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EXHIBIT 2B.
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") dated as of June 19, 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.
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(ii) All of the shares of common stock $20.00 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.
(e) 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.
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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.
(f) 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 $2,048,200, consisting of 204,820 shares of
$10.00 par value all of which will be issued and outstanding
immediately following the Effective Time of the Merger; and
(b) Surplus of $2,318,000; and
(g) Undivided profits, including capital reserves, of $2,752,000,
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
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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.
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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: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx Xxxxxxx
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Its: President Its: Chairman
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Attest: Attest:
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
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Its: Secretary its: Secretary
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Exchange Bank: Exchange Bancshares, Inc.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx Xxxxxx
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Its: President/CEO Its: Chairman
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Attest: Attest:
By: /s/ A. Xxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxx
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Its: Secretary Its: Secretary
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