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EXHIBIT 2A.
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into on this 11th
day of June, 1998, by and among Exchange Bancshares, Inc. ("Buyer"), Towne Bank
("Bank") and Towne Bancorp, Inc. ("Towne Bancorp").
WHEREAS, Towne Bancorp owns, of record and beneficially, all of the
320,000 issued and outstanding shares of the $5 par value common shares of Bank
("Bank Common Stock"), an Ohio banking corporation; and
WHEREAS, Towne Bancorp and Bank desire to sell additional shares of
Bank Common Stock to Buyer in order to provide additional capital to Bank on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, Towne Bancorp desires to cause the merger (hereinafter the
"Merger") of Bank with and into The Exchange Bank, an Ohio banking corporation
and a wholly owned subsidiary of Buyer ("Exchange Bank"), pursuant to the terms
of a Merger Agreement attached hereto as Exhibit A; and
WHEREAS, Buyer desires to purchase additional shares of Bank upon the
terms and conditions herein set forth and to cause the Merger.
NOW, THEREFORE, based on the foregoing and in consideration of the
agreements, representations, warranties, and covenants contained herein, the
parties agree as follows:
PURCHASE OF BANK COMMON STOCK.
1.1 Purchase of Bank Common Stock by Buyer. Subject to all of the terms
and conditions set forth in this Agreement, Bank shall sell, convey, transfer,
assign and deliver to Buyer and Buyer shall purchase from Bank 1,000,000 shares
of Bank Common Stock for an aggregate purchase price of $2,000,000.
1.2 Closing of Purchase of Bank Common Stock. The sale of the Bank
Common stock provided for herein, shall be completed at the Closing. The
"Closing" shall mean the date and place as shall be mutually agreed upon by
Buyer, Towne Bancorp and the Bank for the closing of the purchase of the shares
of Bank Common Stock provided in Section 1.1 of this Agreement; provided,
however, that the date of Closing shall not be later than five (5) calendar days
following the expiration of statutory waiting periods, if any, imposed by the
receipt of all required regulatory approvals.
2. REPRESENTATIONS AND WARRANTIES OF TOWNE BANCORP AND BANK AS TO BANK
COMMON STOCK PURCHASED BY BUYER.
Towne Bancorp and the Bank represent and warrant to Buyer that:
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2.1 Buyer shall, upon the consummation of the purchase of the shares of
Bank Common Stock as set forth in Section 1.1 hereof receive such shares of Bank
Common Stock from the Bank free and clear of all liens, encumbrances, security
interests, options, charges, claims, assessments, voting trust agreements,
community property rights, rights of others, and restrictions on
transferability.
2.2 The shares of Bank Common Stock purchased by Buyer pursuant to
Section 1.1 hereof shall constitute 75.76% of the total outstanding shares of
Bank Common Stock immediately after the Closing.
3. REPRESENTATIONS AND WARRANTIES OF TOWNE BANCORP AND BANK AS TO BANK
AND/OR TOWNE BANCORP.
Towne Bancorp and Bank represent and warrant to Buyer that:
3.1 Bank is a state chartered bank duly organized and existing in good
standing under the laws of the State of Ohio and has all requisite power and
authority to own its assets and carry on its business as now conducted. Bank has
obtained all charters, licenses, permits, orders, authorizations and other
governmental approvals necessary therefor, including insurance of its deposits
by the Federal Deposit Insurance Corporation, all of which are in full force and
effect.
3.2 The authorized capital stock of Bank currently consists of 320,000
shares of voting common stock, all of which are issued and outstanding. All of
the issued and outstanding shares of the Bank are duly authorized, validly
issued and outstanding, and are fully paid and, except as provided by law,
nonassessable. No shares of any other class or series of capital stock of Bank
are authorized, issued or outstanding. Except as provided for in this Agreement,
Bank has not agreed to issue or sell any additional shares of its capital stock
or any obligation convertible into shares of its capital stock, Bank has no
outstanding subscriptions, options, warrants, rights or other security or
obligation which would permit or require Bank to issue any additional shares of
its capital stock, to purchase or otherwise acquire shares of its capital stock,
or convert any obligation into shares of capital stock of Bank. No shares are
held as treasury stock of the Bank.
3.3 The execution, delivery and performance of this Agreement and the
Merger Agreement have been duly authorized by Towne Bancorp and Bank. No other
corporate proceedings on the part of Towne Bancorp or Bank are necessary to
authorize this Agreement, the Merger Agreement or the consummation of the
transactions contemplated hereby and thereby. This Agreement and all instruments
and agreements contemplated by this Agreement to which either Towne Bancorp or
Bank is a party or signatory have been duly authorized, executed and delivered
by Towne Bancorp or Bank as the case may be, and constitute their respective
legal, valid and binding obligations enforceable in accordance with their terms.
3.4 Bank has good and marketable title to its respective assets. Said
assets are subject to no liens or encumbrances, whether by mortgage, pledge,
lien, security aggreement, conditional
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sale agreement, encumbrance, charge or otherwise, except for pledges or
securities to secure its Treasury Tax and Loan Account, public funds deposits,
transactions in Federal Funds, and liens attributable to borrowings by the Bank
from the Federal Home Loan Bank Board in the ordinary course of the Bank's
business.
3.5 Bank has no liability to pay deposits other than as shown on the
books and records of Bank.
3.6 Since December 31, 1997, the business of Bank has been conducted in
the ordinary course of business, and all books, records and accounts of Bank are
in all material respects complete and correct.
3.7 The Bank has no material obligations or liabilities, contingent or
otherwise, which were not previously disclosed in the financial statements
furnished to the Buyer or which were not previously otherwise disclosed in
writing to Buyer.
3.8 To the best of the knowledge of Towne Bancorp and Bank, all income,
franchise, and other taxes assessments and other governmental charges (federal,
state or local) against the Bank, or any of its income or assets, shall have
been duly paid and satisfied on or before their respective due dates. There are
not now and there will be no additional liabilities, interest, penalties, or
deferred taxes due and payable with respect to such taxes, assessments, or
charges. The respective tax returns (federal, state, or local) of the Bank (and
in the case of those returns filed jointly, Towne Bancorp and the Bank) required
by law to be filed on or before the Closing have been correctly and timely
filed. Neither Towne Bancorp nor Bank is a party to any pending action or
proceedings by any taxing authority for assessment or collection of taxes
against Towne Bancorp or Bank, and no such actions or proceedings have been
threatened. The provision for taxes made in the respective financial statements
of Towne Bancorp and the Bank is sufficient for the payment of all accrued and
unpaid current and deferred federal, state and local tax liabilities of Towne
Bancorp and the Bank for the period ended on the date of such financial
statements and for all years prior thereto. Towne Bancorp and the Bank have not
received any notice of deficiency or other adjustment with respect to their
income and franchise tax returns. No issue has been raised by the Internal
Revenue Service or applicable state taxing authorities which might result in a
deficiency for any fiscal year for Towne Bancorp or the Bank, whether or not yet
audited. There are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment of any tax or deficiency
against Towne Bancorp or Bank (except for applicable extensions of time for
filing returns), nor are any actions, suits or claims now pending or threatened
against Towne Bancorp or Bank in respect of any tax or assessment.
3.9 Neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated herein, nor compliance with nor
fulfillment of the terms and provisions herein will conflict with or result in a
material breach of the terms, conditions or provisions of, or constitute a
material default under, the Articles of Incorporation, as the same are to be
amended, or Code of Regulations of Towne Bancorp or the Bank, or any other
restriction to
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which Towne Bancorp or the Bank is a party or by which Towne Bancorp or
the Bank is bound, or any regulatory provisions affecting Towne Bancorp or the
Bank.
3.10 The Bank has delivered to Buyer the Consolidated Statement of
Condition of Bank as of March 31, 1998 and Consolidated Statement of Income for
the three month period ended March 31, 1998, as reported to the Federal
Financial Institutions Examination Council, which statements have been prepared
in conformity with the appropriate regulatory requirements. Such statements do
not omit or misstate any material fact necessary to be set forth therein in
order to make the information set forth therein not misleading.
3.11 All buildings, offices and other structures, and all machinery,
equipment, furniture, fixtures, motor vehicles and other properties owned or
used by Bank are in good operating condition and repair, ordinary wear and tear
excepted.
3.12 Towne Bancorp and Bank have provided Buyer with an opportunity to
review all policies of insurance in which either Towne Bancorp or Bank is named
as an insured party, or which otherwise relate to or cover any assets,
properties, premises, operations and personnel of Towne Bancorp or Bank. Towne
Bancorp or Bank, as the case may be, has in full force and effect the policies
of insurance provided to Buyer. Except in regard to the Directors' and Officers'
Liability Insurance and fidelity bond for which Towne Bancorp and Bank have
received a notice of cancellation, there has been no notice given by any party
of interest in or to any such policies claiming any breach or violation of any
provisions thereof, disclaiming or denying any coverage thereunder, or canceling
or threatening cancellation of any such insurance contracts.
3.13 To the knowledge of the executive management of Towne Bancorp and
Bank, no property owned or leased by either Towne Bancorp or Bank is the subject
of any action, suit or proceeding claiming that any of such properties is
contaminated with any wastes or hazardous substances as such terms are defined
under applicable federal, state or local law.
4. OTHER REPRESENTATIONS AND WARRANTIES OF TOWNE BANCORP.
Towne Bancorp represents and warrants to Buyer that it is an Ohio
corporation and registered bank holding company under the Federal Bank Holding
Company Act.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Towne Bancorp that it will have at the
Closing all requisite power and authority to consummate the transactions
provided for in this Agreement. This Agreement and all instruments and
agreements contemplated by this Agreement to which Buyer is a party or signatory
have been duly authorized, executed and delivered by Buyer, and constitute its
legal, valid and binding obligations enforceable in accordance with their terms.
6. EXTENT OF AND SURVIVABILITY OF REPRESENTATIONS.
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Each of the representations, warranties, covenants and agreements of
Towne Bancorp, Bank and Buyer contained in this Agreement shall be deemed to
have been made again on and as of the Closing, and be true, correct and complete
on and as of the Closing. All of the representations, warranties, covenants and
agreements contained in this Agreement shall survive for a period of six (6)
months after the Closing. Notwithstanding the fact that the representations,
warranties, covenants and agreements are to survive closing for six (6) months,
the sole remedy of Buyer for the breach of any such representations, warranties,
covenants and agreements by Towne Bancorp or Bank shall be to recover against
the "escrow account" established by paragraph IV(1)(b) of the Merger Agreement
attached hereto as Exhibit A.
7. COVENANTS OF TOWNE BANCORP CONCERNING CONDUCT OF BUSINESS.
Towne Bancorp and Bank covenant and agree that during the period from
the date of this Agreement through the Closing, Towne Bancorp and Bank shall use
their best efforts to conduct their respective businesses and operations in the
usual and ordinary course, in a safe and prudent manner, and shall use their
best efforts to preserve intact the banking and business organization, to keep
available the services of the officers and employees, and to preserve their
relations with customers, suppliers and others having business dealings with
them to the end that the goodwill and continuing business of Towne Bancorp and
Bank shall not be materially and adversely affected at the Closing. During said
period, Towne Bancorp covenants and agrees that Towne Bancorp shall cause Towne
Bancorp and Bank to do or refrain from doing (as applicable) the following,
unless the prior written consent of Buyer shall have been received:
7.1 Bank shall not declare or pay any dividends, stock splits (reverse
or otherwise), stock dividends or any other distributions with respect to its
common stock.
7.2 Bank shall not increase the rate of compensation payable to any of
its directors, officers or other personnel, whether by salary, bonus or
otherwise.
7.3 Bank shall not incur any obligations or liabilities, absolute or
contingent, other than current liabilities incurred in the ordinary and usual
course of business.
7.4 Bank shall not sell, transfer or lease any of its properties or
subject any of its properties or assets to a mortgage, pledge, security interest
or lien, except encumbrances of the character heretofore incurred in the
ordinary and usual course of business.
7.5 Bank shall refrain from applying for any bank office and shall not
close any bank office.
7.6 Bank shall assist Buyer in obtaining all regulatory approvals and
consents of third parties necessary to consummate the transactions contemplated
by this agreement.
7.7 Bank shall continue to pay all interest on deposits and any other
debts as such obligations become due and payable in the ordinary course of
business.
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7.8 Bank shall not loan funds or accept any deposits or enter into any
commitments for such loans or deposits, except in the ordinary course of
business and upon substantially the same terms, including interest rates,
maturities, collateral security and other applicable terms as those prevailing
among banks in Bank's market area at the time for comparable transactions.
7.9 Bank shall not merge or consolidate with any other entity or enter
into any agreement therefor for the sale of substantially all of its assets or
acquire or agree to acquire any stock, business, properties or assets of any
other person, firm, association, corporation, bank or other business
organization.
7.10 Bank shall not cancel, without payment in full, any notes, loans
or other obligations receivable from any officer or director Towne Bancorp of
Bank, or any member of their families, or from any corporation, partnership or
other entity in which any officer or director of Towne Bancorp or Bank, or any
member of their families, has any direct or indirect interest.
7.11 There shall not have been any material adverse change in the
condition, quality, composition or maturity of the assets, deposits, other
liabilities, or the business of Bank; provided, however, that the following
factors shall not be considered in determining what shall constitute such a
material adverse change.
(a) Changes in rates of return or yields received on
various Bank assets or changes in the fair market
value of Bank's investment securities, which changes
are caused by general money market fluctuations; and
(b) Changes in interest rates paid by Bank with respect
to its sources of borrowed funds, including deposits,
repurchase agreements and Federal funds purchased,
which changes are caused by general money market
fluctuations.
7.12 The officers of Bank shall furnish Buyer will all internal reports
and information, including financial information pertinent to the operation of
Bank's business, which are legally permissible to be disclosed, and shall
consult with Buyer on any major managerial decision.
7.13 The Bank shall not settle or dismiss any lawsuit on behalf of or
against Bank.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing of each of the following conditions
precedent, except to the extent any such condition is waived in writing by
Buyer:
8.1 Representatives of Buyer shall have completed a purchase
examination of the Bank and Towne Bancorp prior to the Closing, and the results
thereof, including, but not limited to, the financial condition, business,
assets, deposit mix or composition and other liabilities of Towne Bank and Towne
Bancorp shall have been satisfactory to Buyer in its sole discretion.
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Pursuant to this examination, the Bank's assets and liabilities may be
verified by such representatives by confirmation, requests or otherwise. The
examination performed pursuant to this Section shall not affect the right of
Buyer to rely on the representations, warranties and covenants of Towne Bancorp
and the Bank contained in this Agreement.
8.2 Buyer shall have obtained all requisite banking regulatory orders
and approvals required by applicable law or governmental regulations necessary
or appropriate to permit the consummation of the transactions contemplated by
this Agreement. All applicable waiting periods imposed by statute, regulation,
rule or order shall have expired.
8.3 Buyer shall not have discovered any material error, misstatement or
omission in the representations and warranties made herein by Towne Bancorp or
the Bank.
8.4 Towne Bancorp and the Bank shall have performed and complied with
all of the terms, agreements, obligations, covenants and conditions required by
this Agreement to be performed and complied with by Towne Bancorp or the Bank
prior to or on the Closing, including, but not limited to the amendment of the
Articles of Incorporation of Bank to increase its authorized shares of common
stock to 1,320,000.
8.5 Buyer shall have received the written release of Towne Bancorp and
each of the directors of Towne Bancorp and Towne Bank in the form attached
hereto as Exhibits B and C, respectively.
8.6 Towne Bancorp shall have assigned to the Bank the rights and
privileges of the lessee under the leases in respect of the branches of the
Bank, and Buyer shall have accepted all duties and obligations under such
leases. The form of such assignment and assumption of leases shall be mutually
acceptable to Buyer, Towne Bancorp and the Bank.
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF TOWNE BANCORP AND THE BANK.
The obligations of Towne Bancorp and the Bank under this Agreement are
subject to the fulfillment, prior to or on the Closing, of each of the following
conditions precedent, except to the extent any such condition is waived in
writing by Towne Bancorp or the Bank, respectively.
9.1 There shall not have been discovered any error, misstatement or
omission in the representations and warranties made herein by Buyer.
9.2 Buyer shall have performed and complied with all of the terms,
agreements, obligations, covenants and conditions required by this agreement to
be performed and complied with by Buyer prior to or at the Closing.
9.3 Buyer shall have obtained all requisite banking regulatory orders
and approvals required by applicable law or governmental regulations necessary
or appropriate to permit the consummation of the transactions contemplated by
this Agreement and all applicable waiting periods imposed by statute,
regulation, rule or order shall have expired within 60 days after the date of
this Agreement.
9.4 Towne Bancorp shall have assigned to the Bank the rights and
privileges of the lessee under the leases in respect of the branches of the
Bank, and Buyer shall have accepted all duties and obligations under such
leases. The form of such assignment and assumption of leases shall be mutually
acceptable to Buyer, Towne Bancorp and the Bank.
10. COVENANT WITH RESPECT TO THE MERGER OF THE BANK AND EXCHANGE BANK.
With respect to the Merger of the Bank with and into Exchange Bank, the
parties agree to cause the execution of the Merger Agreement attached hereto as
Exhibit A in accordance with all the applicable requirements of law and the
respective Articles of Incorporation and Code of Regulations of the Bank and
Exchange Bank, and further to cause the approval by the Board's of Directors of
the Bank and Exchange Bank, and each of the Bank's and Exchange Bank's
respective shareholders. The parties agree to cooperate and to take all such
actions as may be reasonably required to cause the Merger of Bank with and into
Exchange Bank pursuant to and in accordance with the terms of the Merger
Agreement. Towne Bancorp covenants to forbear from the exercise of its statutory
right to dissent under applicable law in connection with the Merger and the
shares of Towne Bank held by it on the effective date of the Merger. The
covenants of the parties contained herein shall survive the Closing. The
obligations of the parties hereto shall be contingent upon and subject to the
satisfaction of the conditions set forth in the Merger Agreement and the
consummation of the Merger contemplated therein.
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11. TERMINATION.
This Agreement and the transactions contemplated by this Agreement may
be terminated at any time on or before Closing:
11.1 By the mutual written consent of Buyer, Towne Bancorp and the
Bank.
11.2 By written notice from Buyer to Towne Bancorp and the Bank if one
or more of the conditions set forth in Section 8 shall not have been satisfied
or if Buyer determines one or more of such conditions cannot or will not be
satisfied for any reason other than a breach by one of the parties hereto; or
11.3 By written notice from Towne Bancorp or the Bank to Buyer if one
or more of the conditions set forth in Section 9 shall not have been satisfied
or if Towne Bancorp or the Bank determine one or more of such conditions cannot
or will not be satisfied for any reason other than a breach by one of the
parties hereto.
12. EXPENSES.
Each party hereto shall pay its own legal, accounting and other
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement.
13. PUBLICITY.
Each party agrees to hold the fact of this Agreement and its terms in
strictest confidence and not to make any public announcement after the date of
this Agreement concerning the Agreement without the written consent of Buyer,
Towne Bancorp and the Bank. All notices, releases, statements and communications
to depositors, customers and correspondents of Bank and to the press and general
public relating to the Agreement or transactions contemplated by this Agreement
shall be made only at such times and in such manner as shall be mutually agreed
between Buyer, Towne Bancorp and the Bank.
14. REPRESENTATIVES.
14.1 Towne Bancorp and the Bank hereby appoint Xxxx Xxxxxxx to act as
their agent for the purpose of approving such publicity under Section 13 and for
all other purposes under this Agreement for which a Towne Bancorp or Bank
representative is required. The filing of public documents that may disclose the
existence of this Agreement, or the effects of the terms hereof, with any
federal and state regulatory authorities in connection with the transactions
contemplated herein, or as may be required in the ordinary course of business of
either party hereto, shall not constitute a breach of the terms of Section 13.
14.2 Buyer hereby appoints Xxxxxx Xxxxx to act as its agent for the
purpose of approving such publicity under Section 13 and for all other purposes
under this Agreement for which a Buyer representative is required. The filing of
public documents that may disclose the
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existence of this Agreement, or the effects of the terms hereof, with
any federal and state regulatory authorities in connection with the transactions
contemplated herein, or as may be required in the ordinary course of business of
either party hereto, shall not constitute a breach of the terms of Section 13.
15. NOTICES.
Any notice, report or demand required or permitted by any provision of
this Agreement shall be deemed to have been sufficiently given and delivered
when placed in the U.S. mail, if it is sent by registered mail, postage and
registered charges prepaid, addressed as follows:
If to Buyer to:
Xx. Xxxxxx Xxxxxx
Exchange Bancshares, Inc.
c/o Exchange Bank
000 Xxxx Xxxxxx
Xxxxxx, Xxxx 00000
With copies to:
Xxxxx Xxxxxxxxxxx, Esq.
Xxxxxxxx & Shohl, LLP
1900 Chemed Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
(000) 000-0000/PH
(000) 000-0000/FX
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}
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If to Towne Bancorp or Bank to:
Mr. Xxxx Xxxxxxx
Towne Bancorp, Inc.
c/o Towne Bank
000 X. Xxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
With copies to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxx & Blank Co., LPA
0000 X. Xxxxxxx Xxx.
Xxxxxx, XX 00000
(000) 000-0000/PH
(000) 000-0000/FX
16. RISK OF LOSS.
In the event any material loss not covered by insurance to the assets
of Bank occurs due to fire or casualty prior to the Closing, or in the event the
business of Bank is closed or interrupted by reason of any event not in the
ordinary course of business, Buyer shall have the right to terminate this
Agreement.
17. MISCELLANEOUS.
17.1 This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Ohio.
17.2 The headings contained herein are for reference purposes only and
shall not in any way affect the meaning and interpretation of this Agreement.
17.3 This Agreement and the respective rights and obligations of the
parties hereunder shall not be assignable by any party without the prior written
consent of the other parties.
17.4 This Agreement, together with the related Schedules and Exhibits
represents the entire understanding and agreement among the parties hereto with
respect to the subject matter hereof, supersedes all prior and contemporaneous
negotiations, correspondence and understandings relating to the subject matter
hereof, and shall be amended or modified only by the written agreement of all of
the parties hereto.
17.5 The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce the same, and a waiver by any party of any breach of any
provision of this Agreement shall not be construed to be a waiver by such party
of any breach of any other provision.
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17.6 This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
17.7 The rights and obligations contained in this Agreement shall inure
to the benefit of and be binding upon the parties to this Agreement and their
respective heirs, personal representatives, successors and assigns.
17.8 Nothing in this Agreement, express or implied, is intended to
confer upon any party, other than the parties hereto and their respective heirs,
personal representatives, successors and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as and
the extent expressly provided herein.
17.9 Any provision of this Agreement prohibited either by law or court
decrees in any locality or state shall be ineffective to the extent of such
prohibition without in any way invalidating or affecting the remaining
provisions of this Agreement within the states or localities where not
prohibited by law or court decrees. Notwithstanding the foregoing, in no event
shall the capital infusion described in paragraph 1.1 be consummated unless the
Merger (as defined herein) is ready to be and will be consummated immediately
subsequent to such capital infusion.
17.10 Time is of the essence in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
EXCHANGE BANCSHARES, INC.:
By: /S/ Xxxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxxx, President
By: /S/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx, Secretary
TOWNE BANCORP, INC.: TOWNE BANK:
By: /S/ Xxxx Xxxxxxx By: /S/ Xxxx Xxxxxxx
---------------------------------- --------------------------------
Xxxx Xxxxxxx, Chairman Xxxx Xxxxxxx, Chairman
By: /S/ Xxxx X. Xxxxxxx By: /S/ Xxxx X. Xxxxxxx
---------------------------------- --------------------------------
Xxxx X. Xxxxxxx, Secretary Xxxx X. Xxxxxxx, Secretary
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EXHIBIT A
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") dated as of ________, 1998, is
entered into by and between Towne Bank, Perrysburg, Ohio ("Towne Bank"), an Ohio
state banking corporation and The Exchange Bank, Luckey Ohio ("Exchange Bank"),
an Ohio state banking corporation and is joined in by Towne Bancorp, Inc.
("Towne Bancorp"), the sole shareholder of Towne Bank, and Exchange Bancshares,
Inc., ("Exchange Bancshares"), the sole shareholder of Exchange Bank.
WITNESSETH:
WHEREAS, the Board of Directors of Exchange Bank and the Board of
Directors of Towne Bank have determined that it is in the best interests of
Exchange Bank and Towne Bank to merge Towne Bank with and into Exchange Bank in
accordance with the provisions of the laws of the State of Ohio (the "Merger");
and
WHEREAS, the Board of Directors of Towne Bank and the Board of
Directors of Exchange Bank have each adopted a resolution approving this
Agreement and have directed that the Merger Agreement be submitted to the
shareholders of Towne Bank and Exchange Bank entitled to vote in respect thereof
for adoption and approval;
NOW, THEREFORE, the parties hereto, subject to the terms and conditions
contained herein, agrees as follows:
ARTICLE I
Constituent Corporations
Towne Bank and Exchange Bank shall be the constituent banking
corporations with respect to the Merger.
ARTICLE II
Merger
Effective as of the date set forth in the Certificate of Merger filed
in accordance with Section 1115.11 (F) of the Ohio Revised Code with the
Superintendent of Banks for the State of Ohio (the "Effective Time"), Towne Bank
shall be merged into Exchange Bank and Exchange Bank shall be the surviving
banking corporation (the "Surviving Corporation"), which after the effective
time of the Merger shall be known as "Exchange Bank."
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ARTICLE III
Articles of Incorporation, Etc.
1. At the Effective Time, the Articles of Incorporation and Code of
Regulations of Exchange Bank shall constitute the Articles of
Incorporation Code of Regulations of the Surviving Corporation.
2. The Surviving Corporation's main office shall be located at 000 Xxxx
Xxxxxx, Xxxxxx, Xxxx, until otherwise changed in accordance with law.
3. The officers of Exchange Bank immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, each to hold office
until his respective successor is duly elected or appointed and
qualified in accordance with the provisions of the Articles of
Incorporation and Code of Regulations of the Surviving Corporation and
of applicable law, or until his earlier death, resignation or removal.
4. The directors of the Surviving Corporation shall be all of the
directors of Exchange Bank immediately prior to the Effective Time.
ARTICLE IV
Manner of Converting and Exchanging Stock and Capital Structure
1. Subject to the provisions of this Article IV, the manner of converting
and exchanging the shares of the constituent corporation's stock at the
Effective Time shall be as follows.
Conversion and Exchange of Shares.
(a) At the time the Merger shall become effective;
(i) All of the outstanding shares of Towne Bank Common
Stock held by Towne Bancorp, Inc. shall, subject to
statutory dissenters rights as provided Ohio Revised
Code Section 1115.19 and 1701.85, be exchanged for
and converted into the right to receive $1,500,000,
in cash; provided, however, that the consideration to
be received by Towne Bancorp, Inc. pursuant to this
paragraph IV(1)(a)(i) shall be increased or reduced,
dollar for dollar, by the amount by which the capital
of Towne Bank as of the Closing is more than or less
than $1,000,000. However, in no event will the
consideration paid hereunder be less than $1,000,000.
The capital of Towne Bank as of the Closing shall be
determined in accordance with generally accepted
accounting procedures.
15
(ii) All of the shares of common stock $__ par value
of Exchange Bank issued and outstanding immediately
prior to the time the Merger shall become effective
shall constitute all of the of the issued and
outstanding shares of the Surviving Corporation and
shall be held by Exchange Bancshares.
(b) As soon as practicable after the time the Merger shall
become effective, Exchange Bank will distribute to Towne
Bancorp, Inc. seventy five percent (75%) of the total
consideration payable in accordance with paragraph IV(1)(a)(i)
hereof in cash in payment for the exchange of all of the
shares of Towne Bank $1.00 par value common stock ("Towne Bank
Common Stock") owned by Towne Bancorp, Inc. on the effective
date of the Merger. The remaining twenty five percent (25%) of
the consideration due to Towne Bancorp, Inc. in accordance
with paragraph IV(1)(a)(i) hereof shall be retained in an
interest bearing account (the `escrow account") with Exchange
Bank, as escrow agent, for the benefit of Towne Bancorp, Inc.
for a period of six (6) months after Closing. At the
conclusion of such six (6) month period, in the event that
Exchange Bancshares has not claimed that either Towne Bancorp,
Inc. or Towne Bank breached any representation, warranty or
covenant set forth in an agreement of even date between
Exchange Bancshares, Towne Bank and Towne Bancorp, Inc. (the
"Investment Agreement"), Exchange Bank shall deliver to Towne
Bancorp, Inc. the remaining twenty five percent (25%) of such
consideration together with interest earned thereon. In the
event that at any time during such six (6) month period,
Exchange Bancshares claims a breach by Towne Bancorp, Inc. or
Towne Bank of any representation, warranty or covenant set
forth in the Investment Agreement, Exchange Bancshares shall
advise both Towne Bancorp, Inc. and Exchange Bank in writing
of the supposed breach and the estimated amount of loss or
damage caused by such supposed breach. At the conclusion of
such six (6) month period, Exchange Bank shall deliver to
Towne Bancorp, Inc. and Exchange Bancshares a written summary
of all breaches claimed by Exchange Bancshares and the amount
of loss or damage in the opinion of Exchange Bancshares.
Within thirty (30) days of receipt of such written summary,
Towne Bancorp, Inc. will either: (i) respond in writing to
Exchange Bancshares and Exchange Bank that it does not contest
the loss or damage noted in such summary; or (ii) object in
writing to one, some or all of the items contained in such
summary. In the event that Towne Bancorp, Inc. does not object
to any supposed loss or damage claimed, Exchange Bank shall
disburse from the escrow account to Exchange Bancshares the
amount of loss or damage claimed by Exchange Bancshares and
shall distribute the balance of such escrow account, if any,
together with any interest earned thereon, to Towne Bancorp,
Inc. In the event that Towne Bancorp, Inc. objects to any
supposed loss or damages, the resolution of whether such
breach and resulting loss or damage has occurred will be
determined by arbitration in Toledo, Ohio under the rules of
the American Arbitration Association. The cost of such
arbitration will be paid for by the unsuccessful party in
regard to such item in dispute. If more than one item is
disputed, the costs of arbitration shall be shared by Towne
Bancorp, Inc.
16
and Exchange Bancshares based upon the percentage of losses or
damages awarded to each party in relation to the total awards
granted in such arbitration.
(c) Certificates formerly representing shares of Towne Bank Common
Stock owned by Towne Bancorp, Inc. surrendered for
cancellation to Exchange Bank by reason of the Merger shall be
accompanied by such appropriate instruments of transfer as
Exchange Bank may reasonably require.
2. The Resulting Corporation shall have a capital structure equal to the
following:
(a) Common stock of $__________, consisting of _________shares of
$____ par value all of which will be issued and outstanding
immediately following the Effective Time of the Merger; and
(b) Surplus of $_______________; and
(d) Undivided profits, including capital reserves, of
$____________, adjusted for all earnings and losses between
January 1, 1998, and the Effective Time of the Merger.
ARTICLE V
Effect of Merger
From and after the Effective Time, the Surviving Corporation shall have
all of the rights, interests, privileges, powers, immunities and franchises
(public and private) of each of the constituent corporations, and all property
(real, personal and mixed), all debts due on whatever account, and all other
chooses in action, of each of the constituent corporations. All interests of or
belonging to or due to either of the constituent corporations shall thereupon be
deemed to be transferred to and vested in the Surviving Corporation without act
or deed and no title to any real estate or any interest therein vested in either
of the constituent corporations shall revert or be in any way impaired because
of the Merger.
ARTICLE VI
Surviving Corporation
From and after the Effective Time, the Surviving Corporation shall be
responsible for all obligations of each of the constituent corporations and each
claim existing and each action or proceeding pending by or against either of the
constituent corporations may be prosecuted as if the Merger had not taken place,
and the Surviving Corporation may be substituted in the place of such
constituent corporation. No right of any creditor of either constituent
corporation and no lien upon the property of either constituent corporation
shall be impaired by the Merger.
ARTICLE VII
17
Further Documents
If at any time the Surviving Corporation shall consider or be advised
that any further assignments, conveyances or assurances in law are necessary or
desirable to vest, perfect or confirm of record in the Surviving Corporation the
title to any property or rights of the constituent corporations, or otherwise to
carry out the provisions hereof, the persons who were the proper officers and
directors of the constituent corporations immediately prior to the Effective
Time (or their successors in office) shall execute and deliver any and all
proper deeds, assignments and assurances in law, and do all things necessary or
proper, to vest, perfect or confirm title to such property or rights in the
Surviving Corporation, including, but not limited to, filing with each court or
other public tribunal, agency or officer by which Towne Bank or Exchange Bank
have been appointed in the capacity of fiduciary or agent, and in the court file
of each estate, suit or proceeding in which any of them has been acting, a
statement setting forth the information required by law or otherwise to carry
out the provisions hereof.
ARTICLE VIII
Termination
Notwithstanding the adoption and approval of this Agreement and the
Merger by the shareholders of Towne Bank and Exchange Bank, this Agreement and
the Merger may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent
of the Boards of Directors of Towne Bancorp, Towne Bank and
Exchange Bank; or
(b) This Merger Agreement shall automatically terminate in the
event of the termination of the Investment Agreement.
(c) At any time prior to the Effective Time, by Towne Bank or
Exchange Bank if there shall have been a final judicial
determination (as to which all periods for appeal shall have
expired and no appeal shall be pending) that any material
provision of this Agreement or of the Merger is illegal,
invalid or unenforceable;
In the event that this Agreement is terminated pursuant to this Article
VIII, the Merger provided for herein shall be abandoned automatically and
without any further act or deed by the parties hereto.
ARTICLE IX
Conditions to Consummation of the Merger
The consummation of the Merger pursuant to this Merger Agreement and
the obligations of the parties hereto is subject to the satisfaction of the
provisions and conditions of the Investment Agreement.
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and attested to on their behalf by the following directors and officers
thereunto duly authorized as of the day and year first written above.
Towne Bank Towne Bancorp, Inc.:
By: By:
-------------------------- --------------------------
Its: Its:
------------------------- -------------------------
Attest: Attest:
----------------------------- -----------------------------
By: By:
-------------------------- --------------------------
Its: Its:
------------------------- -------------------------
Exchange Bank: Exchange Bancshares, Inc.
By: By:
-------------------------- --------------------------
Its: Its:
------------------------- -------------------------
Attest: Attest:
----------------------------- -----------------------------
By: By:
-------------------------- --------------------------
Its: Its:
------------------------- -------------------------
19
EXHIBIT B
MUTUAL RELEASE AGREEMENT
This Mutual Release Agreement ("Release Agreement") is entered into
this _________ day of May, 1998, between Towne Bancorp, Inc. ("Towne Bancorp")
and Towne Bank ("Bank") and Exchange Bank and Exchange Bancshares, Inc.
(hereinafter collectively "Buyer").
WHEREAS, Towne Bancorp, Bank and Buyer are parties to an Agreement
dated as of ____________, 1998 (the "Agreement") pursuant to which it is
contemplated that Bank will be merged with and into The Exchange Bank, the
wholly owned subsidiary of Buyer (the "Merger"); and
WHEREAS, Towne Bancorp, Bank and Buyer each desire that the Merger be
completed and expect to receive substantial benefit from the Merger; and
WHEREAS, as a condition of and to facilitate consummation of the
Merger, Towne Bancorp agrees to release each of Bank and Buyer from claims as
provided herein.
NOW, THEREFORE, in consideration of the premises and the other
agreements and understandings set forth herein and for other good and valuable
consideration, Towne Bancorp, Bank and Buyer agree to the following:
1. Bank and Buyer each hereby release and forever discharges
Towne Bancorp from any and all known or unknown Claims (as
hereinafter defined), other than Claims arising out of Towne
Bancorp's failure after consummation of the Merger to satisfy
the requirements of the Agreement or any ancillary agreements
executed in connection therewith.
2. Towne Bancorp hereby releases and forever discharges Bank, its
present and former officers, directors, employees, attorneys,
predecessors, successors and assign from any and all known or
unknown Claims, other than Claims arising out of Buyer'
failure after consummation of the Merger to satisfy the
requirements of the Agreement or any ancillary agreements
executed in connection therewith.
3. Towne Bancorp hereby releases and forever discharges Buyer,
its subsidiaries and related companies, corporations and
associations, and all of their respective present and former
officers, directors, shareholders, employees, attorneys,
predecessors, successors and assigns and agents from any and
all known or unknown Claims, other than Claims arising out of
Buyer' failure after consummation of the Merger to satisfy the
requirements of the Agreement or any ancillary agreements
executed in connection on therewith.
4. The term Claims as used in this Release Agreement means all
rights, causes of action, rights of indemnification, dues,
demands, liabilities, claims of appointment, claims at law or
in equity or sounding in contract or in tort, and also
includes any claim to any payment, whether or not such claim
is reduced to judgment, liquidated or unliquidated, fixed or
contingent, disputed or undisputed or secured or unsecured to
the extent that such Claims arise out of events occurring on
or prior to the date of this Release Agreement.
20
5. Each of the parties hereto acknowledges and agrees that noting
contained herein shall be construed as releasing any insurer
from any obligation it or they may have to provide coverage to
any party hereto.
6. Each of the parties hereto acknowledges and agrees that
nothing contained herein shall be construed as releasing any
claims (including "Claims") that Towne Bancorp may have
against present and former officers, directors or employees of
Towne Bancorp or to affect subrogation rights, if any, which
any carrier of Towne Bancorp's policy of Director and Officer
Liability insurance may have to bring claims (including
"Claims") belonging to Towne Bancorp against present or former
directors and officers, directors and employees of Towne
Bancorp.
7. Each of the parties hereto represents and warrants that no
promise or agreement not expressed herein, except as is
expressly set forth in the Agreement, has been made to any
other party and that they each have fully consulted with their
attorneys and each is relying solely on their attorneys and
their own knowledge and that each has had a reasonable period
of time during which to review and consider the contents of
this Release Agreement and the execution of this Release
Agreement by each is their voluntary act.
8. This Release Agreement shall become effective upon
consummation of the Merger and, in the event the Merger is not
consummated or in the event the Agreement is terminated, this
Release Agreement shall be void and without further effect.
9. This Release Agreement shall be interpreted pursuant to the
laws of the State of Ohio and shall be binding upon and shall
inure to the benefit of the parties hereto, their respective
successors and assigns.
TOWNE BANCORP, INC. EXCHANGE BANCSHARES, INC.
By: By:
------------------------ ---------------------------
Its: Its:
------------------------ ---------------------------
TOWNE BANK
By:
------------------------
Its:
------------------------
THE EXCHANGE BANK
By:
------------------------
Its:
------------------------
21
EXHIBIT C
MUTUAL RELEASE AGREEMENT
This Mutual Release Agreement ("Release Agreement") is entered into
this ________ day of May, 1998, among __________________ ("Director") and Towne
Bank ("Bank") and Exchange Bancshares, Inc. ("Buyer").
WHEREAS, Director is a member of the Board of Directors of Bank and is
a shareholder [and a member of the Board of Directors] of Towne Bancorp, Inc.
("Towne Bancorp"); and
WHEREAS, Bank, Towne Bancorp and Buyer are parties to an Agreement
dated as of ______________ (the "Agreement") pursuant to which it is
contemplated that Bank will be merged with and into The Exchange Bank, the
wholly owned subsidiary of Buyer (the "Merger"); and
WHEREAS, Director, Bank,and Buyer desire that the Merger be completed
and expect to receive substantial benefit from the Merger; and
WHEREAS, as a condition of and to facilitate consummation of the
Merger, Director agrees to release each of Bank and Buyer and Bank and
Buyer each agree to release Director from claims as provided herein.
NOW, THEREFORE, in consideration of the premises and the other
agreements and understandings set forth herein and for other good and
valuable consideration, Director, Bank and Buyer agree to the following:
1. Bank and Buyer each hereby release and forever discharges
Director from any and all known or unknown Claims (as
hereinafter defined), other than Claims arising out of
Director's failure after consummation of the Merger to satisfy
the requirements of the Agreement or any ancillary agreements
executed in connection therewith.
2. Director hereby releases and forever discharges Bank, its
present and former officers, directors, employees, attorneys,
predecessors, successors and assign from any and all known or
unknown Claims, other than Claims arising out of Buyer'
failure after consummation of the Merger to satisfy the
requirements of the Agreement or any ancillary agreements
executed in connection therewith.
3. Director hereby releases and forever discharges Buyer, its
subsidiaries and related companies, corporations and
associations, and all of their respective present and former
officers, directors, shareholders, employees, attorneys,
predecessors, successors and assigns and agents from any and
all known or unknown Claims, other than Claims arising out of
Buyer' failure after consummation of the Merger to satisfy the
requirements of the Agreement or any ancillary agreements
executed in connection on therewith.
4. The term Claims as used in this Release Agreement means all
rights, causes of action, rights of indemnification, dues,
demands, liabilities, claims of appointment, claims at law or
in equity or sounding in contract or in tort, and also
includes any claim to any payment, whether or not such claim
is reduced to judgment, liquidated or unliquidated,
22
fixed or contingent, disputed or undisputed or secured or
unsecured to the extent that such Claims arise out of events
occurring on or prior to the date of this Release Agreement.
5. Each of the parties hereto acknowledges and agrees that noting
contained herein shall be construed as releasing any insurer
from any obligation it or they may have to provide coverage to
any party hereto.
6. Each of the parties hereto acknowledges and agrees that
nothing contained herein shall be construed as releasing any
claims (including "Claims") that Towne Bancorp may have
against present and former officers, directors or employees of
Towne Bancorp or that Director may have against Towne Bancorp
or against any present or former officers, directors or
employees of Towne Bancorp or to affect subrogation rights, if
any, which any carrier of Towne Bancorp's policy of Director
and Officer Liability insurance may have to bring claims
(including "Claims") belonging to Towne Bancorp or Director
against present or former directors and officers, directors
and employees of Towne Bancorp.
7. Each of the parties hereto represents and warrants that no
promise or agreement not expressed herein, except as is
expressly set forth in the Agreement, has been made to any
other party and that they each have fully consulted with their
attorneys and each is relying solely on their attorneys and
their own knowledge and that each has had a reasonable period
of time during which to review and consider the contents of
this Release Agreement and the execution of this Release
Agreement by each is their voluntary act.
8. This Release Agreement shall become effective upon
consummation of the Merger and, in the event the Merger is not
consummated or in the event the Agreement is terminated, this
Release Agreement shall be void and without further effect.
9. This Release Agreement shall be interpreted pursuant to the
laws of the State of Ohio and shall be binding upon and shall
inure to the benefit of the parties hereto, their respective
successors and assigns.
----------------------------------
Director
TOWNE BANK
By:
-------------------------------
Its:
------------------------------
EXCHANGE BANCSHARES, INC.
By:
----------------------------------------
Its:
---------------------------------------
