UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 29, 2004
-----------------
Classic Bancshares, Inc.
------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-27170 61-1289391
- ------------------------------- ------------------ ----------
(State or Other Jurisdiction) (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
344 17th Street, Ashland, Kentucky 41101
- ---------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (606) 326-2801
--------------
Not Applicable
--------------
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 1 - Registrant's Business and Operations
Item 1.01. Entry into a Material Definitive Agreement
- --------- ------------------------------------------
On December 29, 2004, Classic Bancshares, Inc. ("CBI") and City Holding
Company ("City Holding") jointly announced the signing of a definitive agreement
(the "Agreement") pursuant to which CBI will be merged with and into City
Holding (the "Merger"), and CBI's bank subsidiary, Classic Bank, will be merged
with and into City Holding's bank subsidiary. The Agreement provides that, upon
the effective date of the Merger, each share of common stock of CBI, par value
$0.01 per share, will be converted into the right to receive 0.9624 shares of
City Holding's common stock, $2.50 par value per share, and up to $11.08 per
share in cash. Additionally, CBI has agreed to sell or have repaid a $4 million
performing commercial loan prior to the closing date of the Merger. If the loan
is sold or repaid for less than its legal balance, shareholders of CBI will
receive a proportionate reduction in the cash consideration received in the
Merger. The cash to be received by shareholders in the Merger could range
between $9.47 and $11.08 per share depending on the results of the sale or
repayment of this loan. The total transaction value is estimated at $77.4
million (assuming that outstanding stock options for 109,435 shares held by
directors of Classic will be cashed out at the difference between the merger
consideration and the exercise price of the options and stock options for
210,385 shares will be exercised prior to the closing).
In connection with the consummation of the Merger, David B. Barbour,
Lisah M. Frazier and Robert S. Curtis (the "Classic Executives") will each
continue serving CBI, CBI's bank subsidiary and their successors, at City
Holding's option, through August 31, 2005 and will terminate their existing
employment agreements with CBI and enter into a three-year non-compete and
non-solicitation agreement with City Holding in exchange for lump sum cash
payments, subject to reduction to the extent such payments are not deductible
under Section 280G of the IRC. The lump sum payments agreed to by the Classic
Executives are believed to be less than the termination payments to which such
executives would otherwise be entitled under their employment agreements upon
the completion of the Merger.
On December 29, 2004, the Company granted the Classic Executives the
opportunity to extend the post-retirement exercise period of certain of their
stock options from 90 to 120 days. A purpose and effect of this action was to
convert such options from incentive stock options ("ISOs") under Section 422 of
the IRC to non-tax-qualified options (with such non-tax qualified stock options
referred to as "Disqualified Options"). In the absence of this action, Messrs.
Barbour and Curtis and Ms. Frazier could have converted their ISOs to
non-qualified status only by exercising them and selling them during the
subsequent one-year period.
On December 30, 2004, the Classic Executives exercised 68,707, 29,677
and 32,505 of their Disqualified Options. The exercise of the Disqualified
Options by the Classic Executives will have the effect of increasing their 2005
"Base Amount" (defined generally as their average W-2 compensation over the
prior five years) under applicable IRS rules. This action will have the effect
of increasing the likelihood that the severance and non-compete payments
described above will be tax deductible and may be paid without reduction. These
actions were taken in consultation with City Holding and are authorized under
the Merger Agreement.
On December 29, 2004, the Company also approved the payment to Mr.
Barbour of an unrestricted $200,000 advance of his termination benefits under
his employment agreement. The effect of this advance is to increase his 2005
Base Amount which will increase the likelihood that the termination and
non-compete benefits payable to him under the Merger Agreement will be fully
tax-deductible and may be paid without reduction. This action was taken in
consultation with City Holding and is permitted under the Merger Agreement.
The Merger will be accounted for as a purchase and is expected to close
in the second quarter of 2005. The Agreement has been approved by the boards of
directors of City Holding and CBI. However, it is subject to certain other
conditions, including the approval of CBI's shareholders and the approval of
regulatory authorities. The directors of CBI and Classic Bank have agreed to
vote their shares in favor of the Merger.
The above description does not purport to be a complete statement of
the parties' rights and obligations under the Agreement and is qualified in its
entirety by reference to the Agreement, which is attached as an exhibit to the
Current Report on Form 8-K of City Holding as filed with the Securities and
Exchange Commission on December 29, 2004, and which is incorporated herein by
reference.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits
- --------- ---------------------------------
(c) Exhibits
Exhibit 2.1 Agreement and Plan of Reorganization among Classic
Bancshares, Inc. Classic Bank, City Holding Company, and
City National Bank of West Virginia dated December 29,
2004 (incorporated by reference to 2(1) to the Current
Report on Form 8-K of City Holding Company (Commission
File No. 0-11733), as filed with the Securities and
Exchange Commission on December 29, 2004))
Exhibit 2.2 Agreement and Plan of Merger for Subsidiary Merger
between Classic Bank and City National Bank of West
Virginia dated December 29, 2004 (incorporated by
reference to Exhibit 2(2) to the Current Report on Form
8-K of City Holding Company (Commission File No.0-11733),
as filed with the Securities and Exchange Commission on
December 29, 2004))
Exhibit 99 Press release dated December 29, 2004 (incorporated by
reference to Exhibit 99 to the Current Report on Form 8-K
of City Holding Company (Commission File No. 0-11733),
as filed with the Securities and Exchange Commission on
December 29, 2004))
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
CLASSIC BANCSHARES, INC.
DATE: January 5, 2005 By: /s/ Lisah M. Frazier
-----------------------------------
Lisah M. Frazier, Chief Operating
Officer and Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
---------- -----------
2.1 Agreement and Plan of Reorganization among
Classic Bancshares, Inc. Classic Bank,
City Holding Company, and City National
Bank of West Virginia dated December 29,
2004 (incorporated by reference to 2(1) to
the Current Report on Form 8-K of City
Holding Company (Commission File No.
0-11733), as filed with the Securities and
Exchange Commission on December 29, 2004))
2.2 Agreement and Plan of Merger for
Subsidiary Merger between Classic Bank and
City National Bank of West Virginia dated
December 29, 2004 (incorporated by
reference to Exhibit 2(2) to the Current
Report on Form 8-K of City Holding Company
(Commission File No. 0-11733), as filed
with the Securities and Exchange
Commission on December 29, 2004))
99 Press release dated December 29, 2004
(incorporated by reference to Exhibit 99
to the Current Report on Form 8-K of City
Holding Company (Commission File No.
0-11733), as filed with the Securities and
Exchange Commission on December 29, 2004))