Wilson has been performed by PBS, which included an on-site
visit by PBS personnel the week of December 20
th
2004, utilizing various management and
financial data for Wilson. The review included the following:
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Board of Directors
We have not compiled, reviewed or audited the financial statements of the Bank or Wilson, nor have
we independently verified any of the information reviewed; we have relied upon such information as
being complete and accurate in all material respects. We have not made independent evaluation of
the assets of the Bank or Wilson.
C-3
Board of Directors
Based on the foregoing and all other factors deemed relevant, it is our opinion as investment
bankers, that, as of the date hereof, the consideration proposed to be received by the shareholders
of the Bank under the Agreement is fair and equitable from a financial perspective.
C-4
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Tennessee Business Corporation Act (TBCA) provides that a corporation may indemnify any
of its directors and officers against liability incurred in connection with a proceeding if (i) the
director or officer acted in good faith, (ii) in the case of conduct in his or her official
capacity with the corporation, the director or officer reasonably believed such conduct was in the
corporations best interests, (iii) in all other cases, the director or officer reasonably believed
that his or her conduct was not opposed to the best interest of the corporation, and (iv) in
connection with any criminal proceeding, the director or officer had no reasonable cause to believe
that his or her conduct was unlawful. In actions brought by or in the right of the corporation,
however, the TBCA provides that no indemnification may be made if the director or officer was
adjudged to be liable to the corporation. In cases where the director or officer is wholly
successful, on the merits or otherwise, in the defense of any proceeding instigated because of his
or her status as an officer or director of a corporation, the TBCA mandates that the corporation
indemnify the director or officer against reasonable expenses incurred in the proceeding. The TBCA
also provides that in connection with any proceeding charging improper personal benefit to an
officer or director, no indemnification may be made if such officer or director is adjudged liable
on the basis that personal benefit was improperly received. Notwithstanding the foregoing, the TBCA
provides that a court of competent jurisdiction, upon application, may order that an officer or
director be indemnified for reasonable expenses if, in consideration of all relevant circumstances,
the court determines that such individual is fairly and reasonably entitled to indemnification,
whether or not the standard of conduct set forth above was met.
The Registrants bylaws provide that the Registrant shall indemnify and advance expenses to
each director or officer of Registrant, or any person who may have served at the request of
Registrants board of directors or its Chief Executive Officer, as a director or office of another
corporation (and, in either case, his heirs, executors and administrators), to the fullest extent
allowed by the laws of the State of Tennessee, both as now in effect or hereafter adopted. The
bylaws also provide that the Registrant may indemnify and advance expenses to any employee or agent
of the Registrant who is not a director or officer (and his heirs, executors and administrators) to
the same extent as to a director or officer, if the board of directors determines that to do so is
in the best interests of the Registrant.
The Registrants bylaws also provide that the indemnification rights contained in the bylaws
do not exclude other indemnification rights to which a director or officer may be entitled under
any statute, charter provision, bylaw, resolution adopted by the shareholders, resolution adopted
by the board of directors, agreement, insurance, purchase by the Registrant or otherwise, both as
to action in his official capacity and as to action in another capacity.
The Registrant believes that its Charter and Bylaw provisions are necessary to attract and
retain qualified persons as directors and officers.
The Registrant has in effect a directors and officers liability insurance policy which
provides coverage for its directors and officers. Under this policy, the insurer agrees to pay,
subject to certain exclusions, for any claim made against a director or officer of the Registrant
for a wrongful act by such director or officer, but only if and to the extent such director or
officer becomes legally obligated to pay such claim.
II-1
ITEM 21. EXHIBITS
II-2
II-3
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes as follows: that prior to any public reoffering
of the securities registered hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), 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.
The registrant undertakes that every prospectus (i) that is filed pursuant to paragraph
(1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of
the 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 of 1933,
each such post-effective amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers, and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised 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.
The undersigned registrant hereby undertakes to respond to requests for information that
is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date of responding to
the request.
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-4
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in
the City of Lebanon, State of Tennessee, on February 4, 2005.
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
J. Randall Clemons his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully do or
cause to be done by virtue hereof. This power of attorney may be executed in counterparts.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the dates indicated.
II-5
II-6
EXHIBIT INDEX
II-7
II-8
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cost savings related to Wilson Bank Holding Companys Sarbanes-Oxley Act compliance
efforts, including, particularly those related to that acts Section 404 internal
control requirements and Wilson Bank Holding Companys accounting and auditing function;
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cost savings related to the centralization of certain back office operations and loan
review operations for the combined bank;
cost savings related to a reduction in the number of regulatory examinations for
Wilson Bank Holding Companys bank subsidiaries;
similarities between the banking philosophies of Wilson Bank and Trust and Community
Bank of Smith County; and
the financial terms of the merger, including the expectation that the merger
consideration will not be taxable to the Community Bank of Smith County shareholders.
the consideration to be paid to the Community Bank of Smith County shareholders;
the representations and warranties of Community Bank of Smith County;
the covenants of Wilson Bank Holding Company and Community Bank of Smith County;
the conditions required to be satisfied or waived, if permissible, prior to completion of the merger; and
the rights of Wilson Bank Holding Company and Community Bank of Smith County to
terminate the merger agreement in certain circumstances.
the risk that the potential benefits of the merger might not be realized;
the risk of decline in the Wilson Bank Holding Company common stock price upon
announcement of the transaction;
the risk that the merger might not be completed;
the conditions to the merger agreement requiring receipt of certain regulatory approvals; and
various other applicable risks associated with the combined banks and the merger,
including those described under the section entitled Risk Factors beginning on page
14.
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cost savings and improved internal controls related to the centralization of certain
back office operations and loan review operations for the combined bank;
similarities between the banking philosophies of Wilson Bank and Trust and Community
Bank of Smith County and Community Bank of Smith Countys historic relationship with
Wilson Bank and Trust;
the belief that the merger would lead to improved lending and asset quality controls;
the increased marketability and liquidity of Wilson Bank Holding Companys common
stock compared to Community Bank of Smith Countys common stock;
the financial terms of the merger, including the expectation that the merger
consideration will not be taxable to the Community Bank of Smith County shareholders;
and
the absence of any apparent regulatory impediments and the corresponding likelihood
that the proposed transactions would be consummated.
the consideration to be paid to the Community Bank of Smith County shareholders and
the fact that the exchange ratio would be calculated on a book value to book value
basis, which the board considered to be fair given the absence of an active trading
market in the stock of either company;
the representations and warranties of Wilson Bank Holding Company;
the covenants of Community Bank of Smith County and Wilson Bank Holding Company;
the conditions required to be satisfied or waived, if permissible, prior to completion of the merger; and
the strong likelihood that because of the shares owned by Wilson Bank Holding Company
and its officers and directors, the merger would be approved by the required vote of
shareholders if it was approved by Community Bank of Smith County board of directors;
the fact that Wilson Bank Holding Company was instrumental in the organization of
Community Bank of Smith County, and was not willing to consider sale of its interest to
a third party or a group of shareholders, or the sale of substantially all or all of
Community Bank of Smith County to a third party;
the rights of Community Bank of Smith County and Wilson Bank Holding Company to
terminate the merger agreement in certain circumstances, including in the event that the
board is not satisfied with the proposed adjustments of PBS to the book values of the
common stock of each of Community Bank of Smith County and Wilson Bank Holding Company;
and
the fact that Community Bank of Smith County would receive an opinion from PBS, a
bank financial advisory firm, that the financial terms of the merger were fair to the
shareholders of Community Bank of Smith County.
the ownership position of Wilson Bank Holding Company and its officers and directors
in Community Bank of Smith County, and the conflict of interest that created;
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the risk that the potential benefits of the merger might not be realized;
the risk of decline in the Wilson Bank Holding Company common stock price following
consummation of the merger;
the risk that the merger might not be completed; and
the conditions to the merger agreement requiring receipt of certain regulatory approvals.
All Forms 10-Q, 10-K and 8-K filed with or furnished to the Securities and Exchange
Commission by Wilson Bank Holding Company in 2002, 2003 and 2004;
The audited annual reports for Wilson Bank Holding Company for the 2002 and 2003
fiscal years;
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The definitive proxy statement of Wilson Bank Holding Company filed with the
Securities and Exchange Commission on March 15, 2004;
Independent audit, firm management letters and management responses thereto for the
last 2 years;
The September 30, 2004, Federal Reserve FY- 9 Consolidated Report of Condition and
Income for Wilson Bank Holding Company;
The September 30, 2004 Uniform Holding Company Performance Report for Wilson Bank
Holding Company;
The most recent consolidated month-end delinquency and non-accrual reports for each
of Wilson Bank and Trust, DeKalb Community Bank and Community Bank of Smith County;
The most recent consolidated analysis of the allowance for loan and lease losses for
each of Wilson Bank and Trust, DeKalb Community Bank and Community Bank of Smith County;
The most recent consolidated internal loan quality reports and consolidated problem
loan listing with classification for each of Wilson Bank and Trust, DeKalb Community
Bank and Community Bank of Smith County;
Copies of Wilson Bank Holding Companys loan policies and procedures manual;
Various other asset/liability, interest rate risk, capital plans, internal audit
reports and board reports for Wilson Bank Holding Company and each of Wilson Bank and
Trust, DeKalb Community Bank and Community Bank of Smith County; and
The 2004 and 2005 budgets of each of Wilson Bank and Trust, DeKalb Community Bank and
Community Bank of Smith County.
The December 31, 2004, draft audited financial statements of Community Bank of Smith
County;
The Consolidated Report of Condition and Income (CALL REPORT) dated December 31, 2002
and 2003, March 31, 2004, June 30, 2004 and September 30, 2004 filed by Community Bank
of Smith County;
The Uniform Bank Performance Report as of September 30, 2004 for Community Bank of
Smith County; and
Community Bank of Smith Countys 2004 operating budget and various internal asset
quality reports, board reports, internal audit reports and other loan, deposit and
interest rate risk reports.
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Median Multiples
Multiple of
Category
Book Value
Multiple of Earnings
1.95X
22.05
X
1.96X
22.92
X
2.06
26.28
2.01
23.51
1.69
21.74
2.44
24.24
Median Percentages
Percent of
Franchise Premium /
Category
Deposits
Core Deposits
16.30
%
10.40
%
21.66
%
13.94
%
22.24
15.06
17.55
11.84
23.62
15.84
21.80
14.53
Proposed Transaction Percentile Rankings
Multiple of
Multiple of
Category
Book Value
Earnings
1.95X
22.05X
52.60
%
47.60
%
39.60
31.30
49.50
44.60
55.50
54.40
23.80
21.70
Proposed Transaction Percentile Rankings
Percentage of
Franchise Premium /
Category
Deposits
Core Deposits
16.30
%
10.40
%
25.30
%
34.30
%
22.30
20.10
43.90
48.10
29.40
41.60
16.10
15.60
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Name and Address of
Number of Shares
Percent of Shares
Beneficial Owner
Beneficially Owned
Beneficially Owned
623 West Main Street
Lebanon, Tennessee 37087
193,933
50
%
Number of
Percent of
Shares
Shares
Name and Address of
Beneficially
Beneficially
Beneficial Owner
(1)
Owned
Owned
327
*
355
*
107
*
4,967
1.28
%
4,967
1.28
%
4,967
1.28
%
5,186
1.34
%
4,960
1.28
%
5,283
1.36
%
4,967
1.28
%
5,073
1.31
%
41,159
10.6
%
*
Less than one percent.
(1)
The address of each director and executive officer is 1300 Main Street North, Carthage,
Tennessee 37030.
(2)
Messrs. Bell, Clemons and Comer are also directors of Wilson Bank and Trust and Wilson Bank
Holding Company.
(3)
Mr. Vance is also a director.
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is based upon 4,488,083 shares of Wilson Bank Holding Company common stock
outstanding as of February 1, 2005; and
assumes that in connection with the completion of the merger
and the merger of DeKalb Community Bank with and into Wilson Bank and
Trust, Wilson Bank Holding
Company will issue 436,943 shares of common stock, resulting in pro forma shares
outstanding of 4,925,026.
Shares Beneficially
Shares of
Shares Beneficially
Owned Prior to
Common
Owned After
Completion of the
Stock Issued
Completion
Merger
Pursuant to
of the Merger
(2)
Name and Address of Beneficial Owner
(1)
Number
Percent
the Merger
Number
Percent
105,034
2.34
%
328
105,579
2.14
%
62,305
1.39
%
329
63,242
1.28
%
37,939
*
37,939
*
67,996
1.52
%
356
68,895
1.40
%
26,045
*
107
26,152
*
68,648
1.53
%
68,648
1.39
%
36,727
*
36,727
*
25,639
*
25,639
*
41,135
*
41,135
*
32,290
*
32,290
*
22,384
*
22,384
*
85,134
1.90
%
85,851
1.74
%
15,995
*
16,540
*
11,176
*
11,176
*
856
*
856
*
440
*
440
*
658,197
14.67
%
1,120
661,947
13.44
%
*
Less than one percent.
(1)
The address of each director and executive officer is 623 West Main Street, Lebanon, Tennessee
37087.
(2)
Includes shares that will be issued by Wilson
Bank Holding Company in connection with the merger of DeKalb
Community Bank and Wilson Bank and Trust.
(3)
Messrs. Clemons and Richerson are also named executive officers.
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an effective registration statement under the Securities Act covering the resale of the shares;
in accordance with Rule 145 of the Securities Act; or
an opinion of counsel or a no action letter from the Securities and Exchange
Commission, that such sale will not violate the Securities Act or is otherwise exempt
from registration under the Securities Act.
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organization, good standing, qualification to do business and corporate power;
authorization to enter into the merger agreement;
corporate power and authority to enter into and perform its obligations under, and
the enforceability of, the merger agreement;
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conflicts between the merger agreement and Community Bank of Smith Countys charter
and bylaws and certain permits;
capitalization;
title to properties;
compliance with laws;
absence of undisclosed liabilities;
absence of litigation; and
fees and commissions required to be paid to brokers, finders or investment bankers in
connection with the merger.
organization, good standing, qualification to do business and corporate power;
authorization to enter into the merger agreement;
corporate power and authority to enter into and perform its obligations under, and
the enforceability of, the merger agreement;
conflicts between the merger agreement and Wilson Bank Holding Companys and Wilson
Bank and Trusts charter and bylaws and certain permits;
capitalization;
filings and reports with the Securities and Exchange Commission;
title to properties;
compliance with laws;
the shares of Wilson Bank Holding Company common stock to be issued in the merger;
absence of undisclosed liabilities;
absence of litigation; and
fees and commissions required to be paid to brokers, finders or investment bankers in
connection with the merger.
Community Bank of Smith County will use its commercially reasonable efforts to
maintain, preserve, renew and keep in full force and effect the existence, rights and
franchises of Community Bank of Smith County, to preserve the business organization of
Community Bank of Smith County intact, to keep available to Wilson
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Bank Holding Company
Community Bank of Smith Countys officers and employees, and to preserve for Wilson Bank
Holding Company the present relationships of Community Bank of Smith County with its
customers and others having business relationships with it;
Community Bank of Smith County will not intentionally do or omit to do any act, which
may cause a material breach of any contract, commitment or obligation of Community Bank
of Smith County;
Community Bank of Smith County will duly comply in all material respects with all
laws applicable to it and its business and operations and all laws, compliance with
which is required for the valid consummation of the transactions contemplated by this
Agreement;
except as set forth on Schedule 6.1 to the merger agreement, Community Bank of Smith
County will not (1) grant any increase in the wages or salary of any officer, employee
or agent of Community Bank of Smith County, except normal wage or salary increases for
employees and commissions paid in the ordinary course of business and consistent with
past practice; (2) except pursuant to existing compensation arrangements, by means of
any bonus or pursuant to any plan or arrangement or otherwise, increase by any amount or
to any extent the benefits or compensation of any such officer, employee or agent; (3)
enter into any employment agreement, sales agency or other contract or arrangement with
respect to the performance of personal services which is not terminable by it without
liability on not more than 30 days notice; (4) enter into or extend any labor contract
with any hourly-paid employees or any union; or (5) agree to take any such action;
except in the ordinary course of business and consistent with past practice,
Community Bank of Smith County will not terminate or modify in any material respect any
lease, license, permit, contract or other agreement to which it is a party;
Community Bank of Smith County will not mortgage, pledge or subject to lien or any
other encumbrance, any of its assets;
except as set forth on Schedule 6.1 to the merger agreement, Community Bank of Smith
County will not declare, pay or make or set aside for payment or making, any dividend or
other distribution in respect of its capital stock or other securities, or directly or
indirectly redeem, purchase or otherwise acquire any of its capital stock or other
securities, except in each case in the ordinary courses of business consistent with past
practice;
except as set forth on Schedule 6.1 to the merger agreement, Community Bank of Smith
County will not incur any additional indebtedness except in the ordinary course of
business;
Community Bank of Smith County will not make, renew or otherwise modify any Loan
other than in the ordinary course of business consistent with past practice;
Community Bank of Smith County will not enter into any new material line of business;
change its material lending, investment, underwriting, risk and asset liability
management and other material banking and operating policies, except as required by
applicable law, regulation or policies imposed by any federal, state or local court,
administrative agency or commission or other governmental authority or instrumentality;
or file any application or make any contract with respect to branching or site location
or branching or site relocation;
Community Bank of Smith County will not enter into any transaction outside the
ordinary course of business; and
Community Bank of Smith County will not enter into any agreement to do any of the
foregoing.
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each of the representations and warranties of Community Bank of Smith County in the
merger agreement shall be true in all material respects at and as of the date of the
merger agreement and at the time of the closing of the merger;
Community Bank of Smith County shall have performed and complied with all covenants,
agreements, obligations and conditions required by the merger agreement;
Community Bank of Smith County shall have delivered to Wilson Bank Holding Company a
certificate, dated the closing date, signed by Community Bank of Smith Countys
President certifying as to the fulfillment of the conditions specified in Sections 8.1
and 8.2 of the merger agreement;
Community Bank of Smith Countys shareholders shall have approved the merger;
receipt of all regulatory and material non-regulatory approvals that are required to complete the merger;
the absence of any governmental order blocking completion of the merger, or of any
proceedings by a governmental body trying to block it;
the absence of any litigation which, if adversely determined might, in the reasonable
opinion of Wilson Bank Holding Company, have a material adverse effect on Community Bank
of Smith County;
since September 30, 2004, there shall not have been any circumstance, development,
state of fact or matter which has, or would reasonably be expected to have, a material
adverse effect on Community Bank of Smith County; and
the receipt by Community Bank of Smith Countys board of directors of the fairness
opinion of PBS to the effect that the consideration to be received by the Community Bank
of Smith County shareholders is fair to the Community Bank of Smith County shareholders
from a financial point of view.
each of the representations and warranties of Wilson Bank Holding Company and Wilson
Bank and Trust in the merger agreement shall be true in all material respects at and as
of the date of the merger agreement and at the time of the Closing;
Wilson Bank Holding Company and Wilson Bank and Trust shall have performed and
complied with all covenants, agreements, obligations and conditions required by the
merger agreement;
Wilson Bank Holding Company and Wilson Bank and Trust shall have delivered to
Community Bank of Smith County a certificate, dated the Closing Date, signed by the
Chief Executive Officer of Wilson Bank Holding Company and Wilson Bank and Trust
certifying as to the fulfillment of the conditions specified in Sections 9.1 and 9.2 of
the merger agreement;
the absence of any governmental order blocking completion of the merger, or of any
proceedings by a governmental body trying to block it;
the performance by PBS of its review of the book values of Wilson Bank Holding
Companys and Community Bank of Smith Countys common stock prior to the mailing of this
proxy statement/prospectus and made its determination as to the adequacy and calculation
methodologies of Wilson Bank and Trusts and Community Bank of Smith Countys loan loss
reserves and allowance for doubtful accounts, among other items, by such date and as a
result thereof recommended any adjustments to the book value of Community Bank of Smith
Countys or Wilson Bank Holding Companys common stock, with all such recommended adjustments
being acceptable to the board of directors of Community Bank of Smith County; and
the receipt by Community Bank of Smith Countys board of directors of the fairness
opinion of PBS to the effect that the consideration to be received by the Community Bank
of Smith County shareholders is fair to the Community Bank of Smith County shareholders
from a financial point of view.
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if the other party makes an assignment for the benefit of creditors, files a
voluntary petition in bankruptcy or seeks or consents to any reorganization or similar
relief under any present or future bankruptcy act or similar law, or is adjudicated a
bankrupt or insolvent, or if a third party commences any bankruptcy, insolvency,
reorganization or similar proceeding involving the other;
if the merger isnt completed by April 30, 2005;
in the event the approval of any governmental authority required for consummation of
the merger and the other transactions contemplated by the merger agreement shall have
been denied by final nonappealable action of such governmental authority or an
application therefor shall have been permanently withdrawn at the request of a
governmental authority;
if the Community Bank of Smith County shareholders dont approve the merger; or
if the other party violates, in a significant way, any of its agreements,
representations, and warranties under the merger agreement.
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NUMBER OF
PRICE PER
DATE
SHARES
SHARE
4,000
$
24.75
104
24.75
628
25.50
409
28.00
128
30.00
160
26.00
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takes place at least five years after the interested shareholder first acquired 10%
or more of the voting power of any class or series of the then outstanding voting stock
of the resident domestic corporation; and
either is approved by at least two-thirds of the non-interested voting shares of the
resident domestic corporation or satisfies fairness conditions specified in the
Tennessee Business Combination Act.
a business combination with an entity can proceed without delay when approved by the
target corporations board of directors before that entity becomes an interested
shareholder;
a business combination is exempt, if in its original charter or original bylaws, the
resident domestic corporation elects not to be governed by the Tennessee Business
Combination Act;
unless the charter of the resident domestic corporation provides otherwise, the
Tennessee Business Combination Act does not apply to a business combination of a
resident domestic corporation with, or proposed by or on behalf of, an interested
shareholder if the resident domestic corporation did not have, on such interested
shareholders share acquisition date, a class of voting stock registered or traded on a
national securities exchange or registered with the securities and exchange commission
pursuant to Section 12(g) of the Exchange Act; or
the resident corporation may enact a charter or bylaw amendment to remove itself
entirely from the Tennessee Business Combination Act that must be approved by a majority
of the shareholders who have held shares for more than one year before the vote and
which cannot become operative until two years after the vote.
the director or officer acted in good faith;
in the case of conduct in his or her official capacity with the corporation, the
director or officer reasonably believed such conduct was in the corporations best
interest;
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in all other cases, the director or officer reasonably believed that his or her
conduct was not opposed to the best interest of the corporation; and
in connection with any criminal proceeding, the director or officer had no reasonable
cause to believe that his or her conduct was unlawful.
the officer or director was adjudged liable to the corporation in a proceeding by or
in the right of the corporation;
the officer or director was adjudged liable on the basis that personal benefit was
improperly received by him or her; or
the officer or director breached his or her duty of care to the corporation.
any breach of the directors duty of loyalty;
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or
any unlawful distributions.
COMMUNITY BANK OF SMITH COUNTY SHAREHOLDERS
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Wilson Bank Holding Company
Community Bank of Smith County
Shareholder Rights
Shareholder Rights
The Wilson Bank Holding
Company charter provides
for authorized stock
consisting of 10,000,000
shares of Wilson Bank
Holding Company common
stock, par value $2.00 per
share.
The Community Bank of Smith
County charter provides for
authorized stock consisting
of 1,000,000 shares of
Community Bank of Smith
County common stock, no par
value per share.
The Wilson Bank Holding
Company bylaws provide for
a minimum of five and
maximum of fifteen
directors, the exact
number to be set by Wilson
Bank Holding Companys
Board of Directors. The
Wilson Bank Holding
Company charter provides
that the directors will be
classified into three
classes, as nearly equal
in number as possible with
each class to serve for
staggered three year
terms. Currently, the
Wilson Bank Holding
Company board is made up
of thirteen members.
The Community Bank of Smith
County bylaws provide that
the board shall consist of no
fewer than eight nor more
than twenty-five members.
According to the Community
Bank of Smith County bylaws,
the exact number of
directors, within the minimum
and maximum, or the range for
the size of the Board, or
whether the size of the Board
shall be a fixed or
variablerange may be fixed,
changed or determined from
time to time by the Board of
Directors. Community Bank of
Smith County directors are
elected at each annual
meeting of the shareholders
and hold office until the
next annual shareholder
meeting following their
election and until their
successors are duly elected
and qualified. All voting
directors of Community Bank
of Smith County must be
citizens of the United
States, two-thirds of the
voting directors must be
residents of the State of
Tennessee or must reside
within 25 miles of the main
office of Community Bank of
Smith County, and a majority
of the voting directors must
reside within 100 miles of
the main office of Community
Bank of Smith County.
Currently, the Community Bank
of Smith County board is made
up of eleven members.
The Wilson Bank Holding
Company charter provides
that, to the fullest
extent permitted by the
Tennessee Business
Corporation Act, a
director of the company
shall not be liable to the
corporation or its
shareholders for monetary
damages for breach of
fiduciary duty as a
director. The Tennessee
Business Corporation Act
provides that a
corporation may not
indemnify a director for
liability:
The Community Bank of Smith
County charter has no
provision with respect to
limitation of liability of
its directors and officers.
for any breach of
the directors duty of
loyalty to the corporation
or its shareholders;
for acts or
omissions not in good
faith or which involve
intentional misconduct or
a knowing violation of
law; or
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Wilson Bank Holding Company
Community Bank of Smith County
Shareholder Rights
Shareholder Rights
under Sec.
48-18-304 of the Tennessee
Business Corporation Act
(with respect to the
unlawful payment of
dividends), as the same
exists or hereafter may be
amended.
The Wilson Bank Holding
Company bylaws provide
that Wilson Bank Holding
Company shall have the
power to indemnify any
director or officer of the
corporation to the fullest
extent permitted by the
Tennessee Business
Corporation Act as it
exists on the date the
bylaws were adopted or as
it may be hereafter
amended. Wilson Bank
Holding Company may also
indemnify and advance
expenses to any employee
or agent of Wilson Bank
Holding Company who is not
a director or officer to
the same extent as to a
director or officer if the
board of directors
determines that to do so
is in the best interests
of Wilson Bank Holding
Company.
The Community Bank of Smith
County charter provides that
to the extent permitted by
the Tennessee Business
Corporation Act, the company
may indemnify every officer,
director or employee, his
heirs, executors and
administrators, against
judgments resulting from the
expenses reasonably incurred
by him in connection with any
action to which he may be
made a party by reason of his
being an officer, director or
employee of the company,
including any action based
upon any alleged act or
omission on his part as an
officer, director or employee
of the company, except in
relation to matters as to
which he shall be finally
adjudged in such action to be
liable for negligence or
misconduct. In the event of
a settlement, indemnification
shall be provided only in
connection with such matters
covered by the settlements as
to which Community Bank of
Smith County is advised by
counsel that in the opinion
of counsel the person to be
indemnified was not liable
for such negligence or
misconduct.
Under the Wilson Bank
Holding Company bylaws,
the shareholders may
remove one or more
directors with or without
cause. If a director is
elected by a voting group
of shareholders, only the
shareholders of that
voting group may
participate in the vote to
remove him without cause.
If cumulative voting is
not authorized, a director
may be removed only if the
number of votes cast to
remove him exceeds the
number of votes cast not
to remove him. The Wilson
Bank Holding Company
bylaws provides that if so
provided in the Wilson
Bank Holding Company
charter, any of the
directors may be removed
for cause by the
affirmative vote of a
majority of the entire
Board of Directors;
however, such a method of
removal is not provided
for in the Wilson Bank
Holding Company charter.
A director may be removed
by the shareholders or
directors only at a
meeting called for the
purpose of removing him,
and the meeting notice
must state the purpose, or
one of the purposes, of
the meeting is the removal
of directors. Directors
may be removed without
cause only by vote of a
majority of the
shareholders entitled to
vote at a regular or
Under the Community Bank of Smith County bylaws, a director may be removed with or without cause if the
number of votes cast not to remove such director exceeds the number of votes cast to remove such director. The
shareholders may remove the entire board of directors if a majority of the outstanding shares approve a motion for removal of all directors.
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Wilson Bank Holding Company
Community Bank of Smith County
Shareholder Rights
Shareholder Rights
special meeting.
The Wilson Bank Holding
Company charter provides
that any vacancy on the
Board of Directors,
including a vacancy that
results from an increase
in the number of directors
or a vacancy that results
from the removal of a
director with cause, may
be filled only by the
Board of Directors. Any
director elected to fill a
vacancy shall hold office
until the next annual
meeting following his or
her election to the Board
of Directors at which time
such person will be
subject to election and
classification. Under the
Wilson Bank Holding
Company bylaws, if the
directors remaining in
office constitute fewer
than a quorum of the Board
of Directors, they may
fill such vacancies by the
affirmative vote of a
majority of all the
directors remaining in
office.
Under the Community Bank of
Smith County bylaws, if any
vacancies on the Community
Bank of Smith County board
occur at any one time so that
one-third (1/3) or less of
the Board of Directors
remains in office, the Board
of Directors may fill such
vacancies until the next
meeting of shareholders.
Vacancies resulting from an
increase in the number of
directors or resulting from
the removal of a director
with or without cause shall
constitute a vacancy for
purposes of calculating the
number of vacancies. If the
directors remaining in office
constitute fewer than a
quorum of the Board of
Directors, they may fill such
vacancies by the affirmative
vote of a majority of all the
directors remaining in
office. If the vacant
offices were held by a
director elected by a voting
group of shareholders, only
the holders of shares of that
voting group shall be
entitled to vote to fill such
vacancies if they are filled
by the shareholders.
Written Consent:
The Wilson Bank Holding
Company bylaws provide
that action required or
permitted to be taken at a
meeting of the
shareholders may be taken
without a meeting if all
shareholders entitled to
vote on the action consent
to taking such action
without a meeting. The
affirmative vote of the
number of shares that
would be necessary to
authorize or take such
action at a meeting is the
act of the shareholders.
The action must be
evidenced by one or more
written consents
describing the action
taken, at least one of
which is signed by each
shareholder entitled to
vote on the action in one
or more counterparts. The
Wilson Bank Holding
Company bylaws also
provide that any action
required or permitted to
be taken at a Board of
Directors meeting may be
taken without a meeting.
If all directors consent
to taking such action
without a meeting, the
affirmative vote of the
number of directors that
would be necessary to
authorize or take such
action at a meeting is the
act of the Board of
Directors. Such action
must be evidenced by one
or more written consents
describing the action
taken, at least one of
which is signed by each
director.
The Community Bank of Smith
County bylaws provide that
action required or permitted
to be taken at a meeting of
the shareholders may be taken
without a meeting if all
shareholders entitled to vote
on the action consent to
taking such action without a
meeting. The affirmative
vote of the number of shares
that would be necessary to
authorize or take such action
at a meeting is the act of
the shareholders. The action
must be evidenced by one or
more written consents
describing the action taken,
at least one of which is
signed by each shareholder
entitled to vote on the
action in one or more
counterparts. Under the
Community Bank of Smith
County charter, the directors
may take any action which
they are required or
permitted to take without a
meeting on written consent,
setting forth the actions so
taken, signed by all of the
directors entitled to vote
thereon.
The Wilson Bank Holding
Company charter provides
that the affirmative vote
of holders of two-thirds
of the voting power of the
shares entitled to vote at
an election of directors
shall be required to
amend, alter, change or
repeal, or to adopt any
provision as part of the
charter
The Community Bank of Smith County charter does not
contain a provision with respect to amendment of the charter and, as such, the
Tennessee Business Corporation Act controls how amendments to the charter may
Table of Contents
Wilson Bank Holding Company
Community Bank of Smith County
Shareholder Rights
Shareholder Rights
or as part of
Wilson Bank Holding
Companys bylaws
inconsistent with the
purpose and intent of
Article 8 of the charter.
Otherwise, Wilson Bank
Holding Companys charter
does not contain a
provision with respect to
the amendment of the
charter and, as such, the
Tennessee Business
Corporation Act controls
how amendments to the
charter may be
accomplished.
be accomplished.
Pursuant to the terms of
Wilson Bank Holding
Companys bylaws, the
bylaws may be altered,
amended, repealed or
restated, and new bylaws
may be adopted, at any
meeting of the
shareholders by the
affirmative vote of a
majority of the stock
represented at such
meeting, or by the
affirmative vote of a
majority of the members of
the Board of Directors who
are present at any regular
or special meeting. The
Wilson Bank Holding
Company charter provides
that the affirmative vote
of holders of two-thirds
of the voting power of the
shares entitled to vote at
an election of directors
shall be required to adopt
any provision as part of
the bylaws inconsistent
with the purpose and
intent of Article 8 of the
charter.
The Community Bank of Smith
County charter provides that
the Community Bank of Smith
County board shall have the
power by majority vote of the
directors present at any
regular or special meeting to
adopt or amend any provision
of the Community Bank of
Smith County bylaws, other
than those relating to the
duties, term of office or any
indemnification of a
director. Under the
Community Bank of Smith
County bylaws, the bylaws may
be altered, amended, repealed
or restated, and new bylaws
adopted, at any meeting of
the shareholders by the
affirmative vote of a
majority of the stock
represented at the meeting,
or by the affirmative vote of
a majority of the members of
the Community Bank of Smith
County board who are present
at any regular or special
meeting, unless such changes
involve provisions relating
to the duties, term of office
or indemnification of a
director.
The Wilson Bank Holding
Company bylaws provide
that a special meeting of
the Wilson Bank Holding
Company shareholders shall
be held only on the call
of the Wilson Bank Holding
Company board or if the
holders of at least ten
percent (10%) of all the
votes entitled to be cast
on any issue proposed to
be considered at the
proposed special meeting
sign, date and deliver to
Wilson Bank Holding
Companys secretary one or
more written demands for
the meeting describing the
purpose ort purposes for
which such special meeting
is to be held. Only
business within the
purpose or purposes
described in the meeting
notice may be conducted at
a special shareholders
meeting.
The Community Bank of Smith
County bylaws provide that
special meetings may be
called at any time by the
Tennessee Commissioner of
Financial Institutions,
one-third (1/3) of the Board
of Directors or if the
holders of at least twenty
percent (20%) of all the
votes entitled to be cast on
any issue proposed to be
considered at the proposed
special meeting sign, date
and deliver to Community Bank
of Smith Countys secretary
one or more written demands
for the meeting describing
the purpose or purposes for
which such special meeting is
to be held. Only business
within the purpose or
purposes described in the
meeting notice may be
conducted at a special
shareholders meeting.
The Wilson Bank Holding
Company bylaws do not
contain a provision with
respect to inspection of
corporate records, other
than the right of the
shareholders to inspect
the shareholders list.
The Community Bank of Smith
County bylaws do not contain
a provision with respect to
inspection of corporate
records, other than the right
of the shareholders to
inspect the shareholders
list.
Table of Contents
Wilson Bank Holding Company
Community Bank of Smith County
Shareholder Rights
Shareholder Rights
Under the Wilson Bank
Holding Company bylaws,
the board is authorized to
declare and pay dividends
on the companys
outstanding shares to the
extent allowed by law.
The Community Bank of Smith
County charter provides that
Community Bank of Smith
County has the right to
declare dividends not more
than one in each calendar
quarter from undivided
profits.
Shareholders of Wilson
Bank Holding Company are
entitled to dissenters
rights.
Same as Wilson Bank Holding
Company
Tennessee law does not
provide for preemptive
rights, except for those
cases in which a
corporations charter
specifically so provides.
Wilson Bank Holding
Companys charter does not
expressly provide for
preemptive rights.
Same as Wilson Bank Holding
Company
The Tennessee Business
Combination Act provides
that a party owning shares
equal to 10% or more of
the voting power of any
class or series of the
then outstanding voting
stock of a resident
domestic corporation is
an interested
shareholder. An
interested shareholder
also includes a party that
is an affiliate or
associate, as defined in
the Tennessee Business
Combination Act, of a
resident domestic
corporation. Wilson Bank
Holding Company is
currently a resident
domestic corporation
within the meaning of this
act. An interested
shareholder cannot engage
in a business combination
with the resident domestic
corporation unless the
combination:
Same as Wilson Bank Holding
Company
takes place at
least five years after the
interested shareholder
first acquired 10% or more
of the voting power of any
class or series of the
then outstanding voting
stock of the resident
domestic corporation; and
either is approved
by at least two-thirds of
the non-interested voting
shares of the resident
domestic corporation or
satisfies fairness
conditions specified in
the Tennessee Business
Combination Act.
These provisions apply
unless one of the
following exemptions are
available:
a business
combination with an entity
can proceed without delay
when approved by the
target corporations board
of directors before that
entity becomes an
interested shareholder;
a business
combination is exempt, if
in its original charter or
original bylaws, the
resident domestic
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Wilson Bank Holding Company
Community Bank of Smith County
Shareholder Rights
Shareholder Rights
corporation elects not to
be governed by the
Tennessee Business
Combination Act;
unless the
charter of the resident
domestic corporation
provides otherwise, the
Tennessee Business
Combination Act does not
apply to a business
combination of a resident
domestic corporation with,
or proposed by or on
behalf of, an interested
shareholder if the
resident domestic
corporation did not have,
on such interested
shareholders share
acquisition date, a class
of voting stock registered
or traded on a national
securities exchange or
registered with the
securities and exchange
commission pursuant to
Section 12(g) of the
Exchange Act; or
the resident
corporation may enact a
charter amendment or bylaw
to remove itself entirely
from the Tennessee
Business Combination Act
that must be approved by a
majority of the
shareholders who have held
shares for more than one
year before the vote and
which cannot become
operative until two years
after the vote.
Wilson Bank Holding
Company has not adopted a
charter amendment or bylaw
to remove it from the
Tennessee Business
Combination Act.
Act:
The Tennessee Greenmail
Act prohibits Wilson Bank
Holding Company from
purchasing or agreeing to
purchase any of its
securities, at a price
higher than fair market
value, from a holder of 3%
or more of any class of
its securities who has
beneficially owned the
securities for less than
two years. Wilson Bank
Holding Company can,
however, make this
purchase if the majority
of the outstanding shares
of each class of voting
stock issued by it
approves the purchase or
if it makes an offer of at
least equal value per
share to all holders of
shares of the same class
of securities as those
held by the prospective
seller.
The Tennessee Greenmail Act
does not apply to Community
Bank of Smith County, as it
is only applicable to
companies that have a class
of voting stock registered
with the SEC pursuant to
Section 12(g) of the
Securities Exchange.
Share Acquisition
Act:
The Tennessee Control
Share Acquisition Act
strips a purchasers
shares of voting rights
any time an acquisition of
shares in a Tennessee
corporation which has
elected to be covered by
the Tennessee Control
Share Acquisition Act
(which Wilson Bank Holding
Company at
Same as Wilson Bank Holding Company
Table of Contents
Wilson Bank Holding Company
Community Bank of Smith County
Shareholder Rights
Shareholder Rights
this time has
not) brings the
purchasers voting power
to one-fifth, one-third or
a majority of all voting
power. The purchasers
voting rights can be
restored only by a
majority vote of the other
shareholders. The
purchaser may demand a
meeting of shareholders to
conduct such a vote. The
purchaser can demand a
meeting for this purpose
before acquiring shares in
excess of the thresholds
described above, which we
refer to as a control
share acquisition, only if
it holds at least 10% of
the outstanding shares and
announces a good faith
intention to make the
acquisition of shares
having voting power in
excess of the thresholds
stated above. If a target
corporation so elects
prior to the date on which
a purchaser makes a
control share acquisition,
a target corporation may
redeem the purchasers
shares if the shares are
not granted voting rights.
Protection Act:
Tennessees Investor
Protection Act applies to
tender offers directed at
corporations (called
offeree companies) that
have substantial assets
in Tennessee that are
either incorporated in or
have a principal office in
Tennessee. The Investor
Protection Act requires an
offeror making a tender
offer for an offeree
company to file with the
Commission of Commerce and
Insurance a registration
statement. When the
offeror intends to gain
control of the offeree
company, the registration
statement must indicate
any plans the offeror has
for the offeree company.
The commissioner may
require additional
information material to
the takeover offer and may
call for hearings. The
Investor Protection Act
does not apply to an offer
that the offeree companys
board of directors
recommends to
shareholders.
In addition to requiring
the offeror to file a
registration statement
with the commissioner, the
Investor Protection Act
requires the offeror and
the offeree company to
deliver to the
commissioner all
solicitation materials
used in connection with
the tender offer. The
Investor Protection Act
prohibits fraudulent,
deceptive, or manipulative
acts or practices by
either side, and gives the
commissioner standing to
apply for equitable relief
to the Chancery Court of
Davidson County,
Tennessee, or to any other
chancery court having
jurisdiction whenever it
appears to the
commissioner that the
offeror, the offeree
company, or any of its
respective affiliates has
engaged in or is about to
engage in a violation of
the Investor Protection
Act. Upon proper showing,
the Chancery Court may
grant injunctive relief.
The Investor Protection
Act
Same as Wilson Bank Holding
Company
Table of Contents
Wilson Bank Holding Company
Community Bank of Smith County
Shareholder Rights
Shareholder Rights
further provides civil
and criminal penalties for
violations.
AND SHAREHOLDER PROPOSALS
Annual Report on Form 10-K for the fiscal year ended December 31, 2003;
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004, June 30, 2004
and September 30, 2004;
Table of Contents
Current Reports on Form 8-K filed on September 14, 2004 and November 22, 2004; and
Proxy Statement on Schedule 14A filed on March 15, 2004.
Table of Contents
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Table of Contents
CHARTER, BYLAWS, AND OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
Table of Contents
CONVERSION OF CBSC STOCK
Table of Contents
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REPRESENTATIONS AND WARRANTIES BY CBSC
Table of Contents
Table of Contents
Table of Contents
COVENANTS AND AGREEMENTS OF CBSC
Table of Contents
Table of Contents
COVENANTS AND AGREEMENTS OF PARENT AND THE BANK
CONDITIONS TO PARENTS AND THE BANKS OBLIGATIONS
Table of Contents
CONDITIONS TO THE CBSCS OBLIGATIONS
TERMINATION OF AGREEMENT
Table of Contents
MISCELLANEOUS
Table of Contents
P. O. Box 100
Carthage, Tennessee 37030
623 West Main Street
Lebanon, Tennessee 37087
315 Deaderick Street, Suite 2700
Nashville, Tennessee 37238
Attn: Bob F. Thompson
Table of Contents
Table of Contents
PARENT:
WILSON BANK HOLDING COMPANY
By:
/s/ J. Randall Clemons
Title:
Chief Executive Officer
THE BANK:
WILSON BANK AND TRUST
By:
/s/ J. Randall Clemons
Title:
Chief Executive Officer
CBSC:
COMMUNITY BANK OF SMITH COUNTY
By:
/s/ Joe Vance
Title:
President
Table of Contents
Table of Contents
WILSON BANK AND TRUST
a Tennessee corporation
By:
Name:
Title:
COMMUNITY BANK OF SMITH COUNTY
a Tennessee corporation
By:
Name:
Title:
Table of Contents
Table of Contents
DISSENTERS RIGHTS
Part 1 Right to Dissent and Obtain Payment for Shares
Chapter definitions.
Right to dissent.
Dissent by nominees and beneficial owners.
Part 2 Procedure for
Exercise of Dissenters Rights
Notice of dissenters rights.
Notice of intent to demand payment.
Dissenters notice.
Duty to demand payment.
Share restrictions.
Payment.
Failure to take action.
After-acquired shares.
Procedure if shareholder dissatisfied with payment or offer.
Part 3 Judicial Appraisal of Shares
Court action.
Court costs and counsel fees.
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Community Bank of Smith County
1300 Main Street North
Carthage, Tennessee 37030
Table of Contents
Community Bank of Smith County
January 25, 2005
Page 2
December 31, 2004, draft financial statements of the Bank.
Consolidated Report of Condition and Income (CALL REPORT) dated
December 31, 2002 and 2003, March 31, 2004, June 30, 2004 and
September 30, 2004 filed by the Bank.
Uniform Bank Performance Report as of September 30, 2004 for the Bank.
The Banks 2004 operating budget and various internal asset quality
reports, board reports, internal audit reports and other loan,
deposit and interest rate risk reports.
All Forms 10-Q, 10-K and 8-K for 2002, 2003 and year to date 2004
filed by Wilson with the Securities and Exchange Commission.
Year-end 2002 and 2003 audited annual reports for Wilson.
Table of Contents
Community Bank of Smith County
January 25, 2005
Page 3
March 15, 2004, form DEF 14A Proxy Statement of Wilson.
Independent audit, firm management letters and management responses thereto for the last 2 years.
September 30, 2004, Federal Reserve FY- 9 Consolidated Report of Condition and Income for Wilson.
September 30, 2004 Uniform Holding Company Performance Report for Wilson.
Most recent consolidated month-end delinquency and non-accrual reports for each affiliate bank.
Most recent consolidated analysis of the allowance for loan and lease losses for each affiliate bank.
Most recent consolidated internal loan quality reports and consolidated problem loan listing with classification for
each affiliate bank.
Copies of Wilsons loan policies and procedures manual.
Various other asset/liability, interest rate risk, capital plans, internal audit reports and board reports for Wilson
and each affiliate bank.
2004 and 2005 budgets of each affiliate bank.
Table of Contents
Community Bank of Smith County
January 25, 2005
Page 4
Very truly yours,
/s/ Professional Bank Services, Inc.
Table of Contents
Table of Contents
Exhibit No.
Description of Exhibit
Agreement and Plan of Merger dated November 16, 2004, among Wilson Bank
Holding Company, Wilson Bank and Trust and Community Bank of Smith County.
(Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to this
agreement are omitted, but will be provided supplementally to the Securities
and Exchange Commission upon request.)
Charter of Wilson Bank Holding Company, as amended (restated for SEC
electronic filing purposes only) (incorporated herein by reference to Wilson
Bank Holding Companys Registration Statement on Form S-4 (Registration No.
333-121943)).
Bylaws of Wilson Bank Holding Company, as amended (restated for SEC
electronic filing purposes only) (incorporated herein by reference to Wilson
Bank Holding Companys Registration Statement on Form S-4 (Registration No.
333-121943)).
Specimen Common Stock Certificate
(incorporated herein by reference to Wilson Bank Holding
Companys Registration Statement on Form S-4 (Registration No.
333-121943)).
Opinion of Bass, Berry & Sims PLC.
Wilson Bank Holding Company 1999 Stock Option Plan (incorporated herein by
reference to the Wilson Bank Holding Companys Registration Statement on Form
S-8 (Registration No. 333-32442).
Executive Salary Continuation Agreement by and between Wilson Bank Holding
Company and J. Randall Clemons dated as of March 30, 1995 (incorporated
herein by reference to the Wilson Bank Holding Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2000).
Executive Salary Continuation Agreement by and between Wilson Bank Holding
Company and Elmer Richerson dated as of March 30, 1995 (incorporated herein
by reference to the Wilson Bank Holding Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2000).
Executive Salary Continuation Agreement by and between Wilson Bank Holding
Company and Gary D. Whitaker dated as of March 1, 1998 (incorporated herein
by reference to the Wilson Bank Holding Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2000).
Executive Salary Continuation Agreement by and between Wilson Bank Holding
Company and Larry Squires dated September 16, 1996 (incorporated herein by
reference to the Wilson Bank Holding Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2001).
Amendment to the Wilson Bank and Trust Executive Salary Continuation
Agreement dated as of January 1, 2001 by and between Wilson Bank and Trust
and Larry Squires (incorporated herein by reference to the Wilson Bank
Holding Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2001).
Subsidiaries of Wilson Bank Holding Company (incorporated herein by reference
to the Wilson Bank Holding Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2003).
Table of Contents
Exhibit No.
Description of Exhibit
Consent of Maggart & Associates, P.C.
Consent of Bass, Berry & Sims PLC (included in Exhibit 5.1).
Power of Attorney (included on signature page of this Registration Statement).
Form of Community Bank of Smith County Proxy Card.
Consent of Professional Bank Services, Inc.
Table of Contents
Table of Contents
WILSON BANK HOLDING COMPANY
By:
/s/ J. Randall Clemons
J. Randall Clemons
President and Chief Executive Officer
Signature
Title
Date
/s/ J. Randall Clemons
J. Randall Clemons
President, Chief Executive
Officer and Director
(Principal Executive Officer)
February 4, 2005
/s/ Lisa Pominski
Lisa Pominski
Chief Financial Officer
(Principal Financial and
Accounting Officer)
February 4, 2005
/s/ Elmer Richerson
Elmer Richerson
Executive Vice President &
Director
February 4, 2005
/s/ Charles Bell
Charles Bell
Director
February 4, 2005
/s/ Jack W. Bell
Jack W. Bell
Director
February 4, 2005
/s/ Mackey Bentley
Mackey Bentley
Director
February 4, 2005
/s/ James F. Comer
James F. Comer
Director
February 4, 2005
Table of Contents
Signature
Title
Date
/s/ Jerry L. Franklin
Jerry L. Franklin
Director
February 4, 2005
/s/ John B. Freeman
John B. Freeman
Director
February 4, 2005
/s/ Marshall Griffith
Marshall Griffith
Director
February 4, 2005
/s/ Harold R. Patton
Harold R. Patton
Director
February 4, 2005
/s/ James Anthony Patton
James Anthony Patton
Director
February 4, 2005
/s/ John R. Trice
John R. Trice
Director
February 4, 2005
/s/ Robert T. VanHooser, Jr.
Robert T. VanHooser, Jr.
Director
February 4, 2005
Table of Contents
Exhibit No.
Description of Exhibit
Agreement and Plan of Merger dated November 16, 2004, among Wilson Bank
Holding Company, Wilson Bank and Trust and Community Bank of Smith County.
(Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to this
agreement are omitted, but will be provided supplementally to the Securities
and Exchange Commission upon request.)
Charter of Wilson Bank Holding Company, as amended (restated for SEC
electronic filing purposes only) (incorporated herein by reference to Wilson
Bank Holding Companys Registration Statement on Form S-4 (Registration No.
333-121943)).
Bylaws of Wilson Bank Holding Company, as amended (restated for SEC
electronic filing purposes only) (incorporated herein by reference to Wilson
Bank Holding Companys Registration Statement on Form S-4 (Registration No.
333-121943)).
Specimen Common Stock Certificate (incorporated herein by reference to Wilson Bank Holding
Companys Registration Statement on Form S-4 (Registration No.
333-121943)).
Opinion of Bass, Berry & Sims PLC.
Wilson Bank Holding Company 1999 Stock Option Plan (incorporated herein by
reference to the Wilson Bank Holding Companys Registration Statement on Form
S-8 (Registration No. 333-32442).
Executive Salary Continuation Agreement by and between Wilson Bank Holding
Company and J. Randall Clemons dated as of March 30, 1995 (incorporated
herein by reference to the Wilson Bank Holding Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2000).
Executive Salary Continuation Agreement by and between Wilson Bank Holding
Company and Elmer Richerson dated as of March 30, 1995 (incorporated herein
by reference to the Wilson Bank Holding Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2000).
Executive Salary Continuation Agreement by and between Wilson Bank Holding
Company and Gary D. Whitaker dated as of March 1, 1998 (incorporated herein
by reference to the Wilson Bank Holding Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2000).
Executive Salary Continuation Agreement by and between Wilson Bank Holding
Company and Larry Squires dated September 16, 1996 (incorporated herein by
reference to the Wilson Bank Holding Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2001).
Amendment to the Wilson Bank and Trust Executive Salary Continuation
Agreement dated as of January 1, 2001 by and between Wilson Bank and Trust
and Larry Squires (incorporated herein by reference to the Wilson Bank
Holding Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2001).
Subsidiaries of Wilson Bank Holding Company (incorporated herein by reference
to the Wilson Bank Holding Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2003).
Consent of Maggart & Associates, P.C.
Consent of Bass, Berry & Sims PLC (included in Exhibit 5.1).
Table of Contents
Exhibit No.
Description of Exhibit
Power of Attorney (included on signature page of this Registration Statement).
Form of Community Bank of Smith County Proxy Card.
Consent of Professional Bank Services, Inc.
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 16, 2004
BY AND AMONG
WILSON BANK HOLDING COMPANY,
WILSON BANK AND TRUST
AND
COMMUNITY BANK OF SMITH COUNTY
TABLE OF CONTENTS
ARTICLE 1 THE MERGER........................................................................... 1 1.1 The Merger.............................................................................. 1 1.2 The Closing............................................................................. 1 1.3 Effective Time.......................................................................... 1 ARTICLE 2 CHARTER, BYLAWS, AND OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION............. 2 2.1 Charter and Bylaws...................................................................... 2 2.2 Directors and Executive Officers of the Surviving Corporation........................... 2 2.3 CBSC Board and Branches................................................................. 2 ARTICLE 3 CONVERSION OF CBSC STOCK............................................................. 2 3.1 Conversion of CBSC Common Stock in the Merger........................................... 2 3.2 Surrender and Exchange of Shares........................................................ 2 3.3 Dividends; Transfer Taxes; Withholdings; Escheat........................................ 3 3.4 No Fractional Securities................................................................ 4 3.5 No Further Rights; Closing of CBSC Transfer Books....................................... 4 3.6 Dissenting Shares....................................................................... 4 ARTICLE 4 REPRESENTATIONS AND WARRANTIES BY CBSC............................................... 5 4.1 Organization, Good Standing and Qualification........................................... 5 4.2 Authorization........................................................................... 5 4.3 Valid and Binding Agreement............................................................. 5 4.4 No Violation............................................................................ 5 4.5 Capitalization.......................................................................... 5 4.6 Title to Properties; Encumbrances....................................................... 5 4.7 No Undisclosed Liability................................................................ 5 4.8 Compliance with Applicable Law.......................................................... 6 4.9 Litigation.............................................................................. 6 4.10 Contracts and Commitments.............................................................. 6 4.11 Brokerage Fees......................................................................... 6 4.12 Corporate Records...................................................................... 6 4.13 Full Disclosure........................................................................ 7 ARTICLE 5 REPRESENTATIONS AND WARRANTIES BY PARENT AND THE BANK................................ 7 5.1 Organization and Good Standing.......................................................... 7 5.2 Authorization........................................................................... 7 5.3 Valid and Binding Agreement............................................................. 7 5.4 No Violation............................................................................ 7 5.5 Brokerage Fees.......................................................................... 7 5.6 Parent Common Stock..................................................................... 7 5.7 Capitalization.......................................................................... 8 5.8 Financial Reports and Securities Documents.............................................. 8 5.9 Full Disclosure......................................................................... 8 |
ARTICLE 6 COVENANTS AND AGREEMENTS OF CBSC..................................................... 9 6.1 Conduct of Business Pending the Closing................................................. 9 6.2 Access; Further Assurances.............................................................. 10 6.3 Schedules............................................................................... 10 6.4 Regulatory Filings...................................................................... 10 6.5 Consents and Approvals.................................................................. 11 ARTICLE 7 COVENANTS AND AGREEMENTS OF PARENT AND THE BANK...................................... 11 7.1 Further Assurances...................................................................... 11 ARTICLE 8 CONDITIONS TO PARENT'S AND THE BANK'S OBLIGATIONS.................................... 11 8.1 Representations and Warranties.......................................................... 11 8.2 Performance by the CBSC................................................................. 11 8.3 Officer's Certificate................................................................... 11 8.4 Shareholder Approval.................................................................... 11 8.5 Regulatory Approvals.................................................................... 11 8.6 No Injunction........................................................................... 12 8.7 Consents and Approvals.................................................................. 12 8.8 Litigation.............................................................................. 12 8.9 No Material Adverse Change; Due Diligence Review........................................ 12 8.10 Fairness Opinion....................................................................... 12 ARTICLE 9 CONDITIONS TO THE CBSC'S OBLIGATIONS................................................. 12 9.1 Representations and Warranties.......................................................... 12 9.2 Performance............................................................................. 12 9.3 Officer's Certificate................................................................... 12 9.4 No Injunction........................................................................... 13 9.5 Adjustments to Book Value............................................................... 13 9.6 Fairness Opinion........................................................................ 13 ARTICLE 10 TERMINATION OF AGREEMENT............................................................ 13 ARTICLE 11 MISCELLANEOUS....................................................................... 14 11.1 Survival............................................................................... 14 11.2 Expenses............................................................................... 14 11.3 Assignability; Parties in Interest..................................................... 14 11.4 Entire Agreement; Amendments........................................................... 14 11.5 Headings............................................................................... 15 11.6 Severability........................................................................... 15 11.7 Notices................................................................................ 15 11.8 Governing Law.......................................................................... 15 11.9 Counterparts........................................................................... 15 EXHIBIT A |
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") made this 16th day of November, 2004 by and among WILSON BANK HOLDING COMPANY, a Tennessee corporation ("Parent"), WILSON BANK AND TRUST, a state chartered bank incorporated under the laws of the State of Tennessee (the "Bank"), and COMMUNITY BANK OF SMITH COUNTY, a state chartered bank incorporated under the laws of the State of Tennessee ("CBSC").
WHEREAS, the Boards of Directors of Parent, the Bank and CBSC each have determined that a business combination between Parent, the Bank, and CBSC is in the best interests of their respective companies and shareholders and presents an opportunity for their respective companies to achieve long-term strategic and financial benefits, and accordingly have agreed to effect the merger provided for herein upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and of the representations, warranties, covenants, and agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, at the Effective Time, CBSC shall be merged with and into the Bank in accordance with the applicable provisions of the Tennessee Business Corporation Act (the "TBCA") (the "Merger"), the separate corporate existence of CBSC shall cease and the Bank shall survive and continue to exist as a corporation incorporated under the TBCA and as a wholly owned subsidiary of Parent (the Bank, as the surviving corporation in the Merger, sometimes being referred to herein as the "Surviving Corporation"). The Merger shall be consummated pursuant to the terms of this Agreement, which has been approved and adopted by the respective Boards of Directors of Parent, the Bank and CBSC.
1.2 THE CLOSING. Subject to the terms and conditions of this Agreement, the closing of the Merger (the "Closing") shall take place at the offices Bass, Berry & Sims PLC, 315 Deaderick Street, Suite 2700, Nashville, TN 37238, at 10:00 a.m., local time, on March 31, 2005 or, if later, the first business day immediately following the day on which the last to be fulfilled or waived of the conditions set forth in Articles 8 and 9 shall be fulfilled or waived in accordance herewith or at such other time, date, or place as Parent and CBSC may agree. The date on which the Closing occurs is hereinafter referred to as the "Closing Date."
1.3 EFFECTIVE TIME. If all the conditions to the Merger set forth in Articles 8 and 9 shall have been fulfilled or waived in accordance herewith and this Agreement shall not have been terminated as provided in Article 10, the parties hereto shall cause Articles of Merger, in substantially the form attached hereto as Exhibit A, to be properly executed and filed in accordance with the applicable provisions of the TBCA on the Closing Date. The Merger shall become effective upon the filing of the Articles of Merger with the Secretary of State of the State of Tennessee, or at such later time that the parties hereto shall have agreed upon and designated in such filings as the effective time of the Merger (the "Effective Time").
ARTICLE 2
CHARTER, BYLAWS, AND OFFICERS AND DIRECTORS OF THE SURVIVING
CORPORATION
2.1 CHARTER AND BYLAWS. The Charter and Bylaws of the Surviving Corporation immediately after the Merger shall be the Charter and Bylaws of the Bank in effect immediately prior to the Merger.
2.2 DIRECTORS AND EXECUTIVE OFFICERS OF THE SURVIVING CORPORATION. The directors and executive officers of the Surviving Corporation immediately after the Merger shall be the directors and executive officers of the Bank immediately prior to the Merger, each of whom shall serve until such time as their successors shall be duly elected and qualified.
2.3 CBSC BOARD AND BRANCHES. After the Merger, the directors of CBSC shall become members of the CBSC Community Board, shall meet monthly to provide advice regarding CBSC operations to the Board of Directors of the Bank and shall be compensated therefore in the same amount as previously compensated as directors of CBSC. The branches of CBSC after the Merger shall operate as "Community Bank of Smith County", an office of Wilson Bank and Trust."
ARTICLE 3
CONVERSION OF CBSC STOCK
3.1 CONVERSION OF CBSC COMMON STOCK IN THE MERGER. At the Effective Time, by virtue of the Merger and without any action on the part of any holder of any capital stock of CBSC, each issued and outstanding share of common stock of CBSC ("CBSC Common Stock") shall be converted into and become a number of shares of Parent common stock ("Parent Common Stock"), equal to the quotient of the (i) book value per share of the CBSC Common Stock at December 31, 2004 divided by (ii) the book value per share of the Parent Common Stock, at December 31, 2004, as such book values may be adjusted by Professional Bank Services, Inc. ("PBS") (the "Merger Consideration"). No fractional shares shall be issued and in lieu thereof, a cash payment shall be made pursuant to Section 3.4 hereof.
3.2 SURRENDER AND EXCHANGE OF SHARES.
(a) The Bank shall act as Exchange Agent hereunder (the "Exchange Agent"). Prior to Effective Time, Parent shall deposit with or for the account of the Exchange Agent stock certificates representing the number of shares of Parent Common Stock issuable pursuant to Section 3.1 in exchange for outstanding shares of CBSC Common Stock, which shares of Parent Common Stock shall be deemed to have been issued at the Effective Time and which certificates shall be returned to Parent if such Effective Time does not occur.
(b) As soon as practicable after the Effective Time (but not later than the first business day after the Effective Time), Parent shall cause the Exchange Agent to mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding shares of CBSC Common Stock (the "Certificates") that were converted pursuant to Section 3.1 into the right to receive shares of Parent Common Stock (i) a form of letter of transmittal specifying 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 (ii) instructions for use in surrendering such Certificates in exchange for certificates representing shares of Parent Common Stock and any cash in lieu of fractional shares of Parent Common Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such letter of transmittal, duly
executed, and such other documents as may be reasonably required by the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefor (x) a certificate representing that number of whole shares of Parent Common Stock which such holder has the right to receive pursuant to the provisions of this Article 3 and (y) cash in lieu of any fractional shares of Parent Common Stock to which such holder is entitled pursuant to Section 3.4, after giving effect to any required tax withholdings, and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of CBSC Common Stock which is not registered in the transfer records of the CBSC, a certificate representing the proper number of shares of Parent Common Stock may be issued to a transferee if the Certificate representing such CBSC Common Stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer, and by evidence that any applicable stock transfer taxes have been paid. Until surrendered as contemplated by this Section 3.2(b), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender a certificate representing shares of Parent Common Stock and cash in lieu of any fractional shares of Parent Common Stock as contemplated by this Article 3. In no event will the holder of any such surrendered Certificate be entitled to receive interest on any cash to be received in lieu of fractional shares.
(c) If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if reasonably required by Parent, the posting by such person of a bond, in such reasonable and customary amount as Parent may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue the corresponding Certificate representing Parent Common Stock to which the person is entitled to hereunder in exchange for such lost, stolen or destroyed Certificate.
3.3 DIVIDENDS; TRANSFER TAXES; WITHHOLDINGS; ESCHEAT. No dividends or distributions that are declared on shares of Parent Common Stock after the Effective Time will be paid to persons entitled to receive certificates representing shares of Parent Common Stock until such persons surrender their Certificates. Subject to applicable law, upon such surrender, there shall be paid, to the person in whose name the certificates representing such shares of Parent Common Stock shall be issued, any dividends or distributions with respect to such shares of Parent Common Stock which have a record date after the Effective Time and shall have become payable between the Effective Time and the time of such surrender. In no event shall the person entitled to receive such dividends or distributions be entitled to receive interest thereon. As soon as practicable following the date which is six months after the Effective Time, the Exchange Agent shall deliver to the Surviving Corporation all cash, certificates and other documents in its possession relating to the transactions described in this Agreement, and any holders of CBSC Common Stock who have not theretofore complied with this Article 3 shall look thereafter only to the Surviving Corporation for the shares of Parent Common Stock, any dividends or distributions thereon, and any cash in lieu of fractional shares thereof to which they are entitled pursuant to this Article 3. Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto shall be liable to a holder of CBSC Common Stock for any shares of Parent Common Stock, any dividends or distributions thereon or any cash in lieu of fractional shares thereof delivered to a public official pursuant to applicable abandoned property, escheat or similar laws upon the lapse of the applicable time periods provided for therein. Parent or the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of a Certificate such amounts as Parent or the Exchange Agent are required to deduct and withhold under the Code or any provision of state, local or foreign tax law with respect to the making of such payment. To the extent that amounts are so withheld by Parent or the Exchange Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Certificate in respect of whom such deduction and withholding were made by Parent or the Exchange Agent.
3.4 NO FRACTIONAL SECURITIES. No certificates or scrip representing less than one whole share of Parent Common Stock shall be issued pursuant to this Agreement. In lieu of any such fractional share, each holder of record of CBSC Common Stock who would otherwise have been entitled to such fractional shares of Parent Common Stock shall be paid cash (without interest) in an amount equal to the fractional share amount to which such holder would be otherwise entitled multiplied by the closing sale price of Parent's Common Stock on the date closest to, but not after, the Closing Date. As soon as practicable after the determination of the amount of cash to be paid to the holders of CBSC Common Stock in lieu of any fractional share interests, the Exchange Agent shall make available in accordance with this Agreement such amounts to such holders. The fractional Parent Common Stock interests of each such holder will be aggregated, and no such holder will receive cash in an amount equal to or greater than the value of one whole share of Parent Common Stock.
3.5 NO FURTHER RIGHTS; CLOSING OF CBSC TRANSFER BOOKS. All shares of Parent Common Stock issued pursuant to this Article 3 shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to the corresponding shares of CBSC Common Stock, subject, however, to the Surviving Corporation's obligation to pay any dividends or make any other distributions with a record date prior to the Effective Time which may have been declared or made by CBSC on such shares of CBSC Common Stock in accordance with the terms of this Agreement or prior to the date of this Agreement and which remain unpaid at the Effective Time. At the Effective Time, the stock transfer books of CBSC shall be closed and no transfer of shares of CBSC Common Stock shall thereafter be made on such stock transfer books. If, after the Effective Time, Certificates are presented to the Surviving Corporation, they shall be canceled and exchanged as provided in this Article 3; provided, however, if any Certificate has not been surrendered prior to five years after the Effective Time (or immediately prior to such earlier date on which Parent Common Stock or any dividends or distributions with respect to Parent Common Stock as contemplated by Section 3.5 in respect of such Certificate would otherwise escheat to or become the property of any Government), any such shares, cash, dividends or distributions in respect of such Certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto.
3.6 DISSENTING SHARES. Each outstanding share of CBSC Common Stock the holder of which has perfected his right to dissent under the Tennessee Business Corporation Act (the "TBCA") and has not effectively withdrawn or lost such right as of the Effective Time (the "Dissenting Shares") shall not be converted into or represent a right to the Merger Consideration hereunder, and the holder thereof shall be entitled only to such rights as are granted by the TBCA. CBSC shall give Parent prompt notice upon receipt by CBSC of any such written demands for payment of the fair value of such shares of CBSC Common Stock and of withdrawals of such demands and any other instruments provided pursuant to the TBCA. If any holder of Dissenting Shares shall fail to perfect or shall have effectively withdrawn or lost the right to dissent at or prior to the Effective Time, the Dissenting Shares held by such holder shall be converted into a right to receive the Merger Consideration in accordance with the applicable provisions of this Agreement. If any holder of Dissenting Shares shall have effectively withdrawn or lost the right to dissent (through failure to perfect or otherwise) after the Effective Time, the Dissenting Shares held by such holder shall be converted on a share by share basis into the Merger Consideration in accordance with the applicable provisions of this Agreement as Parent or the Exchange Agent shall determine. Any payments made in respect of Dissenting Shares shall be made by the Surviving Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES BY CBSC
CBSC hereby represents and warrant as follows:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. CBSC is a state chartered bank duly organized, validly existing and in good standing under the laws of the State of Tennessee. CBSC has full corporate power and authority to carry on its business as now conducted and possesses all governmental and other permits, licenses and other authorizations to own, lease or operate its assets and properties as now owned, leased and operated and to carry on its business as presently conducted, except where failure to possess such permit, license or other authorization could not reasonably be expected to have a material adverse effect on the business, results of operations, prospects or financial condition ("Material Adverse Effect") of CBSC.
4.2 AUTHORIZATION. The Board of Directors of CBSC has taken all action required by law, its respective Charter, Bylaws and otherwise to authorize the execution and delivery by CBSC of this Agreement and the consummation by CBSC of the transactions contemplated hereby.
4.3 VALID AND BINDING AGREEMENT. This Agreement constitutes a valid and binding agreement of CBSC, enforceable against CBSC in accordance with its terms subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights and as to general equity principles.
4.4 NO VIOLATION. Except as set forth on Schedule 4.4, the execution and delivery of this Merger Agreement and any other documents contemplated hereby by CBSC do not, and the consummation of the transactions contemplated hereby will not, (a) violate any provision of, constitute a default under or otherwise give any person the right to terminate, or result in the creation of any lien or security interest under, any agreement, indenture, instrument, lease, security agreement, mortgage or lien to which CBSC is a party or by which any of CBSC's assets or properties are bound; (b) violate any provision of the Charter or Bylaws of CBSC; (c) violate any order, arbitration award, judgment, writ, injunction, decree, statute, rule or regulation applicable to CBSC; or (d) violate any other contractual or legal obligation or restriction to which CBSC is subject.
4.5 CAPITALIZATION. The authorized capital stock of CBSC consists solely of 1,000,000 shares of CBSC Common Stock of which 383,362 shares are issued and outstanding. All of the CBSC Shares are duly authorized, validly issued and outstanding and fully paid and nonassessable and free of preemptive rights. There are no outstanding options, warrants or rights to purchase or acquire from CBSC any securities of CBSC, and there are no contracts, commitments, agreements, understandings, arrangements or restrictions to which CBSC is a party or by which it is bound relating to any shares of capital stock or other securities of CBSC whether or not outstanding.
4.6 TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth on Schedule 4.6, CBSC has good, valid and marketable title to all properties and assets it purports to own, real, personal and mixed, tangible and intangible (except for accounts collected or disposed of since the date hereof in the ordinary course of business and consistent with past practice), subject to no mortgage, pledge, lien, security interest, conditional sale agreement, encumbrance or charge of any kind, except liens for current taxes not yet due.
4.7 NO UNDISCLOSED LIABILITY. Except as set forth on Schedule 4.7, CBSC does not have any liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise and whether due or to become due (including, without limitation, liabilities for Taxes (as defined herein)
and interest, penalties and other charges payable with respect thereto). The reserves reflected in CBSC's internally generated financial statements as of and for the month ended September 30, 2004 are adequate, appropriate and reasonable in accordance with accounting principles generally accepted in the United States ("GAAP") applied on a consistent basis.
4.8 COMPLIANCE WITH APPLICABLE LAW. CBSC has in the past duly complied and is presently duly complying, in the conduct of its business and the ownership of its assets with all applicable laws, whether statutory or otherwise, rules, regulations, orders, ordinances, judgments and decrees of all governmental authorities (federal, state, local or otherwise) (collectively, "Laws"). CBSC has not received any notice of, or notice of any investigation of, a possible violation of any applicable Laws, or any other Law or requirement relating to or affecting the operations or properties of CBSC.
4.9 LITIGATION. Except as set forth in Schedule 4.9, as of the date hereof, there are no claims, actions, suits, proceedings or investigations pending or, to the knowledge of CBSC, threatened by or against, or otherwise affecting CBSC at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, agency, instrumentality or authority, the result of which could reasonably be expected to have a Material Adverse Effect on CBSC.
4.10 CONTRACTS AND COMMITMENTS.
(a) Except as set forth in Schedule 4.10, CBSC has no contracts, commitments, arrangements or understandings which may involve the expenditure or receipt by CBSC after the Closing of more than $25,000 for any individual contract, commitment, arrangement or understanding or which was not entered into in the ordinary course of business ("Material Contracts"). Except for required consents per Schedule 4.4, the legal enforceability after the Closing of the rights of CBSC under any of its Material Contracts will not be affected in any manner by the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
(b) To the knowledge of CBSC, all of the Material Contracts to which CBSC is a party or by which it is bound are in full force and effect, are valid and enforceable in accordance with their terms, and no condition exists or event has occurred which, with notice or lapse of time or both, would constitute a default or a basis for force majeure or other claim of excusable delay or non-performance thereunder by CBSC, or to CBSC's knowledge, the other parties thereto.
4.11 BROKERAGE FEES. Except as set forth on Schedule 4.11, CBSC has not done anything to cause or incur any liability or obligation for investment banking, brokerage, finders or agent's fees, commissions, expenses or charges in connection with the negotiation, preparation, execution or performance of this Agreement or the consummation of the transactions contemplated hereby and CBSC does not know of any claim by anyone for such a commission or fee.
4.12 CORPORATE RECORDS. CBSC has delivered, provided to, or made available for inspection by, Parent for its review true complete and correct copies of the following items, as amended and presently in effect, for CBSC: (a) Charter, (b) Bylaws, (c) minute books, and (d) stock registration books The stock registration books are complete and accurate and contain a complete record of all transactions in CBSC's capital stock from the date of its incorporation to the date hereof.
4.13 FULL DISCLOSURE. Neither this Agreement, nor any Schedule, exhibit, list, certificate or other instrument and document furnished or to be furnished by CBSC to Parent or the Bank pursuant to this Agreement, contains any untrue statement of a material fact or omits to state any material fact required to be stated herein or therein or necessary to make the statements and information contained herein or therein not misleading. CBSC has not withheld from Parent disclosure of any event, condition or fact which CBSC knows is likely to have, in CBSC's reasonable judgment, a Material Adverse Effect on the assets, prospects or condition (financial or otherwise) of CBSC.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES BY PARENT AND THE BANK
Parent and the Bank hereby represent and warrant to CBSC as follows:
5.1 ORGANIZATION AND GOOD STANDING. Parent is a bank holding company duly organized, validly existing and in good standing under the laws of the State of Tennessee and has full corporate power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. The Bank is a state chartered bank incorporated under the laws of the State of Tennessee and has full corporate power and authority to enter into this Agreement and to carry out the transactions contemplated hereby.
5.2 AUTHORIZATION. The Boards of Directors of Parent and the Bank have taken all action required by law, their respective Charters, Bylaws and otherwise to authorize the execution and delivery by Parent and the Bank of this Agreement and the consummation by Parent of the transactions contemplated hereby.
5.3 VALID AND BINDING AGREEMENT. This Agreement constitutes a valid and binding agreement of Parent and the Bank, enforceable against Parent and the Bank in accordance with its terms subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights and as to general equity principles.
5.4 NO VIOLATION. The execution and delivery of this Agreement by Parent and the Bank does not, and the consummation of the transactions contemplated hereby will not, (a) violate any provision, or result in the creation of any lien or security interest under, any agreement, indenture, instrument, lease, security agreement, mortgage or lien to which Parent or the Bank is a party or by which either is bound; (b) violate any provision of Parent's or the Bank's Charter or Bylaws; (c) violate any order, arbitration award, judgment, writ, injunction, decree, statute, rule or regulation applicable to the Bank or Parent; or (d) violate any other contractual or legal obligation or restriction to which Parent or the Bank is subject.
5.5 BROKERAGE FEES. Except as set forth on Schedule 5.5 Neither Parent nor the Bank has done anything to cause or incur any liability for investment banking, brokerage, finders or agent's fees, commissions, expenses or charges in connection with the negotiation, preparation, execution and performance of this Agreement or the consummation of the transactions contemplated hereby, and neither Parent nor the Bank knows of any claim by anyone for such a commission or fee.
5.6 PARENT COMMON STOCK. Parent Common Stock when issued and delivered to the CBSC shareholders at Closing in accordance with the provisions of this Agreement will be (i) duly authorized, validly issued shares of Common Stock of Parent, fully paid and non-assessable, (ii) registered pursuant to an effective Registration Statement, (iii) registered or exempt from registration under applicable state securities or "Blue Sky" laws, and (iv) eligible for sale under Rule 145 of the
Securities Act, subject to the qualifications and limitations set forth in Rule 145 and the CBSC shareholders' compliance with the applicable provisions thereof or under the Registration Statement subject to the Securities and Exchange Commission's powers generally to issue a stop order with respect to the Registration Statement.
5.7 CAPITALIZATION. The authorized capital stock of Parent consists of 10,000,000 shares of common stock, $2.00 par value per share, of which 4,430,591 shares were issued and outstanding on September 30, 2004. All of the shares of Parent Common Stock to be issued to the CBSC shareholders in accordance herewith will be offered, issued, sold and delivered by Parent in compliance with all applicable state and federal laws concerning the issuance of securities, and none of such shares will be issued in violation of the preemptive rights of any shareholder.
5.8 FINANCIAL REPORTS AND SECURITIES DOCUMENTS. Parent's Annual Report on Form 10-K for the year ended December 31, 2003 and all other reports, registration statements, definitive proxy statements or information statements filed or to be filed by it subsequent to December 31, 2003 under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act in the form filed or to be filed (collectively, Parent's "Securities Documents") with the SEC, as of the date filed or to be filed, (A) complied or will comply in all material respects as to form with the applicable requirements under the Securities Act or the Exchange Act, as the case may be and (B) did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that information as of a later date shall be deemed to modify information as of an earlier date; and each of the consolidated balance sheets contained in or incorporated by reference into any such Securities Document (including the related notes and schedules thereto) fairly presents, or will fairly present, the consolidated financial position of Parent and its subsidiaries as of its date, and each of the consolidated statements of income and changes in stockholders' equity and cash flows or equivalent statements in such Securities Documents (including any related notes and schedules thereto) fairly presents, or will fairly present, the consolidated results of operations, changes in stockholders' equity and cash flows, as the case may be, of Parent and its subsidiaries for the periods to which they relate, in each case in accordance with GAAP consistently applied during the periods involved, except in each case as may be noted therein.
5.9 FULL DISCLOSURE. Neither this Agreement, nor any Schedule, exhibit, list, certificate or other instrument and document furnished or to be furnished by Parent or the Bank to CBSC contains any untrue statement of a material fact or omits to state any material fact required to be stated herein or therein or necessary to make the statements and information contained herein or therein not misleading. Neither Parent nor the Bank has withheld from CBSC disclosure of any event, condition or fact which Parent or the Bank knows is likely to have, in Parent's reasonable judgment, a Material Adverse Effect on the assets, prospects or condition (financial or otherwise) of Parent or the Bank.
ARTICLE 6
COVENANTS AND AGREEMENTS OF CBSC
CBSC agrees that from the date hereof until the Closing, and thereafter if so specified, it will use its best efforts to operate generally in the ordinary course consistent with past practices and, without limiting the foregoing, to fulfill the following covenants and agreements, unless otherwise consented to by Parent in writing:
6.1 CONDUCT OF BUSINESS PENDING THE CLOSING.
(a) CBSC will use its commercially reasonable efforts to maintain, preserve, renew and keep in full force and effect the existence, rights and franchises of CBSC, to preserve the business organization of CBSC intact, to keep available to Parent CBSC's officers and employees, and to preserve for Parent the present relationships of CBSC with its customers and others having business relationships with it.
(b) CBSC will not intentionally do or omit to do any act, which may cause a material breach of any contract, commitment or obligation of CBSC.
(c) CBSC will duly comply in all material respects with all laws applicable to it and its business and operations and all laws, compliance with which is required for the valid consummation of the transactions contemplated by this Agreement.
(d) Except as set forth on Schedule 6.1, CBSC will not (i) grant
any increase in the wages or salary of any officer, employee or agent of CBSC,
except normal wage or salary increases for employees and commissions paid in the
ordinary course of business and consistent with past practice; (ii) except
pursuant to existing compensation arrangements, by means of any bonus or
pursuant to any plan or arrangement or otherwise, increase by any amount or to
any extent the benefits or compensation of any such officer, employee or agent;
(iii) enter into any employment agreement, sales agency or other contract or
arrangement with respect to the performance of personal services which is not
terminable by it without liability on not more than 30 days notice; (iv) enter
into or extend any labor contract with any hourly-paid employees or any union;
or (v) agree to take any such action.
(e) Except in the ordinary course of business and consistent with past practice, CBSC will not terminate or modify in any material respect any lease, license, permit, contract or other agreement to which it is a party.
(f) CBSC will not mortgage, pledge or subject to lien or any other encumbrance, any of its assets.
(g) Except as set forth on Schedule 6.1, CBSC will not declare, pay or make or set aside for payment or making, any dividend or other distribution in respect of its capital stock or other securities, or directly or indirectly redeem, purchase or otherwise acquire any of its capital stock or other securities, except in each case in the ordinary courses of business consistent with past practice.
(h) Except as set forth on Schedule 6.1, CBSC will not incur any additional indebtedness except in the ordinary course of business.
(i) Make, renew or otherwise modify any Loan other than in the ordinary course of business consistent with past practice.
(j) Enter into any new material line of business; change its material lending, investment, underwriting, risk and asset liability management and other material banking and operating policies, except as required by applicable law, regulation or policies imposed by any federal, state or local court, administrative agency or commission or other governmental authority or instrumentality; or file any application or make any contract with respect to branching or site location or branching or site relocation.
(k) CBSC will not enter into any transaction outside the ordinary course of business.
(l) CBSC will not enter into any agreement to do any of the foregoing.
6.2 ACCESS; FURTHER ASSURANCES.
(a) After the execution of this Agreement and continuing until the Closing, CBSC shall permit Parent and its counsel, accountants, engineers and other representatives reasonable access upon reasonable prior notice during normal business hours to all of the directors, officers, facilities, properties, books, contracts, commitments and records of or relating to CBSC and will furnish Parent and its representatives during such period with all such information concerning CBSC's affairs and such copies of such documents relating thereto, as Parent or its representatives may reasonably request.
(b) At any time and from time to time after the Closing, at Parent's request and expense and without further consideration, CBSC will execute and deliver such other instruments of sale, transfer, conveyance, assignment, and delivery and confirmation and take such action as may be reasonably required in order more effectively to transfer, convey and assign to Parent and to place Parent in possession and control of, and to confirm Parent's title to, the CBSC Shares.
6.3 SCHEDULES. CBSC shall have the continuing obligation to supplement or amend promptly the Schedules being delivered pursuant to this Agreement with respect to any matter hereafter arising or discovered which, if existing or known at the date of this Agreement, would have been required to be set forth or described in these Schedules, and any such amended Schedule shall be deemed incorporated herein.
6.4 REGULATORY FILINGS. Each of Parent, the Bank and CBSC shall cooperate and use their respective reasonable best efforts to prepare all documentation, to effect all filings and to obtain all permits, consents, approvals and authorizations of all third parties and governmental authorities necessary to consummate the Merger; and any initial filings with governmental authorities shall be made by Parent as soon as reasonably practicable after the execution hereof. Each of Parent, the Bank and CBSC shall have the right to review in advance, and to the extent practicable each shall consult with the other, in each case subject to applicable laws relating to the exchange of information, with respect to all written information submitted to any third party or any governmental authority in connection with the Merger. In exercising the foregoing right, each of such parties agrees to act reasonably and as promptly as practicable. Each party hereto agrees that it shall consult with the other parties hereto with respect to the obtaining of all permits, consents, approvals, waivers and authorizations of all third parties and governmental authorities necessary or advisable to consummate the Merger, and each party shall keep the other parties apprised of the status of material matters relating to completion of the Merger. Each party agrees, upon request, to furnish the other parties with all information concerning itself, its subsidiaries, directors, officers and stockholders and
such other matters as may be reasonably necessary or advisable in connection with any filing, notice or application made by or on behalf of such other parties or any of their subsidiaries to any third party or governmental authority.
6.5 CONSENTS AND APPROVALS. CBSC shall, in a timely, accurate and complete manner, take all necessary corporate and other action and use all reasonable efforts to obtain all consents, approvals, permits, licenses and amendments of agreements required of CBSC to carry out the transactions contemplated in this Agreement and shall provide to Parent such information as Parent may reasonably require to make such filings and prepare such applications as may be required for the consummation by Parent of the transactions contemplated by this Agreement.
ARTICLE 7
COVENANTS AND AGREEMENTS OF PARENT AND THE BANK
7.1 FURTHER ASSURANCES. At any time and from time to time after the Closing, at CBSC's request and expense and without further consideration, Parent and the Bank will execute and deliver such other instruments of sale, transfer, conveyance, assignment, and delivery and confirmation and take such action as may be reasonably required in order more effectively to effect or confirm the transactions hereby contemplated and to carry out the purposes of this Agreement.
ARTICLE 8
CONDITIONS TO PARENT'S AND THE BANK'S OBLIGATIONS
All obligations of Parent and the Bank hereunder are subject to the fulfillment, prior to or at the Closing, of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties made by CBSC in this Agreement and the statements contained in the Schedules attached hereto or in any instrument, list, certificate or writing delivered by CBSC, pursuant to this Agreement shall be true in all material respects (other than representations and warranties qualified by materiality which shall remain as is) when made and, other than representations made as of a specified date (other than the date of this Agreement), at and as of the time of the Closing as though such representations and warranties were made at and as of the Closing.
8.2 PERFORMANCE BY THE CBSC. CBSC shall have performed and complied with all covenants, agreements, obligations and conditions required by this Agreement to be so complied with or performed.
8.3 OFFICER'S CERTIFICATE. CBSC shall have delivered to Parent a certificate, dated the Closing Date, signed by CBSC's President certifying as to the fulfillment of the conditions specified in Sections 8.1 and 8.2 hereof.
8.4 SHAREHOLDER APPROVAL. This Agreement and the Merger shall have been duly approved by the requisite vote of the holders of outstanding shares of CBSC Common Stock.
8.5 REGULATORY APPROVALS. All regulatory approvals required to consummate the Merger shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired and no such approvals shall contain any conditions, restrictions or requirements which the Parent Board reasonably determines in good faith would, individually or in the aggregate, materially reduce the benefits of the Merger to such a degree that
Parent would not have entered into this Agreement had such conditions, restrictions or requirements been known at the date hereof.
8.6 NO INJUNCTION. No governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the Merger.
8.7 CONSENTS AND APPROVALS. Parent shall have received from the CBSC executed counterparts of the consents listed on Schedule 4.4 and all other consents required in connection with the consummation of the transaction contemplated hereby, which consents shall be in form and substance reasonably satisfactory to Parent.
8.8 LITIGATION. On the date of the Closing, except as set forth on Schedule 4.9, CBSC shall not be a party to, nor will there otherwise be pending or threatened, any judicial, administrative, or other action, proceeding or investigation which, if adversely determined might, in the reasonable opinion of Parent, have a Material Adverse Effect on CBSC; and there shall be no lawsuits pending against CBSC, the Bank or Parent seeking to enjoin, prohibit, restrain or otherwise prevent the transactions contemplated hereby.
8.9 NO MATERIAL ADVERSE CHANGE; DUE DILIGENCE REVIEW. Since September 30, 2004, there shall not have been any circumstance, development, state of fact or matter which has, or would reasonably be expected to have, a Material Adverse Effect on CBSC.
8.10 FAIRNESS OPINION. The CBSC Board of Directors shall have received the written opinion of PBS, dated prior to the mailing of the proxy materials to the CBSC Shareholders, to the effect that the consideration to be received by the CBSC Shareholders is fair to the holders of CBSC Common Stock from a financial point of view.
ARTICLE 9
CONDITIONS TO THE CBSC'S OBLIGATIONS
All obligations of CBSC under this Agreement are subject to the fulfillment, prior to or at the Closing, of each of the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties made by Parent and the Bank in this Agreement and the statements contained in any instrument, list, certificate, or writing delivered by Parent or the Bank pursuant to this Agreement shall be true in all material respects (other than representations and warranties qualified by materiality which shall remain as is) when made and, other than representations made as of a specified date (other than the date of this Agreement), at and as of the time of the Closing as though such representations and warranties were made at and as of such date.
9.2 PERFORMANCE. Parent and the Bank shall have performed and complied with all covenants, agreements, obligations and conditions required by this Agreement to be so complied with or performed.
9.3 OFFICER'S CERTIFICATE. Parent and the Bank shall have delivered to CBSC a Certificate of Parent and the Bank, dated the Closing Date, signed by the Chief Executive Officer of Parent and the Bank certifying as to the fulfillment of the conditions specified in Sections 9.1 and 9.2 hereof.
9.4 NO INJUNCTION. No governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the Merger.
9.5 ADJUSTMENTS TO BOOK VALUE. PBS shall have performed its review of the book values of Parent's and CBSC's Common Stock prior to the mailing of CBSC's proxy statement to its shareholders and made its determination as to the adequacy and calculation methodologies of the Bank's and CBSC's loan loss reserves and allowance for doubtful accounts, among other items, by such date and as a result thereof recommended any adjustments to the book value of CBSC's or Parent's Common Stock as contemplated by Section 3.1 hereof, with all such recommended adjustments being acceptable to the Board of Directors of CBSC.
9.6 FAIRNESS OPINION. The CBSC Board of Directors shall have received the written opinion of PBS, dated prior to the mailing of the proxy materials to the CBSC Shareholders, to the effect that the consideration to be received by the CBSC Shareholders is fair to the holders of CBSC Common Stock from a financial point of view.
ARTICLE 10
TERMINATION OF AGREEMENT
This Agreement may be terminated at any time prior to the Closing:
(a) By mutual agreement of CBSC and Parent.
(b) By Parent, if (i) there has been a material violation or breach by CBSC or of any of the agreements, representations or warranties contained in this Agreement which has not been waived in writing; or (ii) if any of the conditions set forth in Article 8 hereof have not been satisfied by the Closing or have not been waived in writing by Parent.
(c) By CBSC, if (i) there has been a material violation or breach by Parent or the Bank of any of the agreements, representations or warranties contained in this Agreement which has not been waived in writing; or (ii) if any of the conditions set forth in Article 9 hereof have not been satisfied by the Closing or have not been waived in writing by CBSC.
(d) By Parent or CBSC if the other makes an assignment for the benefit of creditors, files a voluntary petition in bankruptcy or seeks or consents to any reorganization or similar relief under any present or future bankruptcy act or similar law, or is adjudicated a bankrupt or insolvent, or if a third party commences any bankruptcy, insolvency, reorganization or similar proceeding involving the other.
(e) By Parent on the one hand or CBSC on the other hand, if their Board of Directors so determines by a vote of a majority of the members of their entire Board, in the event the approval of any governmental authority required for consummation of the Merger and the other transactions contemplated by this Agreement shall have been denied by final nonappealable action of such governmental authority or an application therefor shall have been permanently withdrawn at the request of a governmental authority.
(f) By either Parent on the one hand or CBSC on the other hand, if any approval of the shareholders of CBSC contemplated by this Agreement shall not have been obtained by reason
of the failure to obtain the required vote at the CBSC's shareholder meeting at which the Merger is considered for approval.
(g) By CBSC if, within five (5) days of its Board of Directors being advised by PBS of its proposed adjustments to the book value of Parent's or CBSC's Common Stock as contemplated by Section 9.5 hereof, the CBSC Board of Directors determines, in its sole discretion, to terminate this Agreement.
(h) By Parent or CBSC if the transactions contemplated by this Agreement shall not have been consummated on or before April 30, 2005.
ARTICLE 11
MISCELLANEOUS
11.1 SURVIVAL. No representations, warranties, agreements and covenants contained in this Agreement shall survive the Effective Time (other than agreements or covenants contained herein that by their express terms are to be performed after the Effective Time) or the termination of this Agreement if this Agreement is terminated prior to the Effective Time. Notwithstanding anything in the foregoing to the contrary, no representations, warranties, agreements and covenants contained in this Agreement shall be deemed to be terminated or extinguished so as to deprive a party hereto or any of its affiliates of any defense at law or in equity which otherwise would be available against the claims of any Person, including without limitation any shareholder or former shareholder.
11.2 EXPENSES. All fees and expenses incurred by CBSC including without limitation legal fees and expenses, in connection with this Agreement will be borne by CBSC; provided, however, that the Bank shall reimburse CBSC for the fees and expenses of PBS. All fees and expenses incurred by Parent and the Bank, including without limitation, legal fees and expenses, in connection with this Agreement will be borne by Parent or the Bank, as the case may be. Filing fees payable by Parent or CBSC in connection with any regulatory filing shall be paid by Parent.
11.3 ASSIGNABILITY; PARTIES IN INTEREST.
(a) Parent may assign any or all of its rights hereunder to any affiliate or any direct or indirect subsidiary of Parent, and Parent shall advise CBSC of any such assignment and shall designate such party as the assignee and transferee of the securities purchased. Any such assignee shall assume all of Parent's duties, obligations, representations and warranties and undertakings hereunder, but the assignor shall remain liable thereunder.
(b) CBSC may not assign, transfer or otherwise dispose of any of its rights hereunder without the prior written consent of Parent.
(c) All the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective heirs, successors, assigns and legal or personal representatives of the parties hereto.
11.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including the exhibits, Schedules, lists and other documents and writings referred to herein or delivered pursuant hereto, which form a part hereof, contains the entire understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Agreement may be amended only by a written instrument duly executed by all parties or their respective heirs, successors, assigns or legal personal representatives. Any condition to a party's obligations hereunder may be waived but only by a written instrument
signed by the party entitled to the benefits thereof. The failure or delay of any party at any time or times to require performance of any provision or to exercise its rights with respect to any provision hereof, shall in no manner operate as a waiver of or affect such party's right at a later time to enforce the same.
11.5 HEADINGS. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretations of this Agreement.
11.6 SEVERABILITY. The invalidity of any term or terms of this Agreement shall not affect any other term of this Agreement, which shall remain in full force and effect.
11.7 NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered or mailed (registered or certified mail, postage prepaid, return receipt requested) as follows:
If to CBSC:
Community Bank of Smith County
P. O. Box 100
Carthage, Tennessee 37030
If to Parent or the Bank:
Wilson Bank Holding Company
623 West Main Street
Lebanon, Tennessee 37087
with a copy to:
Bass, Berry & Sims PLC
315 Deaderick Street, Suite 2700
Nashville, Tennessee 37238
Attn: Bob F. Thompson
or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall only be effective upon receipt.
11.8 GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Tennessee without regard to its conflict of laws rules.
11.9 COUNTERPARTS. This Agreement may be executed simultaneously in one or more counterparts, with the same effect as if the signatories executing the several counterparts had executed one counterpart, provided, however, that the several executed counterparts shall together have been signed by all the parties hereto. All such executed counterparts shall together constitute one and the same instrument.
[Signature page to follow.]
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on the date first above written.
PARENT:
WILSON BANK HOLDING COMPANY
By: /s/ J. Randall Clemons -------------------------------- Title: Chief Executive Officer |
THE BANK:
WILSON BANK AND TRUST
By: /s/ J. Randall Clemons -------------------------------- Title: Chief Executive Officer |
CBSC:
COMMUNITY BANK OF SMITH COUNTY
By: /s/ Joe Vance -------------------------------- Title: President |
EXHIBIT A
ARTICLES OF MERGER
In accordance with the provisions of Sections 48-21-107 of the Tennessee Business Corporation Act (the "Act"), Wilson Bank and Trust, a Tennessee corporation ("Wilson Bank"), and Community Bank of Smith County, a Tennessee corporation ("CBSC"), collectively referred to herein as the "Merging Entities," hereby adopt the following Articles of Merger for the purpose of merging CBSC with and into Wilson Bank and Trust (the "Merger"):
1 The Agreement and Plan of Merger (the "Plan of Merger") that has been approved by each of the Merging Entities in the manner prescribed by the Act is set forth in Appendix A attached hereto and is incorporated for all purposes into these Articles of Merger.
2. Approval of the Plan of Merger by the shareholders of both of the Merging Entities is required by the Act. The Plan of Merger was approved and adopted by the affirmative vote of the required percentage of all of the votes entitled to be cast by the shareholders of CBSC on ________________, 2005 and by the sole shareholder of Wilson Bank and Trust on October 25, 2004.
3. The Merger shall be effective upon the filing of these Articles of Merger with the Secretary of State of the state of Tennessee.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the undersigned have executed these Articles of Merger effective as of the ____ day of ______________, 2005.
WILSON BANK AND TRUST
a Tennessee corporation
By:__________________________________
Name:________________________________
Title:_______________________________
COMMUNITY BANK OF SMITH COUNTY
a Tennessee corporation
By:__________________________________
Name:________________________________
Title:_______________________________
APPENDIX A
.
.
.
EXHIBIT 5.1
BASS, BERRY & SIMS PLC KNOXVILLE OFFICE A PROFESSIONAL LIMITED LIABILITY COMPANY DOWNTOWN OFFICE: 900 SOUTH GAY STREET, SUITE 1700 ATTORNEYS AT LAW AMSOUTH CENTER KNOXVILLE, TN 37902 315 DEADERICK STREET, SUITE 2700 (865) 521-6200 REPLY TO: NASHVILLE, TN 37238-3001 AMSOUTH CENTER (615) 742-6200 MEMPHIS OFFICE 315 DEADERICK STREET, SUITE 2700 THE TOWER AT PEABODY PLACE NASHVILLE, TN 37238-3001 MUSIC ROW OFFICE: 100 PEABODY PLACE, SUITE 950 (615) 742-6200 29 MUSIC SQUARE EAST MEMPHIS, TN 38103-2625 NASHVILLE, TN 37203-4322 (901) 543-5900 WWW.bassberry.com (615) 255-6161 |
February 4, 2005
Wilson Bank Holding Company
623 West Main Street
Lebanon, Tennessee 37087
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as your counsel in connection with the preparation of a Registration Statement on Form S-4 filed by you with the Securities and Exchange Commission (the "Commission") on the date hereof (such Registration Statement being referred to hereinafter as the "Registration Statement"). The Registration Statement relates to the issuance by Wilson Bank Holding Company, a Tennessee corporation (the "Company"), of 194,766 shares of its common stock, par value $2.00 per share (the "Common Stock"), in connection with the proposed merger (the "Merger") of Community Bank of Smith County, an independent, state chartered bank organized under the laws of the State of Tennessee, with and into Wilson Bank and Trust, a state chartered bank organized under the laws of the State of Tennessee and a wholly owned subsidiary of the Company, pursuant to that certain Agreement and Plan of Merger (the "Merger Agreement") dated November 16, 2004, by and among the Company, Wilson Bank and Trust and Community Bank of Smith County.
In connection with this opinion, we have examined and relied upon such records, documents, certificates and other instruments as in our judgment are necessary or appropriate in order to express the opinions hereinafter set forth and have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as certified or photostatic copies.
Based upon the foregoing and such other matters as we have deemed relevant, we are of the opinion that the shares of Common Stock to be issued by the Company in connection with the Merger, when issued and delivered in the manner and on the terms set forth in the Merger Agreement and as described in the Registration Statement (after the Registration Statement is declared effective), will be validly issued, fully paid and nonassessable.
February 4, 2005
We hereby consent to the reference to our law firm in the Registration Statement under the caption "Legal Matters" and the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement.
Very Truly Yours,
/s/ Bass, Berry & Sims PLC |
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our Firm under the caption "Experts" and to the incorporation by reference in the Registration Statement on Form S-4 pertaining to the Wilson Bank Holding Company merger with Community Bank of Smith County of our report dated January 9, 2004, with respect to the consolidated financial statements of Wilson Bank Holding Company included in the Annual Report (Form 10-K) for the year ended December 31, 2003.
/s/ MAGGART & ASSOCIATES, P.C. Nashville, Tennessee February 4, 2005 |
EXHIBIT 99.1
COMMUNITY BANK OF SMITH COUNTY
PROXY
THIS PROXY IS SOLICITED UPON BEHALF OF THE BOARD OF DIRECTORS OF COMMUNITY BANK OF SMITH COUNTY FOR THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AT 6:30 P.M. LOCAL TIME, ON MARCH 24, 2005 AT THE COMMUNITY BANK OF GORDONSVILLE, 7 NEW MIDDLETON HIGHWAY, GORDONSVILLE, TN 38563.
The undersigned hereby appoints J. Randall Clemons and Joe Vance, or either of them, with full power of substitution, as proxies, and hereby authorizes them to vote, as designated, all shares of common stock of Community Bank of Smith County, held by the undersigned on February 1, 2005 at the Special Meeting In Lieu of Annual Meeting of Shareholders to be held March 24, 2005, at 6:30 p.m., local time, and any adjournment(s) thereof.
1. To approve and adopt the agreement and plan of merger, dated November 16, 2004, among Wilson Bank Holding Company, a Tennessee corporation, Wilson Bank and Trust, a state chartered bank incorporated under the laws of the State of Tennessee, and Community Bank of Smith County, a state chartered bank incorporated under the laws of the State of Tennessee, and the merger of Community Bank of Smith County with and into Wilson Bank and Trust.
____ FOR ____ AGAINST ____ ABSTAIN
2. In their discretion on any other matter that may properly come before the meeting or any adjournment thereof.
The Board of Directors recommends a vote "For" proposal 1.
If no direction is made, this proxy will be voted FOR the Proposal to approve the Merger and the Agreement and Plan of Merger.
Signature ________________________ Date ___________________
Signature (if held jointly) _______ Date ___________________
Please sign exactly as your name appears on your share certificates. Each joint owner must sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name as authorized. If a partnership, please sign in partnership name by an authorized person.
BE SURE TO MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ADDRESSED POSTAGE PAID ENVELOPE PROVIDED
EXHIBIT 99.2
CONSENT OF FINANCIAL ADVISOR
We consent to the use of our fairness opinion letter dated January 25, 2005 forming a part of the Registration Statement on Form S-4 filed by Wilson Bank Holding Company, Lebanon, Tennessee, in connection with the proposed merger of Wilson Bank Holding Company and Community Bank of Smith County, Carthage, Tennessee, to be included in such Prospectus/Proxy Statement, subject to the issuance of such opinion by us. We further consent to the references to our fairness opinion letter and the analysis conducted by us and the use of our name in such Proxy Statement/Prospectus in conjunction therewith.
/s/ Professional Bank Services, Inc. PROFESSIONAL BANK SERVICES, INC. Louisville, Kentucky February 4, 2005 |